Polski
Non-financial reporting is one of the key elements of the European Green Deal. Transparency and public communication of pro-environmental and pro-social measures are intended by the European Commission to provide support for business transformation. The provisions of the Corporate Sustainability Reporting Directive (CSRD) and its implementing acts in the form of delegated regulations introducing the European Sustainability Reporting Standards (ESRS) are intended to standardize the presentation of sustainability information.
Final stages of work on ESRS
The CSRD is effective as of December 2022. Work is underway to transpose the provisions into national law and transfer them into our laws. A more than two-year effort leading to the adoption of the first set of European Sustainable Reporting Standards is being finalized. They began at EFRAG (the European Financial Reporting Advisory Group), and continued at the European Commission after the first set of ESRS was delivered. After a public consultation in July, the legislative procedure began, which we have already written about in Water Matters.
As of July 2023. there was a period for member countries to raise objections to the ESRS. The final element in the process of adopting the regulation, following a motion by EPP-Renev MEPs, was a vote to reject the ESRS in its entirety. The rationale behind the proposal was that European businesses are overburdened with reporting obligations, which could cause them to lose competitiveness in the global market. However, the request was rejected. 359 MEPs voted for it, while 261 were in favor of keeping it. This means that we can expect the document to be published in the Official Journal of the Union in the coming weeks. The European Sustainable Reporting Standards, unlike the CSRD, apply to all member countries, without the need to implement them into national law.
EFRAG’s substantive support
In parallel with the completion of the adoption of the first set of ESRS, EFRAG announced the release of a tool for asking questions about the practical application of the reporting standards. This is intended to help companies prepare for their first CSRD-compliant disclosures. EFRAG, as the substantive author of the European Sustainable Reporting Standards and advisor to the European Commission, is the most competent entity to interpret the provisions. It should be noted, however, that the answers provided by the new tool will not be binding and should not be taken as the position of the European Commission. EFRAG therefore provides substantive support, but cannot guarantee that the EC has the same position. Considering the changes that the EC has made to the projects submitted by EFRAG, such a caveat is most understandable.
Industry ESRS
The work on the ESRS, completed in October, applies to the first, general and applicable company regardless of its business sector. They are designed to build a common, and thus comparable, set of data on corporate sustainability. These requirements will be supplemented by industry-specific ESRS, which are intended to expand the reporting standards to include elements specific to particular types of business. According to the original implementation schedule, the industry’s sustainable non-financial reporting processes were to take effect in 2024. However, the preparation of the guidelines has been greatly delayed. The work is at the stage of development and dialogue with expert groups. Recruiting for teams of specialists for some of the industry standards under preparation was still underway in September (for the financial sector, among others).
EFRAG announced that the ESRS for small and medium-sized enterprises will be consulted on in January 2024. Work on others is still ongoing. Given the time required for extensive public consultations and the formal legislative procedure, adoption of the industry ESRS by the end of this year is impossible. As a result, a postponement of the reporting start date by 2 years was announced. This does not affect non-financial disclosure obligations for the first set of ESRS. These still apply to the first group of companies for 2024.
The decision to reschedule in light of the delays in the development of the European Standards for Sustainable Reporting seems most reasonable. This is because companies need time not only to familiarize themselves with the reporting requirements, but also to prepare the organization to collect the necessary data. However, this involves later access to comparable sustainability information and is less likely to motivate companies to change and transform.
