The Council and the European Parliament reached provisional political agreement at the end of June on theCSRD Directive(Corporate Sustainability Reporting Directive) which will force companies to meet new extra-financial reporting obligations by 2024 by detailing their ESG performance (Environment, Social, Governance). In concrete terms, a comprehensive report on environmental protection, social responsibility, employee protection, respect for human rights, the fight against corruption and diversity within the boards of directors will be submitted together with the annual accounts.
This measure will apply to companies withmore than 250 employeesof which the turnover exceedsEUR 40 million, about 50,000 European organisations. The bond will also be valid for 1000 to 2000 listed SMEs, but also for foreign companies totalling over EUR 150 million in sales within the European Union.
This extra-financial information should be published in a consolidated manner. Information on climate or human rights impacts will be independently audited and certified. Member States will monitor compliance. However, the procedure for the precise presentation of the information has not yet been communicated.
At the same time, companies will also soon have to submit to the Directive on the duty of vigilance adopted by the European Commission last February (cf.CSR: European Commission adopts proposal for a directive on due diligence) and still under discussion with Parliament and the Council. The latter will require, not ESG transparency, but to prevent, stop or mitigate the negative impact of their activities on human rights (e.g. child labour and labour exploitation) and on the environment (e.g. pollution, loss of biodiversity).
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