EU CSRD: European Parliament approves two-year delay to sector-specific ESRS and ESRS for non-EU companies

The Corporate Sustainability Reporting Directive (CSRD) requires the European Commission to adopt, by 30 June 2024, the following European Sustainability Reporting Standards (ESRS): 

• sector-specific ESRS, which will set out the information specific to the sectors in which a company operates; and 
• ESRS to be used by certain non-EU companies with business in the EU meeting certain thresholds. 

In October 2023, the Commission published a proposal for a Decision of the Parliament and the Council to delay the adoption of these two ESRS by two years, i.e. to 30 June 2026 (see our previous blog post). The Commission says that this would allow the companies to focus on the implementation of the first set of (sector agnostic) ESRS, as well as allow more resources to be dedicated to the development of effective and proportionate sector-specific ESRS and limit the reporting requirements to the minimum necessary. 

On 24 January 2024, the Legal Affairs Committee of the European Parliament approved the two-year delay but asked the Commission to publish the eight sector-specific reporting standards as soon as they are ready before the deadline (see press release). The proposal still needs to be approved by the full Parliament in a plenary vote. After that, negotiations with the Council on the final text can then start.

NOTE ADDED ON 08/02/2024:  On 7 February 2024, Parliament and Council negotiators announced that they had agreed on delayed adoption of sector-specific sustainability reporting standards and those for the non-EU companies until 30 June 2026 but the agreement still needs to be formally adopted by the Council and the Parliament before it can enter into force (see EU press release). The Commission has been asked to publish sector-specific sustainability reporting standards in eight areas as soon as they are ready before the deadline. While the EU negotiators do not specify which eight areas should be addressed first, they want to be regularly consulted by EFRAG at least once yearly and receive detailed information on prioritisation and timeline.

NOTE ADDED on 16/04/2024: The plenary of the European Parliament formally adopted this legislative act on 10 April 2024 (see EP press release). The act now needs to be formally approved by the Council before it can be published in the Official Journal of the EU and become law.  The Parliament in its press release clarifies that the new rules do not affect the reporting timelines as agreed under the CSRS. EU companies will still have to report as planned in line with the general sustainability reporting standards adopted by the Commission in July 2023. Later adoption of sector-specific standards for EU companies affects the extent of reporting, as the sector-specific part about companies’ impact will not be required before 2026. And since general reporting obligations for non-EU companies with turnover above 150 million euros and their branches in the EU with turnover above 40 million euros will only start to apply in 2028, the EU institutions are of the view that adoption of the reporting standards in 2026 will still provide those companies with sufficient time to prepare.

For more information on the CSRD, see our our CSRD demystified materials.