EU CSRD: Commission given power to delay sector-specific ESRS and ESRS for non-EU companies by two years until 2026

The Corporate Sustainability Disclosure 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 legislative act to delay the adoption of these two ESRS by two years, i.e. to 30 June 2026. 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. 

The European Parliament formally adopted the proposal on 10 April – see EP press release.

The Council formally adopted the proposal today (29 April) - see Council press release. 

So now all that is left is for the Directive to be published in the Official Journal of the EU. 

However, it is worth noting the following:

• The Commission has been asked (by the Council and Parliament) to publish sector-specific sustainability reporting standards in eight areas as soon as they are ready before the 2026 deadline. While the EU institutions have not specified 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.
• The Parliament press release clarifies that the new rules do not affect the reporting timelines under the CSRS. EU companies will still have to report as planned in line with the general (non-sector specific) ESRS adopted by the Commission in July 2023. Later adoption of sector-specific standards for EU companies just 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.
• The legislative act started off as a Decision but it is now a Directive – but in practice this does not really matter as it will not need to be adopted into national law by Member States. The Directive just gives the Commission more time to draft the necessary ESRS. 

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