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EU lawmakers have approved a two-year delay in the implementation of sustainability reporting standards for specific sectors and non-EU companies.

The European Parliament has recently announced the approval by Members of the European Parliament (MEPs) on the Legal Affairs Committee, of a proposal to postpone crucial elements of the Corporate Sustainable Reporting Directive (CSRD) by 2 years. This includes the deferment of the adoption of standards for companies to furnish sector-specific sustainability disclosures and for sustainability reporting by companies outside of the EU.

The initial ESRS rules, adopted by the Commission in July 2023, delineated sector-agnostic sustainability reporting requirements. Following this, the CSRD mandated the implementation of sector-specific ESRS by the end of June 2024, specifying sustainability information that companies are to disclose concerning the specific industries in which they operate.

The CSRD additionally mandated that large non-EU companies operating within the EU adhere to sustainability reporting. The original timeline for these businesses involved the adoption of ESRS rules by the end of June 2024, with the commencement of reporting obligations beginning in 2028.

The recent proposal suggests a 2-year postponement of the adoption of these standards by the Commission. This adjustment aims to allow companies to concentrate on implementing the initial set of ESRS, streamline reporting obligations, and grant the European Financial Reporting Advisory Group (EFRAG) extended time for the development of the new standards.

While endorsing the adoption of the proposals, MEPs expressed the importance of promptly publishing the standards once they are finalized, even before the extended deadline. Additionally, they urged the Commission to engage in regular consultations with the Parliament, providing updates on the progress of standards development at least annually.

After the vote, the proposal will proceed to the Parliament plenary for approval, shaping its negotiating stance in collaboration with the EU Council.

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