Brussels (The Brussels Morning Newspaper) â The EU Commission issued FAQs to clarify EU corporate sustainability reporting rules, aiming to reduce administrative burden and assist companies in compliance.
What Clarifications Does the New FAQ Provide?
The European Commission has today on 7 August 2024 issued a set of frequently asked questions (FAQs) to back stakeholders in the enactment of the EU corporate sustainability reporting practices.Â
The publication is characteristic of the EU Commissionâs continuous struggle to make the EU sustainable finance framework more functional for companies and lower the administrative burden on them. The FAQs take into account input acquired from companies and cover subjects such as the scope of the rules, application dates, and immunities. For example, they explain when companies may utilise estimates rather than having to gather value chain information from suppliers or partners.
What Did Commissioner Mairead McGuinness Say About the New FAQs?
On the occasion, European Commissioner for Financial Services, Financial Stability and Capital Markets Union, Mairead McGuinness, stated: âThe EU has taken major steps in building a comprehensive sustainable finance framework over the past six years, encouraging companies to embark on their transition paths. Our focus now is to ensure that our tools are usable and effective while continuing to reduce the administrative burden on companies.Â
The FAQs provide important clarifications and will further reduce the need for companies to seek external legal or consultancy advice for applying the rules. Companies are working hard to be more sustainable, which helps strengthen their competitiveness in the medium term, and I aim to ensure that our framework assists them in that processâ.
What Is the Purpose of the Corporate Sustainability Reporting Directive?
The Corporate Sustainability Reporting Directive is an integral part of the EUâs sustainability agenda and the European Green Deal. It has updated and strengthened the laws about the social and environmental data that companies have to report. A more comprehensive set of large companies, as well as listed SMEs, are required to notify on sustainability. Some non-EU businesses will also have to report if they yield over EUR 150 million on the EU market.
The new rules assure that investors and other stakeholders have access to the details they need to consider the influence of companies on people and the environment and for investors to evaluate financial risks and opportunities emerging from climate change and other sustainability matters. Finally, reporting costs will be lowered for companies over the medium to long term by harmonising the information to be delivered. The Directive came into force on 5 January 2023. The first set of companies subject to the new rules must begin reporting in 2025, for the financial year 2024.
