Legislative Proposal for a Directive on Sustainability Disclosures for Companies
On the 21st of April 2021, the European Commission presented a legislative proposal for a Corporate Sustainability Reporting Directive (CSRD) , aiming to amend four existing pieces of legislation: the EU Non-Financial Reporting Directive (NFRD), the Audit Directive and the Audit Regulation as well as the Transparency Directive. The proposal introduces significant changes to the NFRD, which include, inter alia:
– The extension of the scope of reporting companies: whilst the NFRD was applicable to large ‘public interest entities’ (i.e., listed companies, banks and insurance companies) with more than 500 employees, the proposal seeks to extend the scope to include all large (1) as well as all listed companies, with the exception of listed micro-enterprises;
– The introduction of a general EU-wide audit requirement for the sustainability reports;
– The inclusion of new sustainability reporting requirements; and,
– The obligation for the companies to digitally tag the reported sustainability information.
(1) Defined as companies that have, on their balance sheet date, more than 250 employees on average during the financial year, and a balance sheet total in excess of €20m or a net turnover in excess of €40m.
Provisional Agreement on the European Climate Law
The European Parliament and the European Council presented a provisional agreement for the European Climate Law. This Regulation is part of the European Green Deal and represents a deep commitment to reach, by 2050, climate neutrality. It foresees, inter alia:
– A climate target for 2030: a reduction of at least 55% in the net emissions of green-houses gas, when compared to 1990;
– A commitment to prepare, with the different sectors of the economy, sector-specific plans to pursue climate neutrality;
– Provisions directed to the adaptation to climate change; and
– Coherent and efficient policies in the European Union that have climate neutrality as an objective.