Exempted companies will now have an extended period to prioritize the implementation of comprehensive sustainability reporting requirements before they are required to adhere to sector-specific standards.
In Brief
- The European Council has adopted a directive extending sustainability reporting requirements for certain companies by two years.
- Exempted companies, including those outside the EU and in specific sectors such as oil and gas, textiles, and agriculture, now have until June 30, 2026, to comply with the Corporate Sustainability Reporting Directive.
- This decision follows the approval by the European Parliament’s Committee on Legal Affairs of the deferred timeline in January, which was proposed by the Commission as part of its 2024 Work Programme.
- The two-year delay applies to non-EU companies and entities in sectors including mining, coal and quarrying, road transport, motor vehicles, food and beverage, and real estate, among others.
Insight
The European Council’s final approval of the Corporate Sustainability Reporting Directive (CSRD) adoption timeline marks the conclusion of the decision-making process.
Exempted companies will benefit from the extended timeline, allowing them to focus on implementing broader sustainability reporting requirements outlined in the CSRD while limiting their reporting obligations to a minimum.
The delay also provides the EU with additional time to develop standards tailored to specific sectors and companies headquartered outside the bloc.
Companies subject to the CSRD, effective since January 1, 2024, must integrate sustainability reporting metrics into their annual reports from 2024 onwards.
The European Commission said it recognized the “extra burden” these reporting requirements imposed on companies in its draft report earlier this year, and it aimed to simplify these requirements and reduce such burdens by 25%.
The directive impacts all companies listed on an EU-regulated market — including both EU and non-EU entities — and also affects U.S. companies with EU subsidiaries. An EU subsidiary of a U.S. company would be required to report its sustainability efforts and operations if it meets certain thresholds regarding asset, revenue and workforce figures.
Final confirmation of the two-year delay awaits signatures from the presidents of the European Parliament and the Council. Upon publication in the Official Journal of the European Union, the directive will come into effect twenty days later.
