Deadlines become clearer for EU’s revised sustainability reporting rules

The European Financial Reporting Advisory Group (EFRAG) has confirmed it will provide its advice on redesigning the EU’s sustainability disclosure rules by October.

EFRAG has helped shape the European Sustainability Reporting Standards (ESRS) over the past two years, and has now been asked to work with the European Commission to make them more business friendly.

Its secretariat proposed a formal schedule for the project earlier in the month, which was roundly rejected by its sustainability board.

It is understood the board didn’t think enough time had been allocated to public consultations and consequent revisions, but EFRAG argued it wasn’t practical to have the usual 120-day feedback periods because of the speed at which the changes needed to be made.

On Friday, a compromised workplan was put to vote and approved by the sustainability board.

EFRAG will spend the next month canvassing relevant entities, including companies that have used the ESRS to report under the Corporate Sustainability Reporting Directive (CSRD), about their experience.

The interviews will support the results of an ongoing consultation on simplifying the ESRS, which closes next week.EFRAG expects to have draft recommendations for the Commission by the end of July, which will be open for feedback for up to 45 days.

A series of “outreach events” are planned in September, and final advice will be presented to the Commission by the end of October.

Developments on the rest of the EU Omnibus

The revision of the ESRS is part of a broader initiative by EU lawmakers, known as the ‘omnibus’, to simplify the bloc’s sustainability disclosure and due diligence rules and make them more palatable to companies operating in the region.

European Parliament had its first committee debate last week on the main omnibus proposal, which lays out potential changes to the legal texts underpinning the Corporate Sustainability Due Diligence Directive (CS3D) and the CSRD.

At the discussion on Wednesday, MEPs within Parliament’s legal affairs committee, JURI, confirmed that a first draft of its report will be ready in June. JURI members will vote on a final report in October and it will then be put to the rest of Parliament.

The Council of the European Union has been moving much faster. While debate in Parliament has been fractious, and the direction of travel is still unclear, a leaked outline of the Council’s current thinking on the omnibus suggests it won’t deviate much from the Commission’s original proposal.

Member States met for a second time on Friday to discuss the plans, and insiders expect a final negotiating position by June.

In the meantime, the Commission’s legislative proposal to delay the implementation of CSRD and CS3D while the negotiations take place has been formally approved.

On 16 April, the legislation was entered into the EU’s Official Journal, and member states must now transpose it into national law by the end of 2025.

It means large, non-listed firms with more than 250 employees, €50m turnover and/or €25m in assets, will have until 2028 to comply with CSRD, and listed SMEs will have until 2029. Companies with more than 5,000 employees, which were meant to comply with CS3D from 2027, will now have until 2028.

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