(sustainabilityenvironment.com) – On November 10, the European Parliament voted in favor of the new transparency obligations on corporate sustainability policies, which will be required to disseminate data and information about the impact of their activities.
Now the next step is up to the Member States, which will have to commit to transposing the changes and making sure that the business world reports according to the new rules. What is corporate sustainability?
By June 2023, however, the Commission will have to adopt the first set of technical standards, specifying what are the disclosure requirements for businesses in general, while the specifics of individual sectors still remain two years.
New transparency standards on Corporate sustainability for EU businesses
The new package of measures is based on a structural lack of binding legislation on the subject. The current declaration of non-financial information (NFRD, Non-Financial Reporting Directive) is considered insufficient, which is why more detailed transparency requirements on the impact of companies on environmental sustainability have been introduced, respect for human rights and social standards.
Multinationals will now be subjected to independent controls and certifications to validate the data they provide, to make available to investors a sustainability statement with reliable data, comparable to the financial one. There should also be maximum transparency regarding access to information on the sustainability of all business activities.
The obligations apply to all companies, even those not listed on the stock exchange, and also include foreign companies that invoice in the EU at least 150 million euros. The provisions also apply to SMEs listed on the stock exchange, which will have more time to adapt. In all the new measures refer to an audience of 50,000 companies throughout the European Union, with a significant extension of the transparency obligations on sustainability that, until now, covered 11,700.
During the plenary debate, rapporteur Pascal Durand (Renew, FR) said: “Europe is showing the world that it is really possible to ensure that finance, in the strict sense of the word, does not govern the entire global economy”.
Transparency obligation on corporate sustainability: what happens now?
By 28 November, the Council should adopt the proposal and publish it in the Official Journal of the EU. Twenty days after publication, the directive will enter into force and the rules will have to be applied progressively between 2024 and 2028.
- from 1 January 2024 large public-interest enterprises, with more than 500 employees, already required to submit a non-financial declaration, will have the deadline for the publication of data to 2025;
- from 1 January 2025 it will be up to large companies not yet subject to the reporting obligation, which correspond to companies with more than 250 employees and/or 40 million euros in turnover and/or 20 million euros in total assets, which must make their data public by 2026;
- From 1 January 2026 it will be the turn of SMEs and other listed companies. If the deadline for SMEs is 2028, all other sustainability data should be published by 2027.