EU policymakers strengthen rules for companies’ sustainability disclosures with mandatory ESG standards, but delay its implementation

On Tuesday 21 June, the trilogue negotiations between the European Commission, Parliament and Council concluded with an agreement for the EU Corporate Sustainability Reporting Directive (CSRD).

The reformed rules will tackle major problems on the quality, consistency and comparability of sustainability information disclosed by companies under existing EU legislation, as evidenced in the studies published by the Alliance for Corporate Transparency.

The CSRD clarifies transparency obligations for large companies operating in the EU on their sustainability impacts, risks and opportunities – including their decarbonisation plans and performance -, and mandates the development and adoption of mandatory ESG corporate sustainability reporting standards.

This reform is the bedrock to ensure the success of the European sustainable finance agenda, the EU Green Deal and the REPowerEU plan: relevant and comparable sustainability data is a prerequisite to direct finance flows in support of the transition to an EU net-zero economy. It is also essential to ensure financial market participants fulfil their own obligations as well as monitor progression to achieve EU objectives and commitments on climate, biodiversity and human rights, and cut down the EU’s dependency on fossil fuels, and thus Russia (for which we need data on companies’ energy consumption and production, production of renewable energy etc).