In a bid to promote sustainable economy, the European Union has adopted the European Sustainability Reporting Standards (ESRS) for all companies subject to the Corporate Sustainability Reporting Directive (CSRD).
The standards cover the full range of environmental, social, and governance (ESG) issues including climate change, biodiversity and human rights. They provide information for investors to understand the sustainability impact of the companies in which they invest. They also take account of discussions with the International Sustainability Standards Board (ISSB) and the Global Reporting Initiative (GRI) in order to ensure a very high degree of interoperability between EU and global standards and to prevent unnecessary double reporting by companies.
The first companies will have to apply the new rules for the first time in the 2024 financial year, for reports published in 2025.
Mairead McGuinness, Commissioner, Financial Services, Financial Stability and Capital Markets Union, said, “The standards we have adopted today are ambitious and are an important tool underpinning the EU’s sustainable finance agenda. They strike the right balance between limiting the burden on reporting companies while at the same time enabling companies to show the efforts, they are making to meet the Green Deal Agenda, and accordingly have access to sustainable finance.”
It must be noted that (CSRD) was adopted in January 2023. This new directive modernises and strengthens the rules concerning the social and environmental information that companies have to report. The purpose of the Green Deal is to make Europe the first climate-neutral continent by 2050.
