France has become the first country to transpose the Corporate Sustainability Reporting Directive (CSRD) into national law. The announcement was made this week, and is in line with the schedule laid out by the French government in September.
CSRD
The EU Directive will replace the Non-Financial Reporting Directive, laying out much stricter expectations for what, and how, companies report to the market on their environmental and social impacts and vulnerabilities.
Phased in between 2024 and 2028, CSRD applies to large companies with substantial business activities or regulated securities in the EU, and small and medium-sized listed companies in the region. It includes financial institutions.
The flow of information it generates is expected to make it easier for investors to build sustainable financial products, allocate capital, undertake stewardship activities and fulfil their own reporting obligations under the CSRD, Sustainable Finance Disclosure Regulation and the EU’s Taxonomy rules.
The Directive is underpinned by the new European Sustainability Reporting Standards, which are due to be expanded next year to include sector-specific guidance. However the European Commission is currently collecting views on a proposal to delay that deadline until 2026, giving entities more time to get used to the sector-agnostic standards.
This week, sustainable-finance focused law firm Frank Bold called on MEPs to oppose those plans, saying that companies in high-risk sectors needed “clarity” on what information they should be reporting to the market.
Transposition
In the meantime, member states must transpose CSRD into national law by July. France has become the first country to complete the process, but others are expected to follow suit.
At the end of September, the Finnish government submitted its proposal to Parliament. In it, it said it wanted to expand the CSRD’s coverage to include the country’s cooperative societies.
SMEs
The role of small companies in the CSRD has become a major sticking point.
The French confederation of small businesses, CPME, warned last month that “the CSRD standards are complex” and that “some required information seems inaccessible for SMEs”.
Some politicians in Germany are now pushing for an exemption for small and medium-sized businesses.
But large financial institutions and companies can only comply with their obligations if they have information on portfolio companies and businesses in their supply chains.
Read the digital edition of IPE’s latest magazine
No comments yet