Brussels relaxes the mandatory reporting guidelines for corporations concerning sustainability matters
The European Commission has adopted a series of amendments to the first European Sustainability Reporting Standards (ESRS), aiming to provide relief for companies as they navigate the transition to sustainable reporting.
The amendments, referred to as 'targeted quick fix' amendments, were adopted by EFRAG (European Financial Reporting Advisory Group). However, the precise date of adoption and the exact date the adjustments will come into force are yet to be announced.
One of the key changes is the extension of the sustainability reporting requirements for companies reporting from financial year 2025 and 2026 (Wave Two and Wave Three companies). This extension, known as the 'Stop-the-clock' Directive, delays the reporting obligations by two years.
In contrast, companies reporting on financial year 2024, commonly known as "Wave One" companies, can continue to omit information on the anticipated financial effects of certain sustainability-related risks. This exemption is part of the current ESRS.
For financial years 2025 and 2026, Wave One companies with more than 750 employees will have most of the same phase-in provisions as smaller companies. This move is intended to increase certainty for these companies.
The 'quick fix' amendment, which applies from financial year 2025, also allows for the omission of certain information for Wave One companies in financial years 2025 and 2026. This amendment was necessary because Wave One companies were not covered by the "Stop-the-clock" Directive.
The Commission is also working on a broader revision of the ESRS, aiming to reduce data requirements, clarify unclear provisions, and improve consistency with other legislation. The revision of the ESRS is expected to be completed by financial year 2027.
These amendments are a step towards making sustainability reporting more manageable for companies while maintaining the momentum towards a more sustainable European economy.
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