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EU Grants Two-Year Extension for Sector-Specific and Non-EU Company Sustainability Reporting Standards

The European Council has announced the approval of a directive postponing the adoption of sector-specific sustainability disclosures and sustainability reporting for non-EU companies under the Corporate Sustainability Reporting Directive (CSRD).

The European Sustainability Reporting Standards (ESRS) outline the rules and requirements for companies to report on sustainability-related impacts, opportunities, and risks under the CSRD, which took effect at the start of 2024. The postponement was initially proposed by the European Commission in October as part of its 2024 Work Programme, which prioritizes reducing reporting burdens for companies. The delay of the sector-specific ESRS adoption deadline was highlighted as a key action.

The Council stated that the delay would allow companies to focus on implementing the first set of ESRS, limiting reporting requirements to a necessary minimum and providing more time for developing sector-specific and non-EU company reporting standards. The first set of ESRS rules, adopted by the Commission in July 2023, established sector-agnostic sustainability reporting requirements. The CSRD required the adoption of sector-specific ESRS by the end of June 2024, detailing the sustainability information companies must report based on their industries. Although the deadline for sector-specific ESRS has been delayed by two years, EU lawmakers have urged the Commission to publish and adopt these standards as soon as they are ready, before the new 2026 deadline.

Additionally, the CSRD mandates that large non-EU companies operating in the EU provide sustainability reporting, with the ESRS rules for these businesses initially set for adoption by the end of June 2024 and reporting requirements beginning in 2028. The newly adopted directive postpones the adoption of ESRS for non-EU companies to the end of June 2026.

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