As Bloomberg reports, citing Europe's financial markets regulator (ESMA), ESMA says, companies should not assume that the complexity of the new environmental, social and governance (ESG) reporting requirements will excuse careless disclosures.
Accordingly, the ESMA (European Securities and Markets Authority) recognised that compliance with the new European sustainability reporting standards would present "challenges" for companies and that the first reports (due next year) would represent a "milestone in the learning curve for issuers". Nevertheless, recognising this learning curve will not relieve issuers of their responsibility to ensure compliance with the European sustainability reporting standards.
Disclosure is part of the Corporate Sustainability Reporting Directive, which is an important element in the arsenal of EU initiatives to green the economy. Around 50,000 companies will have to comply with the Corporate Sustainability Reporting Directive (CSRD) when it is finalised in the coming years (trade-e-bility reported).
The unprecedented scope and novelty of the disclosure requirements have led to a backlash from companies, who have won some concessions over the past year. These include the ability to determine which of the hundreds of metrics are important enough to report on (known as materiality). ESMA is asking companies to methodically explain their process for making such decisions. This also applies to the disclosure of value chains, where the standards do not provide for cases where the lack of data justifies the omission of material information. The authority also said that companies should be prepared to report fully when the transitional provisions expire.
The original ESMA press release is available here: https://www.esma.europa.eu/sites/default/files/2024-07/ESMA32-992851010-1597_-_ESRS_Statement.pdf
Even if companies are not directly affected by the legal requirements, the complexity increases as customer requirements and specifications rise. These requirements are often passed on from customers to small and medium-sized enterprises, which leads to an indirect impact.
Is your company affected by the CSRD? Take precautions now in good time: The trade-e-bility management consultancy will work with the responsible employees in your company to set up a sustainability management system in small steps to ensure that you are prepared for the new requirements by the time they are introduced. Christopher Blauth and Jens Haasler will be happy to answer your questions. You can request a non-binding orientation meeting via beratung@trade-e-bility.de
