In a vote in the European Parliament on 18 October, MEPs reaffirmed the commitment to the European Sustainability Reporting Standards (ESRS), mandatory under the Corporate Sustainability Reporting Directive (CSRD), which will apply from January 2024 onwards as initially planned.
With over 90% of the commitments made in the 2019 Political Guidelines delivered, the EU Commission also reaffirmed the commitment to reduce reporting requirements by 25%, in line with the strategy to boost the EU’s long-term competitiveness and to provide relief for SMEs, without undermining the policy objectives of the concerned initiatives.
Examples of the expected simplifications include:
➡ A 2-year delay of the date of adoption of the sector-specific ESRS, currently required in 2024, to allow companies to focus on the implementation of the first set of sector-agnostic ESRS adopted on 31 July 2023.
➡ A 2-year delay of the date of adoption of the ESRS to be used by certain non-EU companies with business in the Union.
Considering that the reporting requirements for these non-EU companies only apply from financial year 2028, this will allow more resources to be dedicated to the development of effective and proportionate sector-specific ESRS, while still giving enough time for these non-EU companies to prepare ahead of financial year 2028.
➡ An increase in the size criteria in the Accounting Directive by 25% to account for the effects of inflation. This would reduce the scope of application of the presentation, audit and publication requirements for financial statements, and also the scope of application of the CSRD and the EU Taxonomy Regulation (Art. 8).
The classification of companies into “micro”, small”, “medium” or “large”, is based on meeting two out of three size criteria: two monetary size criteria, the “balance sheet total” and “net turnover”, and the average number of employees.
Over a period of 10 years from 1 January 2013 to 31 March 2023, the cumulated inflation reached 24.3% in the euro area and 27.2% for the EU27.
Initially, all large EU companies meeting two of the following three criteria: more than 250 employees, a net turnover exceeding €40m and/or a balance sheet total exceeding €20m, were required to report according to ESRS for financial year 2025 at the latest (report due in 2026).
With this adjustment, the monetary size criteria will to increase to a net turnover exceeding €50m and/or a balance sheet total exceeding €25m.
Source: IMMC.COM%282023%29596%20final.ENG.xhtml.1_EN_ACT_part1_v5.docx (europa.eu)