The European Commission gathered first impressions from stakeholders on its new proposal for a for a Corporate Sustainability Reporting Directive (see EUROPE 12703/10) at a high-level online conference on Thursday 6 May.
All participants recognised that the challenge will be to find the right balance between ambition and proportionality. Overall, however, they believe that the Commission’s proposal is a step in the right direction.
“Today, companies can use any reporting standards, or all standards, or none. The market is fragmented, and everyone is confused. By developing EU sustainability reporting standards, we can create consensus about the information that investors, NGOs, and the wider public can reasonably expect from companies”, said European Commissioner for Financial Services Mairead McGuinness.
And the Commission wants to move quickly so that these new standards will be applicable in 2024. “For that to happen, we need the Parliament and the Council to reach agreement by early next year”, she said.
Slovenian Finance Minister Andrej Šircelj has assured that this will be one of the main priorities of his country, which will hold the EU Council Presidency from 1 July.
He said the proposal will significantly improve the flow of information on sustainability and corporate reporting. It will also help to avoid unnecessary costs to companies and investors that currently exist due to overlapping reporting standards.
“France will be fully committed to this text”, assured Olivia Grégoire, the French Secretary of State for the Social Economy. Paris will take over from Ljubljana at the beginning of 2022.
Europe must be the one to set the environmental, social, and governance standards, insisted Ms Grégoire, stressing above all the political importance of this text.
Nevertheless, in her view, the main challenge will be to convince companies that this exercise will have a positive impact on their sustainability and that it is not just another yet another compliance obligation.
The Executive Director of the European Securities and Markets Authority (ESMA), Verena Ross, also supported the proposal, which she said would ensure consistency between financial and non-financial information.
The same is true of the European Central Bank. Its chair, Christine Lagarde, said the directive will fill key data gaps currently affecting the EU’s sustainable finance landscape.
However, in her view, further reforms will also be needed in order to move towards a true “Green Capital Markets Union”.
“We need proper European supervision of green financial products with official EU seals. [...] We also need harmonised tax treatment of investments in sustainable finance products, so as to prevent fragmentation of green investments along national lines”, she said.
First impressions from the European Parliament were also positive. MEP Pascal Durand (Renew Europe, France), author of a Parliament report on sustainable corporate governance (see EUROPE 12625/24), said the proposal provides “very solid ground for discussion” and ensures consistency with the objectives of the European Green Deal.
According to him, many of the European Parliament’s recommendations have been taken on board, such as the extension of the scope or the introduction of mandatory auditing of non-financial information reports in all Member States, although he would have liked the Commission to go further in this respect.
For Lara Wolters (S&D, the Netherlands), who Parliament’s work on mandatory corporate due diligence (see EUROPE 12675/10), this is also a “good start”.
The MEP particularly welcomed the extension of the scope, the enhancement of the principle of double materiality, and the ambitious timetable proposed by the Commission.
On the other hand, Ms Wolters regretted that non-European companies are not included in the proposal for the time being and felt that more attention should be paid to high-risk SMEs. (Original version in French by Marion Fontana)