On Wednesday 15 June Member States’ ambassadors to the European Union (Coreper) revised the EU Council mandate on the Sustainability Reporting Directive (SRD) to facilitate a provisional agreement with the European Parliament (see EUROPE 12961/18).
“While an agreement seems within reach on this dossier, the Presidency believes that this mandate needs to be updated in order to finalise the negotiation”, it says in the new EU Council mandate that EUROPE has obtained. The next trilogue will take place on Tuesday 21 June.
Three main issues remained blocked: independent expertise, scope and inclusion of non-EU companies.
With regard to independent expertise and thus sustainability assurance, the Presidency added a reference to the Commission’s commitment to further improve audit quality and to create a more open and diverse audit market. Previous work experience as part of the 8-month practical training requirement would also be taken into account. A passport mechanism for independent auditors (IASPs) would also be introduced to specify that IASPs accredited in one EU Member State may carry out sustainability reporting certification in another Member State.
Regarding the scope, the French Presidency of the Council will propose to the representatives of the European Parliament that the inclusion of listed small and medium-sized enterprises (SMEs) be maintained, with the possibility of an opt-out clause for three years, until 2028. The European Commission’s original proposal was to exempt subsidiaries, which the Parliament did not want (see EUROPE 12911/17). The French Presidency will therefore propose clarifications on the information provided in the consolidated report on subsidiaries, where differences in terms of risks and impacts with the rest of the group will be presented.
For non-European companies, the French Presidency suggests introducing a series of new provisions on the Accounting Directive to extend the obligation to provide a sustainability report to non-European companies with a subsidiary or branch in the EU, with a specific implementation deadline of 1 January 2028. These provisions would only affect included companies with a turnover of more than €150 million. The content of the reporting will be limited to the social and environmental impacts of the company.
As for supervision, the national authorities would only have an obligation to act and not to produce results, and a lighter regime of supervision, implementation and sanctions is provided for than that which currently exists for European companies.
See the EU Council negotiating mandate (in French): https://aeur.eu/f/263
See the table summarising the negotiating mandates: https://aeur.eu/f/264 (Original version in French by Anne Damiani)