On the evening of Wednesday 7 February, the Council of the European Union and the European Parliament reached a provisional agreement on new deadlines for the adoption of the second series of sustainability reporting standards (ESRS), relating to certain sectors and certain companies (see EUROPE 13335/29). They will come into force in June 2026, 2 years later than originally planned.
The first series of ESRS came into force for large companies in January 2024. In October 2023, the European Commission proposed this two-year postponement so that the ‘European Financial Reporting Advisory Group’ (EFRAG), which is developing the ESRS, could give priority to implementing the first ESRS package (see EUROPE 13302/21).
This agreement gives more preparation time to companies affected by sector-specific ESRS, ESRS specific to small and medium-sized enterprises (SMEs) and ESRS specific to third-country companies with a turnover of €150 million in the EU and which have at least one subsidiary or branch in the EU. The date of application for third-country companies will remain the financial year 2028, as indicated in the ‘CSRD’ directive on sustainability reporting.
“Everyone has finally understood that companies cannot be overloaded with new standards every year. Businesses have been putting up with too much bureaucracy in years of crisis, from Covid to inflation”, said the rapporteur, Axel Voss (EPP, German), in a press release. “There is also a lack of quality if you don’t take the time to develop such standards in a practical way”, he added.
In its communication entitled ‘Long-term competitiveness of the EU: looking beyond 2030’, the Commission identified reporting obligations as one of the main burdens on businesses in general and SMEs in particular. It has therefore proposed to reduce reporting obligations by 25% without compromising the related political objectives and this two-year postponement.
“Boosting European competitiveness is a core pillar of the Belgian Presidency, and one way to achieve this objective is to reduce the administrative burden on companies”, commented Vincent Van Peteghem, Belgian Deputy Prime Minister and Minister of Finance.
The provisional agreement must now be approved and formally adopted by the two institutions before it can enter into force. (Original version in French by Anne Damiani)