The European Parliament has decided: new rules for sustainability reports

By: STA Date: 2022. 11. 18. 11:55

The new directive will standardize companies’ sustainability reporting from 2024, so that financial companies, investors and the wider public can access comparable and reliable information about what organizations are doing for climate protection.

(Photo: Pixabay)

On November 10, 2022, the European Parliament adopted the European Corporate Sustainability Reporting Directive (CSRD). The purpose of CSRD is to ensure that companies disclose adequate information about their climate risks and opportunities, as well as their impact on people and the environment. According to EY’s impact study, the number of EU companies subject to the reporting obligation may increase from the current 11,000 to nearly 50,000. According to EY’s estimates, more than a thousand large companies based in Hungary were affected in Hungary alone. CSRD can have significant positive effects on the slowing down of climate change, the competitiveness of the EU economy, and the effectiveness of the companies involved. Now, however, companies have a lot of work to do, as they will have to disclose more sustainability-related information than before, and they will have to do it in such a way that investors can compare it with the data of other companies.

“The standard prescribes the criteria of comprehensibility, relevance, verifiability and comparability, and also requires the real presentation of information,” underlined Ákos Lukács, head of EY’s area dealing with Climate Protection and Sustainability Services. Taking into account the significance of the directive and the remaining time for preparation, the specialist recommends that companies start preparing now, as the competition in the field of sustainability will soon begin, and those who do not get to the starting line in time may never know. to bring in their backlog.

The European Council is expected to ratify the new rules on November 28, which must also be applied by Hungarian companies between 2024 and 2028. First, from January 1, 2024, for large companies covered by the current Directive on the publication of non-financial information. The biggest change will be experienced in 2025, at which time the range of stakeholders will increase drastically, as the obligation to report will also be extended to large companies operating on unregulated markets from then on. From 2026, the range of affected companies will be expanded to include SMEs operating on regulated markets, but at the same time they will be exempted from the mandatory application of the directive until 2028.