The European Council has postponed the implementation of parts of the new regulation that makes ESG reporting mandatory for companies in the European Union. One of the postponed aspects concerns the reporting of companies from outside the bloc that do business in the region. The measure will give more time for Brazilian companies to prepare.
The so-called Corporate Sustainability Reporting Directive (CSRD) was created to replace another, non-financial reporting directive (NFRD), and determines that a series of companies follow a certain standard for ESG reporting, reporting environmental risks and impacts. and social issues that their activities cause or suffer. The change caused the number of companies that need to publish this report to jump from 12 thousand to 50 thousand.
In addition to large European companies and small and medium-sized companies listed on the stock exchange, the law also applies to foreign companies that earn more than €150 million in the bloc.
The general rules, agnostic in terms of sectors of the economy, came into effect at the beginning of this year for publicly traded companies that were already subject to the NFRD.
The next step would be for the European Commission to adopt, later this year, standards drawn up for different sectors of the economy and for foreign companies.
With the newly approved delay, the EU’s executive arm gained another two years to adopt these standards, until 2026.
Consequently, large European companies that were not subject to the NFRD and foreign companies will also have their adaptation period extended and will have to publish their reports from 2028, no longer 2026.
Other corporate groups, such as small and medium-sized European companies, will have until 2030 to align with the standard.
“This postponement was already expected, because the CSRD establishes standards that are still being developed”, says Adriana Mattos, senior ESG lawyer at the Mattos Filho office.
The CSRD is just one of a series of sustainability and corporate responsibility regulations approved by the European Union in recent years. Recently, as implementation deadlines approach, debate has grown about the need for more time for companies to adjust to all demands, says Mattos.
The volume of information needed and the work to be done to meet the guidelines is enormous, says Bruno Galvão, a lawyer at Blomstein, in Berlin.
The delay in mandatory reporting can be seen not as a setback, but as maturity, says Galvão, while regulations on deforestation and due diligence have closer application.
For Brazilian companies, the news is positive, as they also have more time to prepare. “Demand is growing from all sides and, among European companies, there is already some expertise. But here we are still starting from scratch, so postponing is an excellent scenario”, says Mattos.
The lawyer recalls that the CSRD was developed when there was still no global standard for sustainability disclosures, the International Sustainability Standards Board (ISSB), nor the Task force on Nature-related Financial Disclosures (TNFD), for example.
