Council of the European Union issues negotiating position on CSRD
The Council of the European Union has agreed its general approach to the European Commission proposal for a Corporate Sustainability Reporting Directive (CSRD), updating the Non-Financial Reporting Directive (NFRD).
With France currently holding the Council presidency, Bruno Le Maire, the French Minister for Economic Affairs, Finance and Recovery, feted this development as another decisive step in the development of a European regulatory framework for sustainable finance. “Ultimately, companies with more than 250 employees or listed companies will now have to translate their environmental, social and governance policy into standardised, justified and certified information documents. This means greater transparency for citizens, consumers and investors so that businesses can play their full part in society. This is the end of greenwashing. Today, Europe is setting the rigorous non-financial reference standards of tomorrow, in line with our environmental and social ambitions.”
The Council’s changes to the original proposals impact the overall utility and transparency of these new types of disclosure in one important way. The original required that all listed (i.e., public) companies and all private companies with more than 250 staff would need to provide comparable, audited and digital (i.e., Inline XBRL/ESEF) disclosures.
The amendments will exempt these larger private companies from providing Inline XBRL formatted disclosures. The ESEF requirement for public companies remains.
We consider this a retrograde step for the European digital and green agendas. Consuming unstructured sustainability disclosures for analysis across more than 50K private companies will be more or less impossible, making the work of lenders and other stakeholders that are obliged to, or wish to understand the ESG performance of these companies extremely difficult.
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