What do the CSRD delays mean for you?

What do the CSRD delays mean for your business? This article is important if you’re based in Europe or do a lot of business there.

The European Commission’s agenda for 2024 has included plans to delay elements of the landmark new regulations governing ESG reporting. 

The Commission had been planning extensive ESG reporting requirements across the EU by the middle of the decade. Now, some of these requirements will not come into force until mid-2026.

It’s a bit technical:

• The delays will impact parts of the new European Sustainability Reporting Standards (ESRS). 
• A first set of ten reporting standards – more general, covering elements like climate change as a whole – were adopted in July of this year. The delays are separate from this initial list. 
• Instead, the delay affects a proposed list of industry-specific standards due to come into force in mid-2024. There is now a two-year delay, and this list won’t arrive till mid-2026.
• The ESRS is a crucial component of the wider Corporate Sustainability and Reporting Directive (CSRD). Enforcement of the CSRD is not affected by this delay.

Yes. The same delay applies to companies headquartered outside the EU if they have an annual turnover inside the EU of €150 million or more.

For many businesses across the massive economic bloc, yes, this is good news. Ultimately, it depends on how prepared a company felt it was for ESRS to begin with. 

This has varied depending on the industry or the country in question, but warning signs had started to surface in the build-up to ESRS and CSRD becoming a reality.

Basically, companies were scared that they did not have, or would not find, the expertise and capacity to meet the stringent new reporting requirements from the get-go.

A 2023 survey by the Compliance Insitute revealed that 

• 41% of companies said they would struggle to provide the data required.
• 60% said the new rules would have a massive impact on their business.
• 50% said they didn’t know they would be independently audited as a requirement of the CSRD.
• 7% said they needed help understanding the new rules.

The new rules are a first of its kind worldwide, and they have created a vacuum of ESG and sustainability experts who can accurately manage the data and convey it in a way that makes sense to regulators. 

With news that the more specific, technical reporting aspects are being pushed back two years, many companies will likely consider it some much-needed breathing space.

Two years isn’t long, especially when sourcing the right people at the governance level to manage the mammoth reporting task. It may feel like breathing room now, but before long, the pressure can quickly ramp up again. 

What’s more – the EU has become somewhat famous for its lack of clarity around complex directives like this. And it remains the case that as long as there’s a delay in industry-specific standards, confusion is possible. Companies could simply not know what exact standards they have to meet, leaving them unable to strategies thoroughly. It’s one of many teething issues the EU’s ambitious climate goals haven’t quite solved yet.

You can find the European Commission’s official 2024 plan here.