EU approves new sustainability reporting rules for multinationals
16th Nov 2022
The European Parliament approved on November 10, 2022 new rules on corporate sustainability reporting that will oblige large companies to report regularly on the impact of their activity on the environment, human rights and the social sphere.
The aim is to put an end to the greenwashing of some companies, strengthen the social market economy in the EU and lay the groundwork for global sustainability standards.
In addition, this new legislation will eventually bring sustainability reporting in line with financial reporting, giving the public access to reliable and comparable data.
Scope of application
These new rules will apply to all large EU companies (whether listed or not). SMEs listed on the stock market will have more time to adapt to the rules. In addition, non-EU companies with a turnover of more than EUR 150 million in the EU will also have to comply with this legislation.
To ensure that companies provide reliable information, they will be subject to independent audits and certification processes. Digital access to sustainability information is also guaranteed.
Compared to around 11,700 companies covered by the current rules, the new Directive will apply to almost 50,000 companies in the EU.
The Council plans to adopt the text on 28 November 2022. It will then be published in the Official Journal. It will enter into force twenty days and the rules will start to apply between 2024 and 2028:
- January 1, 2024 for large public-interest companies (more than 500 employees) already subject to the non-financial reporting directive, which will have to deliver their reports in 2025;
- January 1, 2025 for large companies not subject to the non-financial reporting directive (more than 250 employees and/or a turnover of 40 million euros and/or 20 million in total assets), which will be required to report in 2026;
- January 1, 2026 for listed SMEs and other companies, which must report in 2027. SMEs will be able to delay until 2028.
Source: European Parliament.