New EU Corporate Sustainability Regulation

On 31 July, the European Commission adopted the Delegated Regulation – European Sustainability Reporting Standards (“Delegated Regulation”), which complements the Accounting Directive (2013/34/EU) (“Accounting Directive”), in the context of the sustainability reporting standards. 

The Accounting Directive requires large companies and listed small and mediumsized companies (“SMEs”), as well as parent companies of large groups, to include certain information on sustainability in a dedicated section of their management report (“Sustainability Report” or “Sustainability Statement”), to make it possible to: 

i) understand the company’s impacts on sustainability matters;

ii) understand how sustainability matters affect the company’s development, performance and position. 

The European Sustainability Reporting Standards (“ESRS”) of the Delegated Regulation are now the first set of standards that companies should refer to when preparing the Sustainability Statement.

The ESRS arise in a context where companies have shown that they are not disclosingsustainability information sufficiently and appropriately. This has led to cases of omission of information relevant to investors and stakeholders, difficulties for investors to compare information published by different companies, and inaccuracies in the information disclosed.