Insider Brief:
- The European Central Bank has released suggested amendments to European Commission legislation on sustainability reporting released in February.
- The European Commission had aimed to limit reporting requirements to firms with more than 1,000 employees and €50 million in turnover.
- The European Central Bank suggests that firms with 500 or more employees also be subject to sustainability reporting requirements.
The European Central Bank released an opinion on May 8 on European Commission (EC) legislation seeking to remove sustainability reporting requirements for 80% of companies, ESG Today reported.
Removing the Corporate Sustainability Reporting Directive (CSRD) requirements could endanger the European Union’s sustainability objectives and increase risks to investors and the economy, the opinion stated.
The EC had released an omnibus legislation package in February which including reduction of sustainability reporting requirements for companies, as well as changes to regulations on the Carbon Border Adjustment Mechanism, the Corporate Sustainability Due Diligence Directive, and the EC’s Taxonomy Regulation.
According to the changes to the CSRD, the new legislation would only apply sustainability reporting requirements to companies with more than 1,000 employees and with revenues larger than €50 million.
The ECB pointed out that “the availability of harmonized, standardised, and reliable sustainability information contributes to the [Savings and Investments Union]’s objectives by ensuring that investors have sound data for their investment decisions.”
The ECB also noted that “physical and transition risks related to the climate and nature crises have profound implications for both price and financial sustainability through their impacts on the structure and cyclical dynamics of the economy and the financial system.”
The bank suggests that the legislation be amended to exclude companies with fewer than 1,000 employees from reporting requirements, and include companies with 500 employees or more. However, reporting requirements should be simplified and be “proportionate and relevant to the capacities and the characteristics of such undertakings and to the scale and complexity of their activities.”
