CSRD

The European Commission this week disappointed sustainable investment organisations by ignoring their collective call for mandatory reporting requirements that would force companies to make public core indicators for their non-financial sustainability performance.

The EU’s top financial markets authority on Thursday invited the European Commission to clarify new sustainability reporting requirements for European companies and to make its legislation for non-financial reporting standards more consistent with other pieces of EU legislation.

Following in the footsteps of the European Parliament earlier this month, the Council of the EU on Monday finalised the legislative process by adopting the Corporate Sustainability Reporting Directive, known as CSRD.

Efama, the trade association for Europe’s fund and asset management industry, welcomed the adoption of what it sees as “a crucial piece of the puzzle”, but warned that the industry still faces years of uncertainty because of the “staggered” adoption between the years 2025 and 2029.

Global asset managers are concerned that the European Union’s regime for corporate sustainability reporting does not fully match their needs and that it could risk making Europe less attractive for international investors as the rules remain to be aligned with an alternative international approach that is gaining traction in international accounting discussions in the IFRS community.

The European Council and the European Parliament have taken an important step towards the implementation of a new sustainability reporting system in Europe. It concerns the Corporate Sustainability Reporting Directive, or CSRD, which requires companies to have their reported sustainability information independently verified.