24 February 2022 The EU Competitiveness Council adopted the so-called general approach to the draft directive on corporate reporting on sustainable development. The new Directive is intended to replace existing EU rules on non-financial disclosure and extend the list of reporting agents. Uniform European reporting standards and their simplified version for smaller units will be developed.
Member States in the compromise text propose a significant extension of the deadline (to 18 months) for the transposition of the Directive and its three-step application by individuals i.e. to activity reports for the financial years from 1 January 2024, 2025 and 2026. This solution is intended to provide more time for individuals to prepare for new reporting requirements.
In the first the new rules would apply only to those entities that are already reporting non-financial information (i.e. large public interest entities above) 500 employees. In the second dates – all other large units, i.e.
meeting any two of the three criteria (balance sheet total above 20,000,000 EUR, net revenue above 40,000,000 EUR, number of employees above 250) whether they are public interest or not. In the third dates – all small and medium-sized stock companies. The scope of the Directive will also be covered by large capital groups.
It is worth noting that mandatory reporting will not cover micro and small and medium-sized non-listed units.
Sustainable development information is to be presented in a separate section in the activity report and will be subject to mandatory verification. Experts will be able to obtain additional expertise in verifying sustainability information. The information will be labelled using developed taxonomy, which will enable their machine reading and analysis – and the entire activity report will be made in XHTML format.
The new Directive is intended to ensure that data disclosed by individuals are comparable and reliable, by applying uniform European standards for reporting sustainable development information and mandatory verification of such data.
The new reporting is intended to allow individuals to have easier access to financing in a market where a strong trend in sustainable financing is created.
Financial institutions should build on new sustainability reporting when assessing units, and this should reduce the administrative burden on entities that would otherwise have to provide a number of data in response to individual requests from banks and other market participants.
The Council's compromise text takes account of most of the comments made by Poland as part of the work on the Directive and in line with the June adopted 2021 the position of the government on this matter. The compromise text drawn up is the basis for negotiations with the European Parliament, which co-decisions on this.
For more information, see the MF website on non-financial reporting.