European Commission Opens Infringement Procedures Regarding Sustainability Reporting Rules | Latham & Watkins LLP

The EU Corporate Sustainability Reporting Directive (CSRD) took effect in 2024, mandating sustainability reporting by a first set of companies in 2025. The deadline for Member States to transpose the Directive into national law was July 6, 2024. However, on September 26, 2024, the European Commission (EC) adopted a package of infringement decisions for untimely transposition of certain EU Directives, including the CSRD. The EC can take legal action against EU countries that fail to implement EU law. The CSRD, which amends the existing Non-Financial Reporting Directive (NFRD), broadens the scope and depth of ESG (Environmental, Social, and Governance) information that must be reported. It requires detailed disclosures on ESG impacts, risks, and opportunities. The Directive applies to large companies, small and medium enterprises, and non-EU parent companies. The EC sent formal notice letters to 17 Member States that have not yet fully transposed the CSRD into national law, initiating the EU infringement procedure. While the EC s actions do not directly affect companies, they may expedite the CSRD implementation process in these Member States. Companies should monitor these developments as Member States might extend the scope of companies required to report under the CSRD or impose additional ESG reporting requirements. Member States now have until November 26, 2024, to respond and complete their transposition into national law. If they fail to do so, the EC may take further steps in the infringement procedure to ensure the CSRD s implementation. Latham & Watkins will continue to monitor developments relating to the CSRD and ESG reporting globally. ENDNOTES: The EC may take legal action against EU countries that fail to implement EU law. For more information on the formal procedure, see the provided link.

Source: jdsupra.com
Published on 2024-10-02