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On 14 December 2022, the European Union published a new regulation requiring companies to report regularly on the impact of their activities on people and the environment. We provide answers to its main key points:
On 14 December 2022, the European Union published a new regulation requiring companies to report regularly on the impact of their activities on people and the environment. We provide answers to its main key points:
It is Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU.
To bring sustainability reporting in line with financial reporting, in response to the exponential increase in demand for sustainability information that has occurred in recent years (especially from the investment industry), allowing access to reliable and comparable data.
These are the main changes it introduces:
This new rule on corporate reporting on sustainability will force large companies to report regularly on the impact of their activities on the environment, human rights and the social sphere.
It aims to end the greenwashing of some companies, strengthen the social market economy in the EU and lay the groundwork for global sustainability standards.
In addition, this new legislation will eventually bring sustainability reporting in line with financial reporting, giving the public access to reliable and comparable data.
The rule enters into force 20 days after its publication in the Official Journal of the European Union. This publication took place on 14 December 2022.
This standard will be mandatory for companies in the following 3 phases:
They will be subject to independent audits and certification processes. In addition, digital access to sustainability information is guaranteed.
Compared to around 11,700 companies covered by the previous rules, the new Directive will apply to almost 50,000 companies in the EU.
Delegated acts: non-legislative acts adopted by the Commission to supplement or amend certain non-essential elements of a legislative act. The Commission also consults experts, including experts appointed by each Member State, before adopting delegated acts.
EFRAG: an entity that advises the European Commission on the adoption of international financial reporting standards.