- Today, the European Parliament voted on a cross-party motion to reject the proposed European Sustainability Reporting Standards (ESRS). This indispensable piece of Europe’s sustainable finance agenda will ensure businesses identify the sustainability of their operations and transparently convey ESG information to investors and consumers.
- The resolution for rejection did not gather majority support, with MEPs voting for the private sector to play its part in the journey to a sustainable, just economy.
- The ESRS are set to come into force before the end of the year. Large companies will identify and disclose the sustainability of their operations through the ESRS criteria starting from beginning of 2024.
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In July, the European Commission adopted the ESRS as a delegated act to the Corporate Sustainability Reporting Directive (CSRD), following an open consultation that received extensive feedback from the private sector, NGOs and international organisations. The ESRS passage is in its last stage – a two-month scrutiny period in the European Parliament and the Council. Last week, an EPP-Renew motion was tabled in the Parliament to object to the adoption of the standards, calling for a plenary vote.
Today, with 359 votes against and 261 in favour, the motion has been rejected. The ESRS will now be formally adopted before the end of the year and shortly after published in the official Journal of the European Union. Large companies will start assessing their operations through the ESRS criteria starting January 2024 and disclosing their information accordingly by 2025.
The ESRS will require EU companies and financial institutions to self-assess the sustainability of their operations and disclose relevant information for investors and financial market participants. The ESRS will also ensure that European companies are actively assessing the financial risks stemming from climate change, future-proofing business operations ahead of the transition to a greener market. Although the ESRS had been watered down in July, before the Commission’s adoption as a delegated act, the reporting standards would still provide the right conditions for competitiveness between sustainable businesses to thrive.
Today’s positive vote in Parliament has confirmed the importance of climate regulations that promote transparency as part of the necessary conditions to achieve competitiveness within and outside the European market. This comes in the context of criticism that sustainability reporting would hinder Europe’s competitiveness. The recently published SME Relief Package and the announced 25% cut in reporting requirements have been presented as initiatives to support European businesses. But today, Parliament has expressed its support for disclosing comparable and comprehensive sustainability information to channel investments to green businesses.
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Jurei Yada, Programme Lead, EU, Sustainable Finance, E3G said:
“Today’s vote confirms Europe’s commitment to corporate transparency and informed decision-making for the transition to a just and sustainable economy. The last-minute calls to reject and water down the sustainability standards were an attempt to instrumentalise businesses and SMEs to justify inaction. Businesses and SMEs need support and guidance to seize the opportunities of this transition.”
Tsvetelina Kuzmanova, Senior Policy Advisor, Sustainable Finance at E3G said:
“Amid international backlash to corporate sustainability reporting, Europe held the fort for sustainable businesses today. Standardised, transparent, and comparable data will not just guide companies in their transition but inform investors and consumers.”
Available for comment
Tsvetelina Kuzmanova, Senior Policy Advisor, EU Sustainable Finance
m: +32 (0) 483 98 96 51 tsvetelina.kuzmanova@e3g.org
Notes to Editors
- E3G is an independent climate change think tank with a global outlook. We work on the frontier of the climate landscape, tackling the barriers and advancing the solutions to a safe climate. Our goal is to translate climate politics, economics and policies into action. About – E3G
- For further enquiries email press@e3g.org or phone +44 (0)7783 787 863
