EU: Due diligence reporting could hit sooner than expected

Non-EU companies could be caught by the European Union's Corporate Sustainability Reporting Directive as early as 2024, rather than in 2028.

Why it matters: This means that non-EU companies that have issued stocks and bonds in the EU could be within scope from as early as next January.

By the numbers: Around 10,000 non-EU companies are likely to be affected by the CSRD, with roughly 3,000 US companies expected to be impacted.

The big picture: The CSRD will require companies to report on social and environmental impacts, and EU Member State governments will need to transpose the CSRD into national law.

What's next: The EU is also working on other sustainability-related legislation, including the Corporate Sustainability Due Diligence Directive and legislation on products made with forced labor.

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Additional information:

The Corporate Sustainability Reporting Directive requires management to inform “workers’ representatives at the appropriate level” and to discuss “with them the relevant information and the means of obtaining and verifying sustainability information.” Issues that must be discussed include:   

“Working conditions, including secure employment, working time, adequate wages, social dialogue, freedom of association, existence of works councils, collective bargaining, including the proportion of workers covered by collective agreements, the information, consultation and participation rights of workers, work-life balance, and health and safety.”

Links:

https://www.bloomberg.com/news/articles/2023-11-10/eu-listed-securities-face-review-as-esg-rules-hit-multinationals?sref=0XF2cxJu#xj4y7vzkg 

https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en 

https://www.refinitiv.com/perspectives/regulation-risk-compliance/how-many-non-eu-companies-are-required-to-report-under-eu-sustainability-rules/ 

https://dart.deloitte.com/USDART/home/publications/deloitte/heads-up/2023/csrd-corporate-sustainability-reporting-directive-faqs