Tag: corporate sustainability reporting directive
New Cooley Alert: “Comparing the SEC Climate Rules to California, EU and ISSB Disclosure Frameworks”
If you’ve been following the developments in climate disclosure regulation, you know that many U.S. companies may well be subject to disclosure regulations beyond those of the SEC; regulations adopted in the European Union, countries outside the EU and in some states, such as California, could be applicable. And some aspects of those regulations are more sweeping—or just different—than those recently adopted by the SEC. For example, the EU employs the concept of “double materiality,” meaning the impacts of companies’ “business on the environment and society irrespective of the positive or negative effect of such impacts on companies’ financials”; by contrast, the SEC looks at materiality from the perspective of the reasonable investor making investment or voting decisions. In light of these and other differences, companies may face challenges in attempting to implement all of the applicable rules. This essential new Cooley Alert, Comparing the SEC Climate Rules to California, EU and ISSB Disclosure Frameworks, from our ESG group provides some welcome guidance in sorting through the requirements of the different frameworks.
New Cooley Alert: EU Adopts Long-Awaited Mandatory ESG Reporting Standards
As discussed in this excellent new Cooley Alert, EU Adopts Long-Awaited Mandatory ESG Reporting Standards, in January 2023, the European Union adopted the Corporate Sustainability Reporting Directive, which requires EU and non-EU companies that meet certain EU activity thresholds to file annual sustainability reports alongside their financial statements. These reports must be prepared in accordance with European Sustainability Reporting Standards, the first set of which were just adopted by the European Commission on July 31, 2023 and will soon become law and apply directly in all 27 EU member states (but not in the UK). Companies will need to report in compliance with these new ESRS as early as 2025 for the 2024 reporting period (and note that large EU subsidiaries of non-EU companies that meet certain criteria will need to report in 2026 for the 2025 reporting period).
Corporate Sustainability Reporting Directive receives final approval, applicable to US companies with EU presence
On Monday, according to this press release from the Council of the European Union, all 27 members of the European Council voted in favor of the adoption of the Corporate Sustainability Reporting Directive, the last step for the CSRD to become law in the EU. The new rules require subject companies […]
Spooktacular Cooley Alert on the new EU rules on ESG and their application to US companies
Trick or treat! Public companies in the US may be haunted by concerns about the breadth and complexity of the SEC’s climate disclosure proposal, but if you are a US company with a presence in the EU, you may have something new to spook you—and it‘s not a ghost. We’re talking about expansive ESG reporting requirements under new EU rules expected to be finalized this fall.
Will U.S. companies face ESG reporting requirements in the EU?
Some U.S. companies may well have to report on ESG—even if the SEC takes no action on climate or other ESG disclosure proposals! How’s that? According to this press release from the Council of the European Union, the Council and the European Parliament reached a provisional agreement last week on a corporate sustainability reporting directive (CSRD) that would require more detailed reporting on “sustainability issues such as environmental rights, social rights, human rights and governance factors.” The provisional agreement is subject to approval by the Council and the European Parliament. The press release indicates that the requirements would apply to all large companies and all companies listed on regulated markets, as well as to listed small- to medium-size companies (“taking into account their specific characteristics”). Importantly, for companies outside the EU, “the requirement to provide a sustainability report applies to all companies generating a net turnover of €150 million in the EU and which have at least one subsidiary or branch in the EU. These companies must provide a report on their ESG impacts, namely on environmental, social and governance impacts, as defined in this directive.”
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