EU Sustainability Law Update: Time Warning, Central Database Affirmed, Mid-Size Companies Affected

Here’s a roundup of news and commentary related to the new European Union Corporate Sustainability Reporting Directive.

Time Magazine Tells North American Readers to Pay Attention to the New Law
EU Parliament Passes One-Stop Access to Financial Sustainability Information
EU Law May Challenge Medium-Size Companies
Will EU Law Create New Technology Category?

This is a periodic update on media, law firm, and management consulting firm coverage of the new European Union Corporate Sustainability Reporting Directive. It was published and distributed in the ESM e-newsletter before publication of this late-breaking report by Fortune’s executive editor, Peter Vanham, reporting from a Brussels conference in the Fortune daily CEO e-newsletter.

He writes that while ESG detractors in the US have “basically won” round one on Environmental, Social, Governance, the EU Corporate Sustainability

Reporting Directive may be changing the conversation. In fact, one manufacturing executive speaking anonymously, says, “It’s freaking them out...My colleagues in the US used to think [the EU ESG rules] won’t apply to us,” a Europe-based US manufacturing executive is quoted saying at a Page Society ESG panel Vanham attended in Brussels. Vanham quotes him as saying, “au contraire, they do apply to us.” The EU’s rules, "which become active in 2024 for multinationals, 'are a really good argument' for getting his US-based colleagues on board with ESG standards'," the executive says, according to Vanham.

Meanwhile, Vanham reports, “'In the US, the polarization of ESG is making the acronym a no-no even for its fans." As was reported earlier in the CEO e-newsletter, "a full half of Fortune 500 CEOs now believe ESG issues are 'unduly impacting business decisions.’ And that sentiment, he reports, "is trickling down to the chief sustainability officers in charge of ESG. Participants in a Fortune Impact Initiative call on Tuesday, which took place under Chatham House rules, admitted as much. ‘We don’t talk about ESG anymore, and 'the term [ESG] does get in our way' were common refrains."

Vanham flatly states that “the EU’s regulatory tsunami on ESG will give US multinationals no choice but to embrace and track ESG principles, regardless of what executives call them. That is the take-away from two ESG conferences I attended this week—one on each side of the Atlantic.”

In other ESM news on the EU CSRD, Time magazine online warns North American business readers to take the new European Union Corporate Sustainability Directive seriously...European Union agrees on single access point for company information...Sustainability issues will present challenges to mid-size companies...Will the law create a new technology category for compliance?

Time Magazine Tells North American Readers to Pay Attention to the New Law

Time magazine reports recently on the EU law, telling readers it “will soon affect companies around the globe. That will likely include more than 3,000 US and 1,300 Canadian companies, according to an analysis shared by the Global Reporting Initiative (GRI), an international standards organization whose work has informed the new EU directive. Any company that isn’t paying attention risks being left unprepared.

EU Parliament Passes One-Stop Access to Financial Sustainability Information

As reported by Edie, a UK sustainability organization, “Representatives of the European Parliament and EU member states on May 23 agreed on an EU regulation to establish a single point of access for individuals and companies to digitally and freely access financial and sustainability-related information about European companies.” This will make it easy for analytics companies to access data for advanced analysis to monitor ESG (environmental, social, governance) practices. Some reports suggest it may take until 2027 for the full database to be built, leaving room for analytics companies to help in the meantime, as most of the content will be available before then on company web sites.

EU Law May Challenge Medium-Size Companies

This report in Breaking Latest News says that while larger companies have the experience and resources to deal with the new EU corporate sustainability reporting requirements, the challenge will be greater for the companies with 250 to 500 employees with fewer resources and experience in ESG reporting. The article also notes that the EU government anticipates that the sustainability reports can be audited by the same organizations that conduct financial audits, although will allow for other types of auditors and notes the need for new training.

Will EU Law Create New Technology Category?

Sweep, the a carbon and ESG management platform, has launched Sweep for Compliance, what it calls “the first solution for reliable, transparent, and audit-ready reporting in compliance with the EU’s new Corporate Sustainability Reporting Directive (CSRD).” The first version appears to focus mostly on environmental reporting. Other Enterprise Engagement technologies also are emerging to support the "S" or social of ESG, which comprises customers, employees, supply chain and distribution partners, and communities.

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