Word Spreads About Looming Impact of EU Disclosure Law

The leading US business media remains mostly silent about the new European Union Corporate Sustainability Reporting Directive that will require thousands of US companies to publish information on over 80 key stakeholder metrics, including employee turnover and pay equity. Here’s a summary of what has been reported in the last few weeks.

Fortune CEO Newsletter: Companies in the EU Must Disclose Their ESG performance Soon. Are CEOs Ready?
Bloomberg Law: Risk Managers Warn US Clients of EU Rules Shock--ESG Regulation
Above the Law: What General Counsels Need To Know About EU Corporate Sustainability Reporting
Governance & Accountability Institute: Mandated Sustainability Disclosure in the EU Will Impact North American Firms
Grant Thornton: EU ESG disclosure--Impacts to US Entities and How to Prepare
Frontline Defenders of Human Rights: It Supports Essence of CSRD But Criticizes Lack of Status for Human Rights Advocates
Global Legal Post: Greenwashing Risk Is Only Going to Increase
Times of Malta: CSRD in Practice: How Will it Affect Your Organization?

***Fortune CEO Newsletter*: Companies in the EU Must Disclose Their ESG performance Soon. Are CEOs Ready?**

Writing in Fortune’s CEO newsletter, the editors quote Nadja Picard, Global Reporting leader at PwC, and lead author of the Global Investor Survey, “the CSRD could be a ‘game changer’ that ends investors’ skepticism of corporate greenwashing.” That would be a good thing, they write: in PwC’s last survey, conducted in 2022, 87% of investors polled still ‘suspected that corporate disclosures contain some greenwashing.’”

Bloomberg Law: Risk Managers Warn US Clients of EU Rules Shock--ESG Regulation

Frances Schwartzkopff writes: “Corporations in the US are unprepared for the paradigm shift that’s about to hit their reporting requirements as European Union rules kick in, according to the risk managers advising them.”

***Above the Law*: What General Counsels Need To Know About EU Corporate Sustainability Reporting**

Christine Uri writes in Above the Law, “If you are not already involved in your company’s sustainability reporting process, you will need to jump into the fray with both feet. Remember how transformative GDPR (General Data Protection Regulation) was for corporations around the globe with respect to privacy? Well, get ready for corporate sustainability reporting to follow the same trajectory...It is estimated that over 10,000 of the impacted companies will be foreign-owned. Reporting requirements are determined according to thresholds related to EU revenues and presence. Data must be verified by a third party.”

Governance & Accountability Institute: Mandated Sustainability Disclosure in the EU Will Impact North American Firms

“Are you ready for the tsunami of sustainability disclosure requirements coming this year for European Union-based publicly traded and private companies and for North American-headquartered companies?” asks an article published by the Governance & Accountability Institute, Inc. More than 10,000 foreign companies with listings on regulated exchanges in EU countries will be covered by the new rule.”

Grant Thornton: EU ESG disclosure--Impacts to US Entities and How to Prepare

This UK-based financial consulting firms tells clients that “the Corporate Sustainability Reporting Directive (CSRD) will impact many US entities with EU operations. This new regulation aims to standardize and improve sustainability reporting by requiring companies to disclose a broader range of information on their ESG performance and it's imperative for your company to have a plan.”

Frontline Defenders of Human Rights: It Supports Essence of CSRD But Criticizes Lack of Status for Human Rights Advocates

Here are comments from a human rights group: “As the CSRD passed another procedural hurdle following some amendments by the European Parliament’s legal affairs committee (JURI), tdhe organization representing human rights defenders expresses overall approval except for what it believes is insufficient recognition and protections for the rights people of groups and individuals working on the ground to protect worker rights.”

***Global Legal Post*: Greenwashing Risk Is Only Going to Increase**

In an article in the Global Legal Post, by Ben Edwards, Debevoise & Plimpton's Ulysses Smith says, “An organization may have already been very engaged on ESG, but when you shift to a world where there are legal and regulatory requirements, and therefore risks of non-compliance and all that comes with them, that is a transformative driver.” He observes that “The wave of regulation is coming from many directions – Europe, the US, Asia, Latin America – and it has layers of complexity. Just focusing on the major European regulation right now, the Corporate Sustainability Reporting Directive or CSRD, has many dimensions to it and many different triggers that could bring companies, European and non-European, within scope. I think this regulation isn’t really on many companies’ radar screen yet, and for many who are aware of it, there’s a challenge in understanding how they apply to them. Much of what we are doing now is helping clients get their heads around this new regulated environment, what compliance means and what good governance means in this new landscape.”

***Times of Malta*: CSRD in Practice: How Will it Affect Your Organization?**

A recent article reports, “The CSRD expands on the Non-Financial Reporting Directive (NFRD) and aims to make sustainability reporting far more consistent and transparent across all businesses. It addresses shortcomings of the NFRD by introducing mandatory third-party independent assurance of reported information, and more detailed requirements including reporting in the management report, digital tagging of the reported data, and establishing standard reporting requirements.”

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