EU Updates - March
Draft ESRS for SMEs open for Feedback until May 21st
Following the publication of the European Commission’s Delegated Act on the first set of European Sustainability Reporting Standards (ESRS) on 31 July 2023, large companies will be asked to report in compliance with the ESRS starting from January 2024. Click here to access the first set explanation on ESRS Q&A Platform released last February 6th.
Subsequently, to the first batch of Standards, the European Financial Reporting Advisory Group (EFRAG) has developed a series of Sustainability Standards for SMEs.
In particular, EFRAG developed Sustainability reporting standards both for listed SMEs (LSMEs) and voluntary sustainability reporting standards for non-listed SMEs (VSMEs).
The ESRS LSME are expected to become effective on January 1, 2026, with a two-year opt-out option. The ESRS LSME aims to establish reporting requirements suited to the size and complexity of public-interest SMEs, promoting access to finance and preventing discrimination by financial markets through standardized sustainability information.
The VSME ED offers a simplified reporting tool to help non-listed micro-, small-, and medium-sized enterprises respond to sustainability information requests from business partners.
The role of large undertakings, that have already engaged with sustainability reporting practices and bear a longstanding experience from relevant collaborative actions with other companies in their value chain, is considered a key element in the current process of development of VSME by EFRAG. For this reason, building on our members’ experience we kindly invite CSR Europe’s members to provide their feedback through the public consultation accessible here that will be open until 21 May 2024.
Moreover. EFRAG introduced a series of educational videos dedicated to the ESRS LSME ED and VSME ED, now available for public consultation from 22 January 2024 until 21 May 2024.
Stay tuned for CSR Europe’s activities related to the development of the ESRS in 2024 namely:
For more information:
Contact Morris Massarutto
The Antwerp Declaration for a European Industrial Deal
On 20th February, 73 industry leaders presented the Antwerp Declaration to Belgian Prime Minister, Alexander De Croo and Commission President, Ursula von der Leyen.
384 companies and organization endorsed the Declaration, expressing their support for a European Industrial Deal to complement the Green Deal and keep high-quality jobs for European workers in Europe.
The Declaration outlines ten specific actions, urging EU member state governments, the upcoming European Commission, and Parliament to prioritize the industrial agenda in the new European Strategic Agenda for 2024-2029. The proposed actions are as follows:
Put the Industrial Deal at the core of the new European Strategic Agenda for 2024-2029: a comprehensive action plan is needed to elevate competitiveness as strategic priority and create the conditions for a stronger business case in Europe.
Include a strong public funding chapter with a Clean Tech Deployment Fund for Energy Intensive Industries closely coordinated with a simplified State Aid framework, while respecting the Single Market rules.
Make Europe a globally competitive provider of energy: the next European Commission needs to prioritize new projects for abundant and affordable low-carbon renewable and nuclear energy.
Focus on the infrastructure Europe needs: target the Recovery and Resilience Facility and Structural and Regional Funds to integrate and build a world-class EU Energy, digital, CCUS, and recycling infrastructures as soon as possible, making these Important Projects of Common European Interest.
Increase the EU’s raw materials security through scaling up domestic mining, sustainable processing, and recycling capacity for crucial raw materials, combined with new global partnerships.
Boost demand for net zero, low carbon, and circular products: empower consumers (businesses and private) to choose net-zero and circular products, based on transparent products and environmental carbon footprints.
Leverage, enforce, revive and improve the Single Market for the transition of integrated value chains, including measures to address increased fragmentation caused by national implementation of European legislation.
Make the innovation framework smarter including fostering high-quality science, technological innovation, and collaborative policies that prioritise openness and pragmatic outcomes while embracing innovative approaches like regulatory sandboxes.
A new spirit of law-making: let entrepreneurship thrive to find the best solutions to overcome challenges. Legislation should create incentives for businesses to invest in clean technologies.
Ensure the structure allows to achieve results: install a First Vice-President responsible for the delivery of the European Industrial Deal and for ensuring the seamless integration of legislation and alignment with the agenda of the next European Commission, overseeing the key DG’s for the Industrial Deal in one integrated approach.
The Antwerp Declaration on a European Industrial Deal aligns closely with the Policy Recommendations for the Future EU Leaders 2024-2029 crafted by CSR Europe and its network of members.
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MEPs Adopt New Regulation Setting Ambitious Targets for Nature Restoration
On February 27th, the European Parliament made a landmark decision by adopting the EU Nature Restoration Law aimed at environmental restoration within the EU. This ambitious regulation mandates that Member States restore at least 20% of the EU's land and sea areas by 2030, with a long-term goal of restoring all ecosystems in need by 2050. It introduces legally binding nature restoration targets, establishes definitions for ecosystems and habitats, and sets forth obligations for Member States to implement effective restoration measures. This includes the protection and restoration of biodiversity in agricultural and forest ecosystems, rivers, and urban green spaces.
The regulation, set to be adopted by the Council following COREPER's approval on November 22, 2023, requires Member States to devise national restoration plans within two years of its enforcement. It also incorporates monitoring and reporting mechanisms to ensure adherence to the restoration targets. This move marks a significant stride towards biodiversity conservation and environmental sustainability in the EU, highlighting the critical role of ecosystem restoration for both nature and society.
However, this positive step towards a greener Europe was contrasted by a significant setback the following day, February 28th, when the EU Council failed to approve the Corporate Sustainability Due Diligence Directive (CSDDD). This failure was marked by abstentions from at least twelve countries, including key players such as Germany and Italy, with Sweden voting against it. This shift, particularly by Germany, represents a reversal in the momentum towards enhancing corporate responsibility for environmental and human rights standards within the EU. The rejection of the CSDDD risks creating a fragmented single market and a patchwork of national laws, undermining efforts towards a unified approach to corporate sustainability. With the Belgian Presidency tasked with addressing these concerns by mid-March, the directive faces potential delays or significant alterations post the EU Parliament Election in June, casting uncertainty on the future of corporate sustainability regulation in the EU.
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EU Strikes Historic Deal to Ban Forced Labour Products from EU Market
In a significant stride towards human rights and ethical labour practices, the European Union Council and Parliament have reached a political agreement on the EU Forced Labour Regulation (EUFLR) on 5th March. This ground-breaking law mandates a ban on products made with forced labour from the EU market. Besides the import and export ban on such goods, the EUFLR introduces several other measures, including compulsory market withdrawal, mandatory recycling, donation, or disposal. The regulation also introduces a risk-based approach for enforcement authorities to assess risks and violations, prioritizing them based on scale, severity, and likelihood of forced labour involvement. It refrains from presuming goods from certain regions are made with forced labour but will establish a list of high-risk areas and products for consideration.
What comes next?
The law is now pending adoption by EU Member States and the European Parliament, with the EU Council expected to vote on March 13th, and the European Parliament at the plenary on 22 April. Upon adoption, the law will come into effect 36 months later. Despite potential resistance, the strong support of EU member states suggests a likely successful adoption.
When it comes to compliance, the EU Commission will lead investigations outside the EU, while Member States will manage internal risks, ensuring that the final decision on banning, withdrawing, or disposing of products involves collaborative efforts across the bloc. Furthermore, the Commission will launch a Forced Labour Single Portal with guidelines for companies and enforcement authorities. Non-compliant firms face fines, but those eliminating forced labour from their supply chains can have their products readmitted to the EU market. In cases where critical products are made with forced labour, companies may withhold the product until demonstrating the absence of forced labour in their operations or supply chains, highlighting the EU's commitment to ethical labour standards worldwide.
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