ICOS Legal Counsel and Governance Executive James Doyle was in Brussels this week to make a presentation on the Corporate Sustainability Reporting Directive.
The new directive will be transposed into Irish law in the coming months with a phased implementation thereafter. Large businesses including many co-operatives are already laying the groundwork to comply with this complex new legislation.
As a component of the European Union Green Deal the CSRD aims to further enhance the disclosure by businesses of climate and environmental data. The directive puts sustainability reporting on a par with financial reporting for the first time ever.
Companies and co-operatives that are in scope will be required to report annually in their management/directors’ report on environmental, social and governance, or ‘ESG’, matters.
That reporting will have to align with uniform and mandatory EU wide standards to be known as the ‘European Sustainability Reporting Standards’.
For co-operatives in the agri-food space which meet two out of three thresholds (turnover of €40m, balance sheet of €20m, employee headcount of 250), 2025 will be the first full year in which sustainability performance will be measured and then reported on from 2026 onwards.
In his presentation to the COGECA Tax & Legal Working Party meeting, Mr. Doyle referenced the “frustrations of ICOS member co-operatives in unpicking the long list of data points which potentially apply to their operations and value chains. For co-op management preparing for 2025 many questions remain unanswered. Questions on the practical requirements of a given reporting standard and also on determining what is material for reporting and what is not.”
Also highlighted at the meeting attended by representatives of co-operatives from other member states was the onus that will be placed on smaller co-operatives, falling outside of the formal scope of the Directive, to disclose relevant data to their larger ‘in scope’ trade partners. This is because the Directive and reporting standards require a broader picture of the sustainability impacts arising across the value chain.
“The Commission expressed an ambition to ease the cost and administration burden for smaller businesses. The standards have now been revised. This is some good news. That said there is the question of whether the revisions go far enough. The task of navigating these more proportionate standards remains. And the clock is ticking. The Commission needs to publish drafts of the complete set of standards. In parallel, our members need user friendly guidance on applying the standards to their business operations, procedures and various other aspects that come under the remit of the Directive. This is critical if management teams, and co-op boards are to have any chance of discharging their sustainability reporting obligations in a timely and meaningful manner.”
21 Nov 2023