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The European Securities and Markets Authority is seeking public input on the implementation of the Corporate Sustainability Reporting Directive. Comments are being sought from a wide range of stakeholders and the public, with a deadline for responses by March 15.
The CSRD, adopted in November 2022, established reporting obligations for both listed and private companies in the EU from 2024. The Directive called for the creation of a European Sustainability Reporting Standard, a detailed process for companies to use to report under the CSRD. The draft ESRS was delegated to the European Financial Reporting Advisory Group. The EU adopted the first version of EFRAG’s ESRS in July 2023, and it will enter into force in 2024.
Initially, the ESRS will only apply to public companies and large private companies, but it will eventually be expanded to include small and medium-sized companies. In addition, the ESRS also applies to non-EU companies that meet certain requirements based on their revenue and presence in the EU. The directive also called for sector-specific standards that would disaggregate the ESRS by industry and require companies within the same sector to report the same information. Enforcement of sector-specific standards and non-EU business standards has been postponed until 2026. There were also calls to reduce the impact of his CSRD on small businesses.
At the same time, ESMA was tasked with drafting guidelines on the enforcement of sustainability information. ESMA is the European Union’s financial market regulator and supervisory authority. While the actual implementation of the CSRD reporting standards will be managed at the national level by the respective authorities of member states, GLESI is intended to be adopted as a uniform standard.
Standard practice in regulation development is for regulators to create a draft proposal, make it available to the public, allow the public to comment on the proposal, review and consider the comments, and then publish the proposal in a final regulation. Publish for approval.
ESMA published the draft GLESI on 15 December 2023 and accepted public comments. ESMA plans to adopt the final GLESI in the third quarter of 2024. Within two months of publication, the respective authorities of the EU Member States have determined whether (i) they are compliant, (ii) they are not compliant but intend to comply, or (iii) they do not comply with the Guidelines; I have no intention of following.
Public comment will close on March 15th.
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