EU delays new ESG reporting demands amid industry pushback

THE European Union has agreed to delay additional environmental, social and governance (ESG) disclosure requirements by two years, as it responds to pressure from businesses leaders who warn they are buckling under the weight of regulations.

The EU’s Corporate Sustainability Reporting Directive (CSRD) had set a Jun 30 deadline for companies to report on thousands of data points, to give investors insight into their conduct on ESG issues. 

But EU lawmakers and member states agreed late on Wednesday (Feb 7) to push that timeline back to June 2026 for sector-specific reporting requirements that are still being developed. The decision does not affect a requirement to report general ESG data points from June this year, according to a statement. 

The provisional agreement comes as industry opposition to Brussels rulemaking builds. The mounting tensions between the EU’s ambitious ESG agenda and realities on the ground already threaten to derail the planned implementation of Europe’s toughest ESG rule to date, the Corporate Sustainability Due Diligence Directive.

“Boosting European competitiveness is a core pillar of the Belgian presidency, and one way to achieve this objective is to reduce the administrative burden on companies,” Vincent Van Peteghem, the deputy prime minister of Belgium, which holds the rotating EU presidency, said in a statement. “Today’s agreement limits reporting requirements to the minimum.”

The delay is the latest snag in the EU’s agenda to address threats to the environment by requiring companies to report on their climate and biodiversity impact, as well as how they treat their own workforce and the communities in which they operate.

European firms have lobbied hard to push back against many of the EU’s planned ESG rules, often yielding results. Last year, the European Commission said companies under the scope of CSRD would be free to determine for themselves what constitutes relevant ESG information for reporting purposes.

That angered many investors, who warned relaxing the planned rules risked creating a loophole for greenwashing, making it harder for asset managers to do their jobs.  

The announced delay in implementing the additional CSRD reporting requirements still needs to be formally adopted by both the EU Council and Parliament. Companies will be expected to comply as soon as the new reporting standards are officially published, as the requirements will already have been made public. 

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Roughly 50,000 companies are subject to CSRD, with small and medium-sized – as well as some non-EU – companies among the last groups that will be required to comply. Some foreign firms have responded by suggesting they would delist securities now trading on EU markets, to avoid the directive.

Mairead McGuinness, EU commissioner for financial services and markets, said in a statement that the commission welcomes the provisional agreement which “shows that we hear the concerns of businesses and we are responding”.

While ESG reporting is “critical for the green transition and for transparency towards investors” and will over time become less burdensome, the current “pace of change can be challenging for many companies”, McGuinness said. BLOOMBERG