Brussels proposes to force companies to report on their impact on the planet
A new step against climate change. The plenary session of the European Parliament approved this Thursday the new Directive on corporate information on sustainability -with 525 votes in favour, 60 against and 28 abstentions-, which will improve the accountability of some 50,000 companies to the public, by forcing them to report regularly on the effect of its activity on people and the environment.
This measure aims to put an end to the green image washing carried out by some companies -known as ‘greenwashing’ or ‘eco-whitening’– and strengthen the social market economy in the EU in what is a step towards the establishment of global sustainability standards.
The Council plans to adopt the text on November 28 and then it will be published in the Official Gazette to enter into force twenty days later. However, the new rules will start to apply between 2024 and 2028, starting with large public interest companies already subject to the directive on non-financial information.
“Europe is showing the world that it is possible to ensure that finance does not rule the entire world economy”
“Europe is showing the world that it is possible to ensure that finance, in the strict sense of the word, does not govern the entire world economy,” highlighted the report’s rapporteur, the liberal Pascal Durand, during the plenary session.
The new EU sustainability reporting requirements apply to all large companieswhether or not they are listed on the markets securities, as well as non-EU companies with substantial activity in the EU, with a turnover of more than 150 million euros. Listed SMEs will also be covered, but will have more time to adjust to the new rules. In this way, for around 50,000 companies in the EU, the collection and exchange of information on sustainability will become the norm, compared to around 11,700 companies covered by the current rules.
The new legislation tries to cover gaps in the current regulations on non-financial information, considered insufficient and unreliable, and to this end, introduces more detailed obligations on the impact of companies on the environment, human rights and the social sphere, based on on common criteria in line with the EU objectives on climate. The Commission will approve the first standards in June 2023.
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