17 EU Countries Fail to Meet Sustainability Reporting Deadline

In the European Union, the deadline for member states to implement the Corporate Sustainability Reporting Directive (CSRD) passed on July 6, 2023, with 17 out of 27 countries failing to comply. This directive, proposed in April 2021, aims to enhance sustainability reporting requirements for businesses operating within the EU, replacing the previous Non-Financial Reporting Directive. The European Financial Reporting Advisory Group (EFRAG) was tasked with drafting the European Sustainability Reporting Standards, which were completed between June 2021 and April 2022. The European Commission has now issued a two-month ultimatum for these non-compliant member states, which include Belgium, Czechia, Germany, and others, to enact the necessary legislation. Notably, Finland was initially considered compliant but was later deemed out of compliance by the Commission. The new rules are set to apply from financial years beginning on or after January 1, 2024. The Commission emphasized that without the transposition of these rules, achieving a harmonized approach to sustainability reporting across the EU will be impossible. This lack of compliance could hinder investors' ability to assess the sustainability performance of companies, potentially impacting investment decisions. The situation highlights the challenges faced by member states in aligning with EU directives and the importance of timely implementation to ensure a cohesive regulatory framework for sustainability reporting in the region.