Sustainability reporting: EU Commission relieves companies of responsibility

The European Commission has presented two delegated acts on sustainability reporting. It aims to reduce reporting costs for companies by more than 30 percent.

The European Commission has adopted delegated acts amending the European Sustainability Reporting Standards (ESRS) and establishing a voluntary reporting standard for smaller companies. Its aim is twofold: to ensure high-quality disclosure and to reduce the administrative burden for businesses in Europe.

The ESRS address environmental, social, and governance (ESG) issues, including climate change, biodiversity, and human rights. They are designed to provide information for investors and other stakeholders so they can understand sustainability risks. The new standards are part of the "Omnibus I" simplification package, which reduces the number of companies that fall within their scope.

Relief for businesses

"The revised ESRS are shorter and clearer, offer new flexibilities, and streamline key processes. For example, they reduce the number of mandatory data points by over 60 percent and the total number of data points by over 70 percent," the Commission promises. It expects companies to reduce their reporting costs by 30 percent.

The voluntary reporting standard provides a uniform framework for sustainability reporting by smaller companies that are not covered by the Corporate Sustainability Reporting Directive (CSRD). "It will make it easier for companies not covered by the CSRD to respond to specific requests for sustainability information from large financial institutions and corporations."

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Recognize voluntary reporting standard

"The first omnibus simplification package has noticeably relieved the burden on craft businesses and other small and medium-sized enterprises. Reporting obligations have been significantly reduced. The European Commission is rigorously continuing down this path with the delegated acts now presented," commented Holger Schwannecke, Secretary General of the German Confederation of Skilled Crafts.

The voluntary reporting standard should therefore be viewed positively. It gives craft businesses the opportunity to limit inquiries about their sustainability to the absolute minimum necessary. Schwannecke demands: "Now it must be ensured that the voluntary reporting standard is recognized throughout the entire business world. Craft businesses must be able to rely on policymakers creating the necessary conditions for this."

Free tool for craft businesses

This also requires adjustments to EU legislation for banks. "Banks need legal certainty that a voluntarily produced sustainability report from an SME meets all requirements. At the same time, craft businesses must not be burdened by their business partners with additional requirements that go beyond the voluntary reporting standard."

The European Parliament and the Council of the European Union now have two months to raise objections to the legal acts. If no objections are raised, they will apply in their current form. Craft businesses can use a free tool to generate their reports.

Future Compass for Crafts: Craft businesses can create sustainability reports using the free tool Future Compass for Crafts.

DHB now also available digitally! Simply click here and register for the digital German Crafts Journal (DHB)!