Corporate Sustainability Reporting Postponement

WHAT IS SUSTAINABILITY REPORTING?

Sustainability reporting is a way for a company to publicly communicate its environmental, social, and governance (ESG) impacts. The goal of this reporting is to improve corporate transparency in the public eye and to allow investors to assess which companies are thinking long-term.

WHAT CHANGES AFTER "STOP-THE-CLOCK"?

1. Corporate Sustainability Reporting Directive (CSRD):

   1. Large companies ("second wave" companies), which were supposed to start reporting in 2026 (for 2025), will be able to do so two years later - only in 2028.
   2. Listed small and medium-sized enterprises (SMEs) ("third wave" companies), which were due to start reporting in 2027, will do so in 2029.
   3. For companies that have already started reporting under the CSRD ("first wave" companies), the deadlines remain unchanged.

2. Corporate Due Diligence Directive (CSDDD):

   1. Transposition deadline: Member States must implement the directive into national law by 26 July 2027 (previously by 26 July 2026).
   2. Start of application for the largest companies: for companies with more than 5,000 employees and a turnover of EUR 1.5 billion, the CSDDD requirements will come into force from 26 July 2028.

3. Simplification measures and their impact:

   1. In addition to the postponement of deadlines, the "Omnibus I" package also includes proposals to simplify reporting requirements:
      1. Reduced amount of data to be reported: it is planned to reduce the number of required data points, making reporting more transparent and less burdensome for companies.
      2. Industry-specific standards eliminated: In order to reduce complexity, it is planned to abandon industry-specific reporting standards.
      3. Increased thresholds for including companies in the scope of the regulation: for example, the threshold for applying the CSRD has been increased to companies with more than 1,000 employees, thereby reducing the number of companies affected by the regulation.

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WHAT DOES THIS MEAN FOR YOUR BUSINESS?

Although the dates have been moved, reporting should not be left until the last minute, as it requires time, planning and a clear framework. While these changes provide additional time, it is important to:

• Continue preparatory work on the development and integration of sustainability reporting processes, despite the postponement of deadlines.
• Keep up with regulatory developments: possible future amendments are still being discussed at the EU level, so it is better to stay informed about the latest news.
• Consider voluntary reporting options: If your company wants to demonstrate its commitment to sustainability, you may want to consider voluntary reporting, which can provide a competitive advantage and strengthen your company's reputation.

HOW TO START PREPARING NOW?

Here are 5 steps to get you started:

1. Find out if the CSRD will apply to your company.
   Are you a large company (250+ employees, 40+ million EUR turnover or 20+ million EUR assets)? Are you listed on a stock exchange?
   If so, start thinking about reporting.
2. Familiarize yourself with the ESRS standards.
   These are the rules that determine what and how to report. It is a good idea to research now what data will need to be collected.
3. Start collecting and organizing data.
   Environmental indicators (electricity consumption, CO₂ emissions), employee well-being, ethical principles in supply chains, etc. – many of these data are currently not in one place in companies.
4. Conduct a materiality assessment.
   Determine which sustainability issues are material to your company's operations. This should be done by involving employees, customers, partners, etc.
5. Collaborate with experts.
   If you don't have internal resources, consider working with external service providers (such as Numeri) to help you develop a reporting plan, organize your data, and compile your report.

Sustainability reporting is becoming an integral part of business – just like financial reporting – and a proactive approach in this area can provide long-term benefits. The earlier you start, the easier it will be to ensure compliance with regulations later. The postponed deadlines are an opportunity to prepare well, but if you are not sure where to start – we can help! Contact us if you want to find out if the CSRD applies to your company and how best to start preparing.

Author: Lonija Grīnfelde, Marketing Specialist