Jurisdiction
For products sold in the EU
Law Summary
This EU directive significantly expands sustainability reporting requirements for large companies and listed SMEs. It mandates detailed disclosure on environmental, social, and governance (ESG) matters, including supply chain impacts, using mandatory European Sustainability Reporting Standards (ESRS). Auditing of reported sustainability information becomes compulsory, increasing transparency and accountability.
Law Obligation
The Directive mandates extensive sustainability reporting, including details on the company’s business model, strategy, governance, risks, targets, impacts and progress towards sustainability goals.
Companies must report according to the European Sustainability Reporting Standards (ESRS) which set out long lists of sustainability topics companies should report on.
Adoption of the double materiality principle whereby companies should disclose information on how their business activities affect the planet and its people, and how their sustainability goals, measures and risks impact the financial health of the business.
The obligation to present more detailed sustainability reports, which must, on the one hand, constitute a separate chapter of the business management report and, on the other, be published on the company’s website in digital format and with free access to facilitate its accessibility to the public.
