Thousands of Companies to Be Affected by New EU Rules

According to The Wall Street Journal, thousands of American, Canadian, and British companies will face new rules on sustainability reporting due to the upcoming Corporate Sustainability Reporting Directive (CSRD) set forth by the European Union (EU).

Earlier this year, CMMOnline reported that the EU was taking steps to hold companies accountable for claims made regarding the sustainability or green nature of their products or services. EU officials estimate that more than 50,000 European companies will be held responsible by the CSRD. But according to estimates by financial data firm Refinitiv provided to The Wall Street Journal, at least another 10,000 companies outside the EU will be affected. Roughly a third of those companies are located within the United States. Another 13% are Canadian and 11% are British.

Falling under the regulations of the CSRD are companies outside the EU that have the following:

• Listed securities on a regulated EU market
• An annual EU revenue of more than EU€150 million (approximately US$165 million)
• An EU branch with net revenue of more than €40 million (approximately $44 million)
• An EU subsidiary meeting at least two of these three criteria: more than 250 EU-based employees, a balance sheet above €20 million (approximately $22 million), or local revenue of more than €40 million (approximately $44 million).

The draft of the CSRD includes 82 annual disclosure requirements, covering disclosures such as a company’s greenhouse gas emissions, alignment with the United Nations’ 2015 Paris Agreement on reducing such emissions, and pollution of waterways. Companies will also need to have a third party audit their data.

“EU companies already have experience of mandatory ESG (environmental, social, and governance) disclosure requirements,” Donato Calace, senior vice president of accounts and innovation at analytics firm Datamaran, told The Journal. “The vast majority of U.S. companies don’t have this experience and still see ESG as a communication and PR exercise, rather than regulatory disclosure, so this process will be a steeper learning curve for them and a more difficult task.”