Europe’s executive arm is proposing a two-year delay in implementing a key element of its sustainable finance framework, as complaints mount that businesses can’t keep up.
The European Commission said cutting red tape is critical to ensuring that the region’s companies remain competitive, according to a document laying out its agenda for 2024. That means extending the deadline for adoption of sectoral elements of the European Sustainability Reporting Standards, or ESRS, currently due to come into force in June 2024.
“This will provide an immediate reduction in the reporting burden for in-scope companies,” small and medium-sized firms, the commission said.
The development is the latest sign of a pushback against Europe’s ambitions to swiftly respond to climate change and social inequality, and steer its economy toward a more sustainable model. An 11th-hour attempt on Wednesday by members of the EU’s parliament to entirely rework the ESRS failed, in a vote of 359-261.
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Other corners of Europe’s ESG framework are also likely to be reworked. The commission is reviewing the Sustainable Finance Disclosure Regulation, its ESG investing rulebook. And this week, the EU announced that it’s seeking stakeholder input as it reconsiders Europe’s taxonomy of sustainable business activities amid a steady drumbeat of complaints that companies can’t meet the welter of new rules within existing deadlines.
The commission has pledged to reduce reporting requirements generally by 25%, and said it will cooperate with the European Parliament and the Council “to ensure all forthcoming proposals take into account the need to reduce burdens while preserving their policy objectives.”
