Firms will no longer have to explain financial implications of climate in next year’s EU reports

Plans for a ‘quick fix’ amendment will see CSRD carve-outs extended until at least 2027

Large companies in Europe will no longer have to report on the anticipated financial effects of climate change in their next sustainability statements.

The European Commission plans to adopt a ‘quick fix’ delegated act to ensure that firms don’t face additional disclosure requirements under the Corporate Sustainability Reporting Directive (CSRD) in 2026 or 2027.

Under the current rules, companies mandated to publish their first CSRD reports this year would have to add more information into future versions.

These ‘phase-in’ provisions, outlined in the European Sustainability Reporting Standards, relate to value-chain reporting, comparative information and financial risks.

Essentially, they give breathing room to companies that can’t access sustainability information about their value chains (for the first three years, they can instead simply demonstrate they tried to access it); and acknowledge that, in the first year, firms shouldn’t have to provide past data so that stakeholders can track their progress.

The phase-ins also allow entities to omit information about the anticipated financial risks and impacts of environmental issues on their business in the first year of reporting.

The ‘quick fix’ delegated act should extend these permissions to CSRD reports covering the financial years 2025 and 2026.

The Commission revealed its plans during a discussion with European Parliament this week.

A ‘quick-fix’ delegated act is a tool that can be used to stave off regulatory problems at Level Two, without needing to change the underlying legislation – which requires sign off from European Council and Parliament.

The Commission recently applied ‘quick fix’ amendment to Mifid II, to simplify the requirements and reduce the burden it puts on entities.