ESRS update: Standards for sectors and non-EU companies postponed by two years – EFRAG launches consultation for SME ESRS

The sector-specific sustainability standards (ESRS) originally planned for June 2024 have been delayed by two years. The European Parliament's Legal Affairs Committee has approved a corresponding proposal by the EU Commission to extend the deadline for the adoption of these sector-specific ESRS to June 2026. This should give companies the opportunity to focus on implementing the first set of general ESRSs first. It will also give EFRAG time to develop the quality standards.

However, the committee members suggested that the Commission should publish eight sector-specific reporting standards as soon as they are finalised before the deadline. In addition, information on the progress and timetable for the development of the standards should be provided at least once a year.

As the reporting obligations for non-EU companies with a turnover of more than 150 million euros will not apply until 2028, the deadline for the adoption of the general sustainability reporting standards for companies from third countries will also be postponed until 2026.

Consultation launched on ESRS drafts for SMEs

There is also news regarding the "slimmed-down" reporting standards for SMEs. On 22 January 2024, EFRAG published the drafts for two standards for consultation (until 21 May 2024). The draft ESRS LSME is aimed at publicly listed small and medium-sized enterprises, of which around 140 are subject to reporting requirements in Germany. In addition, the reporting simplifications also apply to around 1,000 small and non-complex institutions, captive insurance companies and captive reinsurance companies

All other non-capital-market-oriented SMEs can voluntarily prepare a sustainability report. EFRAG has developed a voluntary reporting standard for this target group, the ESRS VSME (Voluntary Sustainability Reporting by SMEs). The aim is to harmonise and facilitate the sustainability reporting of potentially several thousand SMEs. With the help of the ESRS VSME, the flood of ESG questionnaires from lenders or large companies as customers of SMEs could be stemmed.

More information on LSME and VSME.