We support the Commission’s review of the Non-Financial Reporting Directive (NFRD) via the proposal for a Corporate Sustainability Reporting Directive (CSRD). CSRD should focus on strengthening and harmonising provisions, and striving to achieve both horizontal and vertical consistency with other EU sustainability reporting regulations.
We welcome the extension of the scope beyond today’s requirements to include all large undertakings (including non-listed ones). This is a sensible approach as comparable disclosures should apply to companies with comparable footprints. However, though we also welcome that micro-companies and SMEs listed on SME Growth Markets and MTFs would be exempted from the ESG reporting requirement, and that SMEs listed on Regulated Markets would benefit from proportional reporting requirements, we are concerned that non-listed SMEs would meanwhile only be subject to voluntary reporting. This approach risks disincentivising companies from going public and could increase de-listings, as requirements on listed SMEs are already high, making any additional costs an important factor. The scope of CSRD should be set to include companies according to their size, not according to how they are financed. To this end, FESE would support the introduction of a voluntary EU ESG disclosure framework for both listed and non-listed SMEs. This would cater to the need for transparency for investors, while placing a more proportionate burden on SMEs.
More broadly, many new ESG reporting requirements have recently been agreed (Benchmarks, Disclosure, Taxonomy) and are now discussed within the CSRD proposal and upcoming files as use-cases for ESG information reported by issuers. It is therefore important to consider streamlining the disclosure requirements under those frameworks to avoid legal uncertainty and a disproportionate regulatory burden where companies need to comply with the diverging or overlapping disclosure requirements of different authorities.