The Corporate Sustainability Reporting Directive (CSRD) is a key component of the European Union’s Green Deal, aiming to set consistent and comprehensive sustainability reporting standards for approximately 50,000 entities. As the first reporting deadlines approach, companies face a dual challenge: managing uncertainties caused by delays and inconsistencies in national transpositions of the directive, while also adjusting to the EU's broader agenda for regulatory simplification and consolidation. 

Two recent developments frame these challenges. First, the French Prime Minister’s October 2024 call for a moratorium on the CSRD reflects growing concerns about the directive’s implementation timeline and regulatory complexity. Second, the European Commission’s November 2024 announcement of plans to consolidate overlapping ESG frameworks, in line with the objectives of the Budapest Declaration, signals a shift towards simplification without compromising substantive obligations.

These dynamics add urgency to compliance efforts. While the CSRD’s harmonized framework promises greater comparability and transparency in sustainability reporting, the current landscape is not entirely consistent. With delays in national transpositions, uneven implementations, and impending deadlines, businesses must act decisively to prepare while remaining adaptable to potential regulatory changes.

This article is written by Bart Ladru ([email protected]) and Alim Abasi ([email protected]). Bart and Alim are both part of RSM Netherlands Business Consulting Services with a focus on Sustainability and Strategy.   

France’s Proposal and the State of National Transpositions

In an interview published on October 20, 2024, French Prime Minister Michel Barnier called for a “moratorium” on the CSRD, suggesting a delay in the directive’s entry into force to alleviate pressures on businesses. While individual member states lack the authority to unilaterally postpone EU directives, Barnier’s statement underscores the broader frustration with the regulatory demands placed on companies.

France’s position has found some resonance among other member states. Germany, for instance, has signaled support for exploring adjustments to the CSRD, while smaller nations like Slovakia and Hungary, as well as countries with traditionally lenient regulatory enforcement such as Ireland, have expressed concerns about the directive’s impact on competitiveness. However, any formal postponement or amendment would require reopening the legislative process at the EU level—a prospect fraught with political and procedural complexities.

Adding to these challenges is the uneven transposition of the CSRD across member states. Despite the July 2024 deadline for national implementation:

  • Fully approved implementations: 15 countries, including France, Denmark, and Italy, had fully transposed the directive into national law by October 2024.
  • Ongoing processes: 9 countries, such as the Netherlands and Germany, were finalizing their legislation.
  • Minimal progress: Spain has held consultations, but five countries (Austria, Greece, Iceland, Portugal, and Malta) have made no significant moves.

In Germany, for example, the transposition of the CSRD is delayed due to political deadlock following the coalition's collapse and disagreements over amendments. With limited time and resistance from certain parties, the law is unlikely to pass before the next election. This creates legal uncertainty for companies, as the CSRD takes effect EU-wide on January 1, 2025, but won’t yet be enforceable nationally. The delay is expected to primarily impact the first wave of companies (large, listed entities and public interest organizations), due to their earlier deadlines. Meanwhile, the reporting obligations of second-wave companies (large companies) are unlikely to be affected, provided the transposition occurs in 2025 without significant changes. Until then, businesses will follow NFRD rules and will leave Germany vulnerable to EU infringement penalties for missing the deadline.

These delays create uncertainty, particularly for companies operating in one of those jurisdictions or across multiple jurisdictions. While the CSRD aims to harmonize reporting requirements, national transpositions introduce variations that complicate compliance efforts.

Divergent Approaches to Transposition

Among the countries that have implemented the CSRD, several have introduced deviations or “gold-plating” measures that go beyond the directive’s baseline requirements:

  • Denmark extended the reporting scope to include Danish commercial foundations and limited liability cooperatives.
  • Finland covers co-operatives and imposes additional digital reporting obligations, requiring sustainability and financial reports to be made freely accessible online.
  • Romania lowered size thresholds for reporting, subjecting a broader range of entities to the directive’s requirements.

In contrast, countries like Ireland have opted for more flexible interpretations, including provisions to exclude commercially sensitive information under specific conditions and allowing sustainability assurance by auditors other than those auditing financial statements.

These variations highlight a core tension in the CSRD’s implementation: while the directive seeks to create a unified framework, national adaptations introduce complexities that undermine its harmonization goals. For businesses, this means navigating a patchwork of requirements, even within a supposedly harmonized system. That said, it is worth noting that only 11 of 30 countries (a little over one-third) have introduced gold plating so far. This suggests that most member states largely adhere to the directive as written. Additionally, most deviations involve relatively minor add-ons rather than significant changes, as the core requirements are firmly established by the directive and cannot be altered through national implementation.

The Bigger Picture: Simplification and Consolidation

Amid the challenges of national transpositions, the European Commission has prioritized simplifying ESG reporting frameworks. In November 2024, Commission President Ursula von der Leyen unveiled plans to consolidate overlapping sustainability regulations—including the CSRD, the EU Taxonomy, and the Corporate Sustainability Due Diligence Directive (CSDDD)—into a single “omnibus regulation.” This initiative, rooted in the Budapest Declaration, aims to reduce administrative burdens while maintaining high standards.

This announcement may also reflect an acknowledgment of the concerns of leaders such as the French Prime Minister and his call for a moratorium to delay the CSRD’s entry into force. Rather than postponement, the Commission’s focus on streamlining requirements could be seen as a response to such sentiments, aiming to address regulatory challenges while keeping the directive’s timelines intact.

The declaration outlines three key objectives:

  1. Reducing reporting requirements by at least 25% by mid-2025.
  2. Implementing competitiveness impact assessments for future legislation.
  3. Consolidating existing frameworks to eliminate redundancies and overlaps.

These proposals reflect mounting pressure to reconcile the EU’s ambitious sustainability agenda with economic priorities. The Draghi Report, released in September 2024, identified regulatory complexity as a key factor undermining the EU’s competitiveness relative to the US and China. With the US potentially rolling back ESG requirements under its new administration, the EU faces growing calls to streamline its regulatory landscape.

While businesses welcome the promise of reduced complexity, von der Leyen has emphasized that consolidation will not dilute the substantive obligations of ESG reporting. Companies must still provide detailed disclosures on sustainability performance, alignment with EU Taxonomy objectives, and due diligence efforts. The focus is on streamlining processes rather than lowering standards.

Lessons from the EU Deforestation Regulation

The Commission’s consolidation efforts echo recent developments with the EU Deforestation Regulation (EUDR). Initially proposed as a simple one-year delay, the EUDR’s legislative revision opened the door to more extensive changes, including additional delays and weakened requirements. This experience underscores the risks of regulatory revisions becoming protracted and politically charged.

For the CSRD, any significant amendments would likely face similar hurdles. With listed companies preparing their first reports, revising the directive mid-implementation would be far more complex than the EUDR changes. Nonetheless, the push for simplification indicates a broader trend toward recalibrating the EU’s ESG agenda.

Forward Thinking

The European Union’s dual focus on implementing the CSRD and simplifying its broader ESG framework presents challenges and opportunities. The uneven national transposition of the directive adds immediate complexity for businesses, particularly those with cross-border operations. However, the Commission’s plans for consolidation offer a potential pathway to greater clarity and efficiency in the long term.

Looking ahead, several factors will shape the regulatory landscape:

  1. Timelines and Deadlines: With the first reporting obligations due in 2025 for certain organizations, companies must prioritize compliance efforts while remaining adaptable to potential changes in requirements.
  2. Consolidation Outcomes: The success of the omnibus regulation will depend on its ability to reduce administrative burdens without compromising the EU’s sustainability goals.
  3. Geopolitical Pressures: As the EU navigates global economic and political shifts, its sustainability agenda will likely evolve to balance competitiveness with environmental objectives.

For now, businesses must prepare for the CSRD while monitoring national and EU developments. The drive for simplification may reduce complexity in the future, but navigating the current uncertainties requires immediate attention and strategic foresight.

The CSRD’s implementation and the broader consolidation efforts signal a pivotal moment for sustainability reporting in the EU. While challenges remain, these initiatives represent a critical step toward a more coherent and competitive regulatory framework, ensuring sustainability remains central to Europe’s economic future.

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