EU to make large companies disclose their environmental impacts much more extensively; will other nations follow suit?

In a massive win for the environment, the European Union has proposed strengthened laws concerning the transparency of environmental impacts of large-scale businesses operating in the union. These new laws will vastly increase the detailed reporting on environmental, social and governance matters. In addition, this will cover five times as many companies as previous rules did — a change that is exceedingly crucial due to the state of the climate today.

The Corporate Sustainability Reporting Directive (CSRD) was voted into the EU parliament on Thursday, November 10, with overwhelming support — no doubt due to the incessant toil of climate activists over the past few decades. With the EU being one of the largest collective economies in the world and commanding vast global influence, this move could pave the way for other nations to follow suit and participate thoroughly in the green revolution.

The Committee will adopt the first set of standards by June 2023, requiring large-scale businesses to provide much more detailed information on the various impacts of their processes. In addition, this information will be subject to independent auditing and certification, aside from being digitally accessible. This will ensure that the supplied information remains accurate and reliable.

This move will also indubitably trickle down to other economies since the rules dictate that non-EU companies (with a turnover of €150 million in the EU) must comply with these standards. In fact, any company with substantial activity will fall under the purview of these standards, although small and medium enterprises will have more time to adapt.

While the Council will likely officially adopt the CSRD proposal by the end of this month, the 11,700 companies already falling under existing reporting rules will have to produce impact reports by 2025. The 40,000 large-scale businesses that will be added to the reporting list will have to generate their reports a year later, while the remaining smaller companies will have to report by 2027.

This move will undoubtedly spur into motion a new era of accountability that often slips through the gaps. With a handful of years left to reach the Paris climate targets, it remains to be seen what type of environmental and societal reaction these new standards garner, both inside and outside the EU.

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