Germany is calling for changes to the European Commission’s Corporate Sustainability Reporting Directive (CSRD), aiming to delay the implementation timeline for smaller companies by two years and reduce the scope of reporting requirements. These proposals were detailed in a leaked letter from senior government officials and further elaborated by Federal Minister of Finance Jörg Kukies in an interview with Börsen-Zeitung.
Germany’s push to alter the CSRD implementation focuses on easing the burden on smaller businesses. Among the key proposals are:
Two-Year Delay: Postponing the start of sustainability reporting for companies currently scheduled to begin in 2026.
Sector-Specific Reporting Exemption: Eliminating the requirement for sector-specific disclosures.
Higher Size Thresholds: Raising the minimum size criteria for companies required to comply, potentially excluding many smaller businesses.
The government argues that these adjustments will streamline sustainability reporting, enabling a more efficient and manageable compliance process.
The CSRD, which replaced the Non-Financial Reporting Directive (NFRD), significantly broadens the number of companies required to report on sustainability. Under the directive:
Companies with over 500 employees began reporting in 2024, with their first reports due in 2025.
By 2026, the directive will apply to companies with more than 250 employees or €50 million in revenue, followed by listed SMEs and non-EU companies in subsequent years.
The directive also mandates companies to report on their impact on the environment, human rights, social standards, and sustainability risks, based on the European Sustainability Reporting Standards (ESRS).
According to Kukies, compliance with the CSRD poses significant challenges for small and medium-sized enterprises (SMEs). He noted that over 13,000 German companies will need to report by 2026, requiring them to disclose roughly 1,100 data points.
This effort is compounded by additional regulations, such as ESG reporting requirements from the European Banking Authority, which demand banks to gather client data, creating further administrative strain.
In the interview, Kukies advocated for a streamlined and internationally coordinated sustainability reporting system. He emphasized the need for:
Unified Data Reporting: Companies should only report each data point once, avoiding redundancy.
Harmonized Regulations: Aligning European and international standards to reduce inconsistencies and inefficiencies.
Kukies stressed that reducing bureaucracy would benefit businesses and ensure sustainability reporting achieves its goals effectively.
Germany’s proposals come as the country approaches federal elections, highlighting the government’s sensitivity to the concerns of SMEs. With the CSRD poised to impact thousands of businesses across Europe, debates over its implementation are likely to continue.
The final decision on these proposed changes rests with the European Commission, as stakeholders across the EU weigh the balance between robust sustainability reporting and practical compliance measures.
Stay informed on the latest ESG insights and updates. Follow us on LinkedIn.
Join the Conversation!
Want to stay ahead in the world of sustainability? Subscribe to our newsletter for the latest insights on ESG trends, sustainability reporting, and innovative strategies.
💡 Be part of the change! Join our ESG Community Forum to share your perspectives, connect with like-minded professionals, and shape the future of sustainable practices.
Comments