The European Commission has launched infringement procedures against 17 EU Member States for failure to implement the Corporate Social Responsibility Reporting Directive (CSRD) in national law. The CSRD represents a major upgrade to the EU’s Non-Financial Reporting Framework (NFRD), increasing the number of companies required to disclose sustainability information from 12,000 to 50,000 more than 50,000 more reports on the company’s impact in areas such as the environment, human rights and livelihood risks.
The CSRD, which took effect in early 2024, will initially apply to large public interest companies with more than 500 employees. These companies must publish their first reports in 2025. Companies with more than 250 employees or 40 million euros in turnover will follow next year, while listed small and medium enterprises (SME) will be subject to the rules next year . The deadline for EU member states to incorporate the CSRD into their national legislation is 6 July 2024. However, the Commission has indicated that 17 countries, including Germany, Spain, Greece and Belgium, have not fulfilled this responsibility. The Commission concluded in its statement that, unless the CSRD is fully transposed, the EU will not achieve the necessary harmonization in sustainability reporting, preventing investors from properly assessing the sustainability performance of companies. The legal process began with formal warning letters to 17 countries, which took two months to respond and complete the transfer. Failure to comply will result in further action, including referral to court and possible penalties. In a related case, the Commission has also opened infringement procedures against 26 member states for not implementing the provisions of the Renewable Energy Directive. The directive aims to speed up the licensing process for renewable energy projects and sets a target for renewable energy to reach 42.5% of the EU’s energy consumption by 2030. Only Denmark has done so mandate by the end of July 2024. Currently, the EU’s energy mix is 22%, and the mandate encourages member states to aim for 45% of renewable energy.