From edie

The European Commission has adopted new measures to mandate enhanced environmental reporting, in a move that will affect tens of thousands of larger businesses.

The Commission voted on Monday (31 July) to adopt the new European Sustainability Reporting Standards (ESRS). These Standards provide more detail on the Corporate Sustainability Reporting Directive adopted last year, while also updating them to align with new international climate reporting standards issued in June.

Under the ESRS, large businesses will need to enhance their environmental disclosures by embedding them in annual reports from 2024. The Standards will then be mandated for medium-sized businesses in phases through to 2026.

Companies will need to conduct a materiality assessment to determine which environmental issues are most material to their operations and value chains. The principle of ‘double materiality’ applies; companies will need to assess both their own impact and their exposure to the impact of risks.

Any company which does not deem climate mitigation as material to their business will need to explain why. For other topics, including biodiversity and water, companies can omit disclosures not deemed material with only a “brief explanation”.

These aspects of the Standards represent a significant change from original proposals from the EU’s standards bodies, which had recommended mandatory climate impact and risk reporting from businesses in all sectors including finance.

The Standards will now be subjected to a two-month scrutiny period in the European Council, giving member states the chance to recommend changes.