European Commission Increases Oversight of EU Directive Implementation, Including CSRD
On 30 September 2024, the European Commission announced measures to ensure the full and timely incorporation of EU directives into national legislation across Member States. Special emphasis has been placed on the transposition of the Corporate Sustainability Reporting Directive (CSRD), as delays in this process could hinder the EU's goals for sustainable growth and transparency.
Concerns Raised for EU Member States
The Commission has issued formal notices to Member States that have not provided information on the full transposition of five directives in areas such as:
- justice;
- financial stability;
- energy;
- environmental protection.
These countries have been given two months to respond and complete the process.
Special Focus on CSRD
The Commission has initiated proceedings against countries that have failed to meet their obligations to formally adopt CSRD and other related directives:
- the Accounting Directive — 2013/34/EU;
- the Transparency Directive — 2004/109/EC;
- the Audit Directive — 2014/56/EU, as amended by the Corporate Sustainability Reporting Directive (CSRD) — Directive (EU) 2022/2464.
Seventeen Member States have not yet reported the full incorporation of CSRD provisions into their national legislation — Directive (EU) 2022/2464. These include Belgium, Germany, Greece, Spain, Cyprus, Latvia, Luxembourg, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Finland, the Czech Republic, and Estonia.
CSRD: Requirements and Timelines
CSRD establishes new standards for large and publicly listed companies (excluding micro-enterprises) to report on their social and environmental risks and impacts on society and nature. These standards, effective as of 1 January 2024, aim to provide investors and stakeholders with transparent information to assess companies' sustainability performance.
The deadline for CSRD transposition expired on 6 July 2024. In the absence of transposition, there is a risk of insufficient harmonisation of sustainability reporting across the EU, which may limit investors' ability to factor in sustainability performance when making decisions.
Conclusions and Next Steps
The Member States concerned have been given two months to respond to notifications and complete the CSRD transposition process. If they fail to act, the Commission may issue a reasoned opinion, marking the next stage in infringement proceedings.
