EU Updates - November
Non-EU ESRS: Background Information
After EFRAG's meeting on October 16, 2024, non-EU companies subject to the CSRD should take note of upcoming sustainability reporting standards called non-EU ESRS.
These standards will be essential for companies with a significant presence in the EU market with revenues exceeding 150 mln € in the EU, and at least:
one EU subsidiary subject to CSRD or
one EU branch with revenues exceeding 40 million €.
The content of the non-EU ESRS will focus on:
impact materiality
relationships between sustainability impacts and business strategy, and
aligning with the goals of limiting global warming to 1.5°C as outlined in the Paris Agreement.
Companies will be required to set time-bound targets, including GHG emissions reduction goals, and be transparent about their sustainability due diligence process.
While the non-EU ESRS will be based on the existing Set 1 ESRS for large companies/groups, adjustments will be made to address the unique scope and content requirements for non-EU entities. A key aspect to be determined is the reporting scope approach, including options to exclude non-EU impacts for certain topics.
Interested stakeholders can look forward to participating in a public consultation on the non-EU ESRS expected in Q1 2025, with the goal of final adoption by the Commission by June 2026. The first reporting period for non-EU companies under the CSRD is expected to begin in 2028 (reports to be published in 2029).
Stay tuned for more updates and opportunities to provide input on the development of these important sustainability reporting standards for non-EU companies.
For more information:
Contact Morris Massarutto
Consultation Version of the European Model Clauses (EMCs) Launched
The CSDDD, which came into force in July 2024, introduces the concept of European Model Contractual Clauses to support companies in meeting their human rights and environmental due diligence (HREDD) obligations. To further assist companies in complying with the directive, the European Commission, in consultation with Member States and stakeholders, will adopt guidance on voluntary model contractual clauses by January 26, 2027.
In October 2023, the first draft of the European Model Clauses (EMCs) was published for electronic consultation, prepared by the European Working Group for Responsible and Sustainable Supply Chains. Following that, the European Working Group has now released the Zero Draft, inviting broader input. The consultation is coordinated by the Responsible Contracting Project (RCP), with financial support from the Initiative for Global Solidarity (IGS), implemented by GIZ on behalf of Germany’s Federal Ministry for Economic Cooperation and Development. While the EMCs were not developed at the EU Commission's request, the European Working Group hopes that they will serve as a helpful resource for the Commission as it formulates the guidance.
This process aims to ensure the final EMCs (EMCs 1.0), expected in early 2025, reflect a balanced and inclusive approach. Stakeholders from companies, civil society, academia, and governments are encouraged to provide feedback through written submissions or by joining virtual workshops and meetings.
The consultation is open until December 2, 2024. We invite you to join this important process and help shape the future of corporate sustainability due diligence in the EU. Share your feedback in writing (by emailing or by completing this form) or by participating in meetings and workshops.
For more information:
Contact Morris Massarutto
