Earlier this month, the EU parliament adopted the new reporting rules for multinational companies, including of course, companies within the fashion and luxury industries. Currently, only 11 700 companies are impacted by reporting requirements. However, the new Reporting Directive will increase this number to 50 000. The Corporate Sustainability Reporting Directive (CSRD for short) will make businesses publicly accountable by forcing them to disclose information on their societal and environmental impact with the aim of ending greenwashing.
What will change?
Presently, the EU regulates reporting through the Non-Financial Reporting Disclosures (NFRD) when dealing with non-financial information. Today this is perceived as insufficient and unreliable since it impacts a small number of companies and its KPIs vary considerably across the board. The NFRD is in turn, adopted by local authorities, in France it is known as the DPEF. As a result, the CSRD aims at extending the scope of companies that will have to comply with this regulation, and introducing more detailed reporting requirements on companies impact on the environment, human rights and society.
The new sustainability reporting requirements will apply to all large companies, non-EU companies with activity in the EU over 150 million euros will also have to comply. Listed SMEs will also be included down the line. This will be done through a phased approach following these steps:
January 2024, large public-interest companies, with over 500 employees which are already subject to the non-financial reporting directive (for reports due in 2025)
January 2025, large companies that are not currently subject to non-financial reporting, with over 250 employees and/or 40 million euros in turnover, and/or 20 million euros in total assets (for reports due in 2026)
January 2026, listed SMEs and other undertakings (for reports due in 2026).
Finally, the new regulation will closely follow EU climate goals criteria, and as such will be subject to independent auditing and certification at EU and local levels.
European Parliament - https://www.europarl.europa.eu/news/en/press-room/20221107IPR49611/sustainable-economy-parliament-adopts-new-reporting-rules-for-multinationals