EU Commission Takes Action Against 17 Member States for Failing to Implement CSRD Rules

The European Commission has initiated infringement procedures against 17 EU member states for failing to incorporate the new Corporate Sustainability Reporting Directive (CSRD) into their national laws. This move underscores the Commission's commitment to ensuring the smooth implementation of the CSRD, a key update to the Non-Financial Reporting Directive (NFRD), which expands the scope of sustainability disclosures from 12,000 companies to over 50,000.

The CSRD requires more detailed reporting on company impacts concerning environmental, social, and human rights issues, as well as sustainability risks. Large public-interest companies with more than 500 employees were required to start complying with the directive from the beginning of 2024, with additional deadlines set for companies with over 250 employees or €40 million in revenue, and listed SMEs in the following years. The directive's full implementation was expected by July 6, 2024, but Belgium, Czechia, Germany, and 14 other states have yet to meet the deadline.

In a statement, the Commission warned that failure to transpose the directive would hinder harmonization of sustainability reporting across the EU, preventing investors from assessing companies' sustainability performance. As part of the infringement procedures, the Commission may escalate legal actions, potentially referring cases to the Court of Justice if member states fail to comply within two months.

In addition to the CSRD, the Commission has also opened procedures against 26 member states for not fully implementing renewable energy permitting provisions under the Renewable Energy Directive. This directive aims for renewable energy to comprise 42.5% of the EU's total energy consumption by 2030, with an aspirational target of 45%. Renewable energy accounted for about 22% of the EU's energy mix in 2021, and only Denmark has fully complied with the transposition deadline set for July 2024.