REPORT on the proposal for a Directive of the European Parliament and of the Council amending Directive 2013/34/EU, Directive 2004/109/EC, Directive 2006/43/EC and Regulation (EU) No 537/2014, as regards corporate sustainability reporting

22.3.2022 - (COM(2021)0189 – C9‑0147/2021 – 2021/0104(COD)) - ***I

Committee on Legal Affairs
Rapporteur: Pascal Durand
Rapporteurs for the opinion (*):
Jessica Polfjärd, Committee on Economic and Monetary Affairs
Kira Marie Peter‑Hansen, Committee on Employment and Social Affairs
Lídia Pereira, Committee on the Environment, Public Health and Food Safety
(*) Associated committees – Rule 57 of the Rules of Procedure

Amendments

• 001-174 (PDF - 347 KB)
• 001-174 (DOC - 112 KB)
• 175-175 (PDF - 514 KB)
• 175-175 (DOC - 145 KB)

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

on the proposal for a Directive of the European Parliament and of the Council amending Directive 2013/34/EU, Directive 2004/109/EC, Directive 2006/43/EC and Regulation (EU) No 537/2014, as regards corporate sustainability reporting

(COM(2021)0189 – C9‑0147/2021 – 2021/0104(COD))

(Ordinary legislative procedure: first reading)

The European Parliament,

– having regard to the Commission proposal to Parliament and the Council (COM(2021)0189),

– having regard to Article 294(2) and Articles 50 and 114 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C9-0147/2021),

– having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

– having regard to the opinion of the European Central Bank of 7 September 2021[1],

– having regard to the opinion of the European Economic and Social Committee of 22 September 2021[2],

– having regard to Rule 59 of its Rules of Procedure,

– having regard to the opinions of the Committee on Economic and Monetary Affairs, the Committee on Employment and Social Affairs, the Committee on the Environment, Public Health and Food Safety, the Committee on Foreign Affairs, the Committee on Development and the Committee on Women’s Rights and Gender Equality,

– having regard to the letter from the Committee on Industry, Research and Energy,

– having regard to the report of the Committee on Legal Affairs (A9-0059/2022),

1. Adopts its position at first reading hereinafter set out;

2. Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

 

Amendment  1

 

Proposal for a directive

Recital 1

Text proposed by the Commission	Amendment
(1) In its communication on the European Green Deal adopted on 11 December 201930 , the European Commission made a commitment to review the provisions concerning non-financial reporting of Directive 2013/34/EU of the European Parliament and of the Commission.31 The European Green Deal is the European Union’s new growth strategy. It aims to transform the Union into a modern, resource-efficient and competitive economy with no net emissions of greenhouse gases by 2050. It also aims to protect, conserve and enhance the Union's natural capital, and protect the health and well-being of citizens from environment-related risks and impacts. The European Green Deal aims at decoupling economic growth from resource use, and ensuring that all regions and citizens of the Union participate in a socially just transition to a sustainable economic system. It will contribute to the objective of building an economy that works for the people, strengthening the EU’s social market economy, helping to ensure that it is future-ready and that it delivers stability, jobs, growth and investment. These goals are especially important considering the socio-economic damage caused by the COVID-19 pandemic and the need for a sustainable, inclusive and fair recovery. In its proposal of 4 March 2020 for a European Climate Law, the European Commission proposed to make the objective of climate neutrality by 2050 binding in the Union.32	(1) In its communication on the European Green Deal adopted on 11 December 201930 , the European Commission made a commitment to review the provisions concerning non-financial reporting of Directive 2013/34/EU of the European Parliament and of the Commission.31 The European Green Deal is the European Union’s new growth strategy. It aims to transform the Union into a modern, resource-efficient and competitive economy with no net emissions of greenhouse gases by 2050. It also aims to protect, conserve and enhance the Union's natural capital, and protect the health and well-being of citizens from environment-related risks and impacts. The European Green Deal aims at decoupling economic growth from resource use, and ensuring that all regions and citizens of the Union participate in a socially just transition to a sustainable economic system so that no person and no place is left behind. It will contribute to the objective of building an economy that works for the people, strengthening the EU’s social market economy, helping to ensure that it is future-ready and that it delivers stability, jobs, growth and sustainable investment. These goals are especially important considering the socio-economic damage caused by the COVID-19 pandemic and the need for a sustainable, inclusive and fair recovery. In its proposal of 4 March 2020 for a European Climate Law, the European Commission proposed to make the objective of climate neutrality by 2050 binding in the Union.32
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30 COM(2019) 640 final.	30 COM(2019) 640 final.
31 Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19).	31 Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19).
32 Proposal for a Regulation of the European Parliament and of the Council establishing the framework for achieving climate neutrality and amending Regulation (EU) 2018/1999 (European Climate Law) [2020/0036 (COD)]	32 Proposal for a Regulation of the European Parliament and of the Council establishing the framework for achieving climate neutrality and amending Regulation (EU) 2018/1999 (European Climate Law) [2020/0036 (COD)]

Amendment  2

 

Proposal for a directive

Recital 2

Text proposed by the Commission	Amendment
(2) In its Action Plan: Financing Sustainable Growth the Commission set out measures to achieve the following objectives: reorient capital flows towards sustainable investment in order to achieve sustainable and inclusive growth, manage financial risks stemming from climate change, resource depletion, environmental degradation and social issues, and foster transparency and long-termism in financial and economic activity33 . The disclosure by undertakings of relevant, comparable and reliable sustainability information is a prerequisite for meeting those objectives. The European Parliament and the Council adopted a number of legislative acts as part of the implementation of the Action Plan on Financing Sustainable Growth. Regulation (EU) 2019/2088 of the European Parliament and of the Council34 governs how financial market participants and financial advisers are to disclose sustainability information to end investors and asset owners. Regulation (EU) 2020/852 of the European Parliament and of the Council35 creates a classification system of environmentally sustainable economic activities with the aim of scaling up sustainable investments and combatting greenwashing of financial products that unduly claim to be sustainable. Regulation (EU) 2019/2089 of the European Parliament and of the Council36 , complemented by Commission Delegated Regulations (EU) 2020/181637 , (EU) 2020/181738 and (EU) 2020/181839 , introduces environmental, social and governance (‘ESG’) disclosure requirements for benchmarks administrators and minimum standards for the construction of EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks. Regulation (EU) No 575/2013 of the European Parliament and of the Council40 requires large institutions which have issued securities that are admitted to trading on a regulated market to disclose information on ESG risks from 28 June 2022. The new prudential framework for investment firms set by Regulation (EU) 2019/2033 of the European Parliament and of the Council41 and Directive (EU) 2019/2034 of the European Parliament and of the Council42 contains provisions concerning the introduction of an ESG risk dimension in the supervisory review and evaluation process (SREP) by competent authorities, and contains ESG risks disclosure requirements for investment firms, applicable from 26 December 2022. The Commission has also announced a proposal on a European Green Bond Standard in its Work Programme for 2021, following up on the Action Plan on Financing Sustainable Growth.	(2) In its Action Plan: Financing Sustainable Growth the Commission set out measures to achieve the following objectives: reorient capital flows towards sustainable investment in order to achieve sustainable and inclusive growth, manage financial risks stemming from climate change, resource depletion, environmental degradation and social issues, and foster transparency and long-termism in financial and economic activity33 . The disclosure by certain categories of undertakings of relevant, comparable and reliable sustainability information is a prerequisite for meeting those objectives. In its Guidelines on reporting climate-related information, the European Commission highlighted the benefits for companies to report on climate related information particularly by increasing awareness and understanding of climate related risks and opportunities within the company, diversifying investor base, creating a lower cost of capital and by improving constructive dialogue with all stakeholders. The European Parliament and the Council adopted a number of legislative acts as part of the implementation of the Action Plan on Financing Sustainable Growth. Regulation (EU) 2019/2088 of the European Parliament and of the Council34 governs how financial market participants and financial advisers are to disclose sustainability information to end investors and asset owners. Regulation (EU) 2020/852 of the European Parliament and of the Council35 creates a classification system of environmentally sustainable economic activities with the aim of scaling up sustainable investments and combatting greenwashing of financial products that unduly claim to be sustainable. Regulation (EU) 2019/2089 of the European Parliament and of the Council36 , complemented by Commission Delegated Regulations (EU) 2020/181637 , (EU) 2020/181738 and (EU) 2020/181839 , introduces environmental, social and governance (‘ESG’) disclosure requirements for benchmarks administrators and minimum standards for the construction of EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks. Regulation (EU) No 575/2013 of the European Parliament and of the Council40 requires large institutions which have issued securities that are admitted to trading on a regulated market to disclose information on ESG risks from 28 June 2022. The new prudential framework for investment firms set by Regulation (EU) 2019/2033 of the European Parliament and of the Council41 and Directive (EU) 2019/2034 of the European Parliament and of the Council42 contains provisions concerning the introduction of an ESG risk dimension in the supervisory review and evaluation process (SREP) by competent authorities, and contains ESG risks disclosure requirements for investment firms, applicable from 26 December 2022. The Commission has also announced a proposal on a European Green Bond Standard in its Work Programme for 2021, following up on the Action Plan on Financing Sustainable Growth.
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33 COM(2018) 97 final.	33 COM(2018) 97 final.
34 Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (OJ L 317, 9.12.2019, p. 1).	34 Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (OJ L 317, 9.12.2019, p. 1).
35 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13).	35 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13).
36 Regulation (EU) 2019/2089 of the European Parliament and of the Council of 27 November 2019 amending Regulation (EU) 2016/1011 as regards EU Climate Transition Benchmarks, EU Paris-aligned Benchmarks and sustainability-related disclosures for benchmarks (OJ L 317, 9.12.2019, p. 17).	36 Regulation (EU) 2019/2089 of the European Parliament and of the Council of 27 November 2019 amending Regulation (EU) 2016/1011 as regards EU Climate Transition Benchmarks, EU Paris-aligned Benchmarks and sustainability-related disclosures for benchmarks (OJ L 317, 9.12.2019, p. 17).
37 Commission Delegated Regulation (EU) 2020/1816 of 17 July 2020 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards the explanation in the benchmark statement of how environmental, social and governance factors are reflected in each benchmark provided and published (OJ L 406, 3.12.2020, p. 1).	37 Commission Delegated Regulation (EU) 2020/1816 of 17 July 2020 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards the explanation in the benchmark statement of how environmental, social and governance factors are reflected in each benchmark provided and published (OJ L 406, 3.12.2020, p. 1).
38 Commission Delegated Regulation (EU) 2020/1817 of 17 July 2020 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards the minimum content of the explanation on how environmental, social and governance factors are reflected in the benchmark methodology (OJ L 406, 3.12.2020, p. 12).	38 Commission Delegated Regulation (EU) 2020/1817 of 17 July 2020 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards the minimum content of the explanation on how environmental, social and governance factors are reflected in the benchmark methodology (OJ L 406, 3.12.2020, p. 12).
39 Commission Delegated Regulation (EU) 2020/1818 of 17 July 2020 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards minimum standards for EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks (OJ L 406, 3.12.2020, p. 17).	39 Commission Delegated Regulation (EU) 2020/1818 of 17 July 2020 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards minimum standards for EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks (OJ L 406, 3.12.2020, p. 17).
40 Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).	40 Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).
41 Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014 (OJ L 314, 5.12.2019, p. 1).	41 Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014 (OJ L 314, 5.12.2019, p. 1).
42 Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms and amending Directives 2002/87/EC, 2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU and 2014/65/EU (OJ L 314, 5.12.2019, p. 64).	42 Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms and amending Directives 2002/87/EC, 2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU and 2014/65/EU (OJ L 314, 5.12.2019, p. 64).

Amendment  3

 

Proposal for a directive

Recital 2 a (new)

Text proposed by the Commission	Amendment
	(2 a) Diversity on company boards might have an influence on decision making, corporate governance and resilience.

Amendment  4

 

Proposal for a directive

Recital 8

Text proposed by the Commission	Amendment
(8) The ultimate beneficiaries of better sustainability reporting by undertakings are individual citizens and savers. Savers who want to invest sustainably will have the opportunity to do so, while all citizens should benefit from a stable, sustainable and inclusive economic system. To realise these benefits, the sustainability information disclosed in undertaking’s annual reports first has to reach two primary groups (‘users’). The first group of users consists of investors, including asset managers, who want to better understand the risks and opportunities that sustainability issues pose to their investments and the impacts of those investments on people and the environment. The second group of users consists of organisations, including non-governmental organisations and social partners, that wish to better hold undertakings to account for their impacts on people and the environment. Other stakeholders may also make use of sustainability information disclosed in annual reports. The business partners of undertakings, including customers, may rely on this information to understand, and where necessary report on, the sustainability risks and impacts through their own value chains. Policy makers and environmental agencies may use such information, in particular on an aggregate basis, to monitor environmental and social trends, to contribute to environmental accounts, and to inform public policy. Few individual citizens and consumers directly consult undertaking’s reports, but they may use such information indirectly such as when considering the advice or opinions of financial advisers or non-governmental organisations. Many investors and asset managers purchase sustainability information from third party data providers, who collect information from various sources, including public corporate reports.	(8) The ultimate beneficiaries of better sustainability reporting by undertakings are public authorities, individual citizens, including workers, and savers, trade unions and workers’ representatives to be adequately informed, and thereby to better engage in social dialogue. Savers who want to invest ethically and sustainably will have the opportunity to do so, while all citizens should benefit from a stable, sustainable and inclusive economic system. To realise these benefits, the sustainability information disclosed in undertaking’s annual reports first has to reach three primary groups (‘users’). The first group of users consists of policymakers and public authorities. The second group of users consists of investors, including asset managers, who want to better understand the risks and opportunities that sustainability issues pose to their investments and the impacts of those investments on people and the environment. The third group of users consists of civil society actors, including non-governmental organisations and social partners, that wish to better hold undertakings to account for their impacts on people and the environment or in the case of worker’s representatives wish to take part in the design of those reports. Other stakeholders may also make use of sustainability information disclosed in annual reports, notably to foster comparability across and within market sectors and assess, in line with Regulation (EU) 2020/852, the respect of the “do not significant harm” principle. The business partners of undertakings, including customers, may rely on this information to understand, and where necessary report on, the sustainability risks and impacts through their own value chains. Policy makers and environmental agencies may use such information, in particular on an aggregate basis, to monitor environmental and social trends, to contribute to environmental accounts, and to inform public policy. Few individual citizens and consumers directly consult undertaking’s reports, but they may use such information indirectly such as when considering the advice or opinions of financial advisers or non-governmental organisations. Many investors and asset managers purchase sustainability information from third party data providers, who collect information from various sources, including public corporate reports.

Amendment  5

Proposal for a directive

Recital 8 a (new)

Text proposed by the Commission	Amendment
	(8a) The market for sustainability information is rapidly growing, and the role of data providers is gaining in importance with the new obligations that investors and asset managers need to fulfil. With the increased availability of disaggregated data, sustainability information should come at a more reasonable cost. The amended Directive 2013/34 is expected to increase the comparability of data and harmonise standards. It is expected that the practices of data providers should converge and that expertise will grow in this area, with a vast potential for job creation. In the event that the review of this Directive concludes that the practices of data providers remain fragmented, rules should be introduced in order to further standardise those practices and increase their reliability.

Amendment  6

 

Proposal for a directive

Recital 9

Text proposed by the Commission	Amendment
(9) There has been a very significant increase in demand for corporate sustainability information in recent years, especially on the part of the investment community. That increase in demand is driven by the changing nature of risks to undertakings and growing investor awareness of the financial implications of these risks. That is especially the case for climate-related financial risks. Awareness of the risks to undertakings and to investments resulting from other environmental issues and from social issues, including health issues, is also growing. The increase in demand for sustainability information is also driven by the growth in investment products that explicitly seek to meet certain sustainability standards or achieve certain sustainability objectives. Part of that increase is the logical consequence of previously adopted Union legislation, notably Regulation (EU) 2019/2088 and Regulation (EU) 2020/852. Some of the increase would have happened in any case, due to fast-changing citizen awareness, consumer preferences and market practices. The COVID-19 pandemic will further accelerate the increase in users’ information needs, in particular as it has exposed the vulnerabilities of workers and of undertaking’s value chains. Information on environmental impacts is also relevant in the context of mitigating future pandemics with human disturbance of ecosystems increasingly linked to the occurrence and spread of diseases.	(9) There has been a very significant increase in demand for corporate sustainability information in recent years, especially on the part of the investment community and civil society. That increase in demand is driven by the changing nature of risks to undertakings and growing investor awareness of the financial implications of these risks. That is especially the case for climate-related financial risks. Awareness is also growing on the risks and opportunities to undertakings and to investments resulting from other environmental and climate issues and from health and social issues, including on child and forced labour. The increase in demand for sustainability information is also driven by the growth in investment products that explicitly seek to meet certain sustainability standards or achieve certain sustainability objectives and to ensure coherence with the ambition of the Paris Agreement, Convention on Biological diversity and Union policies. Part of that increase is the logical consequence of previously adopted Union legislation, notably Regulation (EU) 2019/2088 and Regulation (EU) 2020/852. Some of the increase would have happened in any case, due to fast-changing citizen awareness, consumer preferences and market practices. The COVID-19 pandemic will further accelerate the increase in users’ information needs, in particular as it has exposed the vulnerabilities of workers and of undertaking’s value chains. Information on environmental impacts is also relevant in the context of mitigating future pandemics with human disturbance of ecosystems increasingly linked to the occurrence and spread of diseases.

Amendment  7

 

Proposal for a directive

Recital 9 c (new)

Text proposed by the Commission	Amendment
	(9c) Legislative bodies should provide legal certainty. Undertakings, customers and trade unions, among others, should be allowed to agree upon guidelines that might support the application of this Directive.

Amendment  8

Proposal for a directive

Recital 10 a (new)

Text proposed by the Commission	Amendment
	(10a) The European Green Deal will require behavioural change to achieve its objectives. Consequently, there is a need to move from corporate short-termism, to more sustainable, longer-term decision-making. As a study for DG Justice and Consumers in July 2020 revealed, one of the root causes of corporate short-termism is the regulatory framework1a. Though not sufficient on its own, enhanced sustainability reporting can be an important incentive for more sustainable corporate decision-making and governance. Sustainability reporting is also essential to keep track of the progress made in implementing the European Green Deal.
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	1a Study on Directors Duties and Sustainable Corporate Governance, prepared for DG Justice and Consumers in July 2020

Amendment  9

 

Proposal for a directive

Recital 11

Text proposed by the Commission	Amendment
(11) The report on the review clause of the Non-Financial Reporting Directive (Directive 2014/95/EU), and its accompanying fitness check on corporate reporting, identified problems as to the effectiveness of that Directive48 . There is significant evidence that many undertakings do not disclose material information on all major sustainability-related topics. The report also identified as significant problems the limited comparability and reliability of sustainability information. Additionally, many undertakings from which users need sustainability information are not obliged to report such information.	(11) The report on the review clause of the Non-Financial Reporting Directive (Directive 2014/95/EU), and its accompanying fitness check on corporate reporting, identified problems as to the effectiveness of that Directive48 . There is significant evidence that many undertakings do not disclose material information on all major sustainability-related topics, especially climate-related information including all green-house gas emission and factors that affect biodiversity. The report also identified as significant problems the limited comparability and reliability of sustainability information. Additionally, many undertakings from which users need sustainability information are not obliged to report such information which underlines the need for a robust and affordable monitoring, reporting and verification framework and effective auditing within corporate sustainability reporting to ensure the reliability of data and avoid greenwashing and/or double accounting.
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48 Publication office: please insert reference to Report from the Commission to the European Parliament, the Council and the European Economic and Social Committee on the review clauses in Directives 2013/34/EU, 2014/95/EU, and 2013/50/EU, and accompanying SWD- Fitness Check.	48 Publication office: please insert reference to Report from the Commission to the European Parliament, the Council and the European Economic and Social Committee on the review clauses in Directives 2013/34/EU, 2014/95/EU, and 2013/50/EU, and accompanying SWD- Fitness Check.

Amendment  10

 

Proposal for a directive

Recital 12

Text proposed by the Commission	Amendment
(12) In the absence of policy action, the gap between users’ information needs and the sustainability information reported by undertakings is expected to grow. This gap has significant negative consequences. Investors are unable to take sufficient account of sustainability-related risks and opportunities in their investment decisions. The aggregation of multiple investment decisions that do not take adequate account of sustainability-related risks has the potential to create systemic risks that threaten financial stability. The European Central Bank and international organisations such as the Financial Stability Board have drawn attention to those systemic risks, in particular in the case of climate. Investors are also less able to channel financial resources to undertakings and economic activities that address and do not exacerbate social and environmental problems, which undermines the objectives of the European Green Deal and the Action Plan on Financing Sustainable Growth. Non-governmental organisations, social partners, communities affected by undertakings’ activities, and other stakeholders are less able to hold undertakings accountable for their impacts on people and the environment. This creates an accountability deficit, and may contribute to lower levels of citizen trust in businesses, which in turn may have negative impacts on the efficient functioning of the social market economy. The lack of generally accepted metrics and methods for measuring, valuing, and managing sustainability-related risks is also an obstacle to the efforts of undertakings to ensure that their business models and activities are sustainable.	(12) In the absence of policy action, the gap between users’ information needs and the sustainability information reported by undertakings is expected to grow. This gap has significant negative consequences. Investors are unable to take sufficient account of sustainability-related risks and opportunities in their investment decisions. The aggregation of multiple investment decisions that do not take adequate account of sustainability-related risks has the potential to create systemic risks that threaten financial stability. The European Central Bank and international organisations such as the Financial Stability Board have drawn attention to those systemic risks, in particular in the case of climate. Investors are also less able to channel financial resources to undertakings and economic activities that address and do not exacerbate social and environmental problems, which undermines the objectives of the European Green Deal and the Action Plan on Financing Sustainable Growth and the objectives of the Paris agreement. Non-governmental organisations, social partners, communities affected by undertakings’ activities, and other stakeholders are less able to hold undertakings accountable for their impacts on people and the environment and the climate. This creates an accountability deficit, and may contribute to lower levels of citizen trust in businesses, which in turn may have negative impacts on the efficient functioning of the social market economy. The lack of generally accepted metrics and methods for measuring, valuing, and managing sustainability-related risks is also an obstacle to the efforts of undertakings to ensure that their business models and activities are sustainable. The lack of sustainability information also limits the ability of stakeholders, including civil society actors, trade unions and workers representatives to enter into dialogue with undertakings on sustainability matters.

Amendment  11

 

Proposal for a directive

Recital 13

Text proposed by the Commission	Amendment
(13) The report on the review clause of Directive 2014/95/EU, and its accompanying fitness check on corporate reporting, also recognised a significant increase in information requests for information about sustainability matters to undertakings in an attempt to address the existing information gap. In addition, ongoing expectations on undertakings to use a variety of different frameworks and standards are likely to continue and may even intensify as the value placed on sustainability information continues to grow. In the absence of policy action to build consensus on the information that undertakings should report, there will be significant increases in costs and burden for reporting undertakings and for users of such information.	(13) The report on the review clause of Directive 2014/95/EU, and its accompanying fitness check on corporate reporting, also recognised a significant increase in information requests for information about sustainability matters to undertakings in an attempt to address the existing information gap. In addition, a variety of different frameworks and standards are likely to continue and may even intensify as the value placed on sustainability information continues to grow. In the absence of policy action to build consensus on the information that undertakings should report, there will be significant increases in costs and burden for reporting undertakings and for users of such information.

Amendment  12

 

Proposal for a directive

Recital 15

Text proposed by the Commission	Amendment
(15) Articles 19a and 29a of Directive 2013/34/EU apply to large undertakings that are public-interest entities with an average number of employees in excess of 500, and to public-interest entities that are parent undertakings of a large group with an average number of employees in excess of 500 on a consolidated basis, respectively. In view of the growth of users’ needs for sustainability information, additional categories of undertakings should be required to report such information. It is therefore appropriate to require all large undertakings and all undertakings listed on regulated markets, except micro undertakings, to report detailed sustainability information. In addition, all undertakings that are parent undertakings of large groups should prepare sustainability reporting at group level.	(15) Articles 19a and 29a of Directive 2013/34/EU apply to large undertakings that are public-interest entities with an average number of employees in excess of 500, and to public-interest entities that are parent undertakings of a large group with an average number of employees in excess of 500 on a consolidated basis, respectively. In view of the growth of users’ needs for sustainability information, additional categories of undertakings should be required to report such information. It is therefore appropriate to require all large undertakings to report detailed sustainability information. In addition, all undertakings that are parent undertakings of large groups should prepare sustainability reporting at group level.

Amendment  13

Proposal for a directive

Recital 17 a (new)

Text proposed by the Commission	Amendment
	(17a) In order to ensure a level playing field on the single market, it is appropriate that third-country companies that are not established in the EU but provide goods and services inside the EU are subject to the same reporting rules than EU companies, or at least apply rules that are evaluated equivalent to the EU standards by the Commission, once implementing measures for those equivalence schemes are adopted.

Amendment  14

Proposal for a directive

Recital 18 a (new)

Text proposed by the Commission	Amendment
	Voluntary standarts for SMEs
	(18a) SMEs should be given the possibility to report according to standards that are proportionate to their capacities and resources. Listed and Non-listed SMEs can choose to use proportionate standards on a voluntary basis. The SME standards should set a reference for undertakings that are within the scope of the Directive regarding the level of sustainability information that they could reasonably request from SME suppliers, investees and clients in their value chains.

Amendment  15

Proposal for a directive

Recital 18 b

Text proposed by the Commission	Amendment
(71) Member States are invited to assess the impact of their transposition act on SMEs in order to ensure that they are not disproportionately affected, giving specific attention to micro-enterprises and to the administrative burden, and to publish the results of such assessments. Member States should consider introducing measures to support SMEs in applying the voluntary simplified reporting standards.	(18 b) Member States are invited to assess the impact of their transposition act on SMEs in order to ensure that they are not disproportionately affected, giving specific attention to micro-enterprises and to unnecessary administrative burden, and to publish the results of such assessments. Member States should consider introducing measures to support SMEs in applying the voluntary simplified reporting standards.

Amendment  16

Proposal for a directive

Recital 18 c (new)

Text proposed by the Commission	Amendment
	(18c) Certain economic activities in high-risk sectors are recognised as posing particularly significant sustainability risks. The list of high-risk sectors are based on existing sectoral OECD guidance. In order to ensure that this directive can also apply to such economic activities in high-risk sectors they should be defined and the power to adopt a delegated act in accordance with Article 290 of the Treaty on the Functioning of the European Union in respect of establishing a list economic activities in  high-risk sectors of economic activity should be delegated to the Commission. This list should, to the extent possible, use the European NACE classification. Not all economic activities in those sectors could be considered as high-risk. The Commission should therefore aim at using the lowest classification level possible. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making. In particular, to ensure their equal participation in the preparation of delegated acts, Parliament and the Council should receive all documents at the same time as Member States’ experts, and their experts should systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

Amendment  17

 

Proposal for a directive

Recital 19

Text proposed by the Commission	Amendment
(19) Directive 2004/109/EC of the European Parliament and of the Council49 applies to all undertakings with securities listed on regulated markets. In order to ensure that all undertakings with securities listed on regulated markets, including third country issuers, fall under the same sustainability reporting requirements, Directive 2004/109/EC should contain the necessary cross-references to any requirement on sustainability reporting in the annual financial report.	(19) Directive 2004/109/EC of the European Parliament and of the Council49 applies to all undertakings with securities listed on regulated markets. In order to ensure that all large undertakings with securities listed on regulated markets or business activities in the EU internal market, including third country issuers, fall under the same sustainability reporting requirements, Directive 2004/109/EC should contain the necessary cross-references to any requirement on sustainability reporting in the annual financial report.
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49 Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (OJ L 390, 31.12.2004, p. 38).	49 Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (OJ L 390, 31.12.2004, p. 38).

Amendment  18

 

Proposal for a directive

Recital 21

Text proposed by the Commission	Amendment
(21) Articles 19a(3) and 29a(3) of Directive 2013/34/EU currently exempt all subsidiary undertakings from the obligation to report non-financial information where such undertakings and their subsidiary undertakings are included in the consolidated management report of their parent undertaking, provided this includes the required non-financial information. It is necessary, however to ensure that sustainability information is easily accessible for users, and to bring transparency about which is the parent undertaking of the exempted subsidiary undertaking which is reporting at consolidated level. It is therefore necessary to require those subsidiary undertakings to publish the consolidated management report of their parent undertaking and to include a reference in their management report to the fact that they are exempted from reporting sustainability information. That exemption should also apply where the parent undertaking reporting at consolidated level is a third country undertaking reporting sustainability information in accordance with the requirements of this Directive or in a manner equivalent to EU sustainability reporting standards.	(21) Articles 19a(3) and 29a(3) of Directive 2013/34/EU currently exempt all subsidiary undertakings from obligations to report some non-financial information where such undertakings and their subsidiary undertakings are included in the consolidated management report of their parent undertaking, provided this includes the required non-financial information and that certain information are broken down for each consolidated entity. It is necessary, however to ensure that sustainability information is easily accessible for users, and to bring transparency about which is the parent undertaking of the exempted subsidiary undertaking which is reporting at consolidated level. It is therefore necessary to require those subsidiary undertakings to publish the consolidated management report of their parent undertaking and to include a reference in their management report to the fact that they are exempted from reporting some sustainability information in their own management report.

Amendment  19

 

Proposal for a directive

Recital 22

Text proposed by the Commission	Amendment
(22) Article 23 of Directive 2013/34/EU exempts parent undertakings from the obligation to prepare consolidated financial statements and a consolidated management report where those undertakings are subsidiaries of another parent undertaking that complies with that obligation. It should be specified, however, that the exemption regime for consolidated financial statements and consolidated management reports operates independently from the exemption regime for consolidated sustainability reporting. An undertaking can therefore be exempted from consolidated financial reporting obligations but not exempted from consolidated sustainability reporting obligations where its ultimate parent prepares consolidated financial statements and consolidated management reports in accordance with Union law, or in accordance with equivalent requirements if the undertaking is established in a third country, but does not prepare consolidated sustainability reporting in accordance with EU law, or in accordance with equivalent requirements if the undertaking is established in a third country.	(22) Article 23 of Directive 2013/34/EU exempts parent undertakings from the obligation to prepare consolidated financial statements and a consolidated management report where those undertakings are subsidiaries of another parent undertaking that complies with that obligation unless the parent undertaking is a subsidiary undertaking from a parent undertaking that is established in a third country. It should be specified, however, that the exemption regime for consolidated financial statements and consolidated management reports operates independently from the exemption regime for consolidated sustainability reporting.

Amendment  20

 

Proposal for a directive

Recital 23

Text proposed by the Commission	Amendment
(23) Credit institutions and insurance undertakings play a key role in the transition towards a fully sustainable and inclusive economic and financial system in line with the European Green Deal. They can have significant positive and negative impacts via their lending, investment and underwriting activities. Credit institutions and insurance undertakings other than those that are required to comply with Directive 2013/34/EU, including cooperatives and mutual undertakings, should therefore be subject to sustainability reporting requirements provided that they meet certain size criteria. Users of that information would thus be enabled to assess both the impacts of these undertakings on society and the environment and the risks arising from sustainability matters that these undertakings could face. To ensure coherence with the reporting requirements of Council Directive 86/635/EEC50 on the annual accounts and consolidated accounts of banks and other financial institutions, sustainability reporting Member States may choose not to apply sustainability reporting requirements to credit institutions listed in Article 2(5) of Directive 2013/36/EU of the European Parliament and of the Council51 .	(23) Credit institutions and insurance undertakings play a key role in the transition towards a fully sustainable and inclusive economic and financial system in line with the European Green Deal. They can have significant positive and negative impacts via their lending, investment and underwriting activities. Credit institutions and insurance undertakings other than those that are required to comply with Directive 2013/34/EU, including cooperatives and mutual undertakings, as well as for-profit legal entities organised as trusts or under similar legal arrangements, should therefore be subject to sustainability reporting requirements provided that they meet certain size criteria. Users of that information would thus be enabled to assess both the impacts of these undertakings on society and the environment and the risks arising from sustainability matters that these undertakings could face. To ensure coherence with the reporting requirements of Council Directive 86/635/EEC50 on the annual accounts and consolidated accounts of banks and other financial institutions, sustainability reporting Member States may choose not to apply sustainability reporting requirements to credit institutions listed in Article 2(5) of Directive 2013/36/EU of the European Parliament and of the Council51 .
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50 Council Directive 86/635/EEC of 8 December 1986 on the annual accounts and consolidated accounts of banks and other financial institutions (OJ L 372, 31.12.1986, p. 1).	50 Council Directive 86/635/EEC of 8 December 1986 on the annual accounts and consolidated accounts of banks and other financial institutions (OJ L 372, 31.12.1986, p. 1).
51 Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338).	51 Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338).

Amendment  21

 

Proposal for a directive

Recital 24

Text proposed by the Commission	Amendment
(24) The list of sustainability matters on which undertakings are required to report should be as coherent as possible with the definition of ‘sustainability factors’ laid down in Regulation (EU) 2019/2088. That list should also correspond to the needs and expectations of users and undertakings themselves, who often use the terms ‘environmental’, ‘social’ and ‘governance’ as a means to categorise the three main sustainability matters. The list of sustainability factors laid down in Regulation (EU) 2019/2088 does not explicitly include governance matters. The definition of sustainability matters in Directive 2013/34/EU should therefore be based on the definition of ‘sustainability factors’ laid down in Regulation (EU) 2019/2088, but with the addition of governance matters.	(24) The list of sustainability matters on which undertakings are required to report should be as coherent as possible with the definition of ‘sustainability factors’ laid down in Regulation (EU) 2019/2088, and prevent a mismatch of information required by data users and to be reported by data preparers. That list should also correspond to the needs and expectations of users and undertakings themselves, who often use the terms ‘environmental’, ‘social’ and ‘governance’ as a means to categorise the three main sustainability matters. The list of sustainability factors laid down in Regulation (EU) 2019/2088 does not explicitly include governance matters. The definition of sustainability matters in Directive 2013/34/EU should therefore be based on the definition, indicators and methodologies of ‘sustainability factors’ laid down in Regulation (EU) 2019/2088 and delegated acts, but with the addition of governance matters. The list is a minimum requirement, which will not lower existing national reporting requirements. The list of environmentally sustainable matters should be based on, and take account of, underlying indicators and methodologies set out in Regulation (EU) 2020/852 and in various delegated acts adopted pursuant to it, as they jointly create a classification system for environmentally sustainable economic activities.

Amendment  22

 

Proposal for a directive

Recital 25

Text proposed by the Commission	Amendment
(25) Articles 19a and 29a of Directive 2013/34/EU require reporting not only on information ‘to the extent necessary for an understanding of the undertaking's development, performance, position’, but also on information necessary for an understanding of the impact of the undertaking’s activities on environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters. Those articles therefore require undertakings to report both on how various sustainability matters affect the undertaking, and on the impacts of the activities of the undertaking on people and the environment. That is referred to as the double-materiality perspective, in which the risks to the undertaking and the impacts of the undertaking each represent one materiality perspective. The fitness check on corporate reporting shows that those two perspectives are often not well understood or applied. It is therefore necessary to clarify that undertakings should consider each materiality perspective in its own right, and should disclose information that is material from both perspectives as well as information that is material from only one perspective.	(25) Articles 19a and 29a of Directive 2013/34/EU require reporting not only on information ‘to the extent necessary for an understanding of the undertaking's development, performance, position’, but also on information necessary for an understanding of the impact of the undertaking’s activities on environmental, climate-related, social and employee matters, respect for human rights, gender equality, anti-corruption and bribery matters. Those articles therefore require undertakings to report both on how various sustainability matters affect the undertaking, and on the impacts of the activities of the undertaking on people and the environment. That is referred to as the double-materiality perspective, in which the risks to the undertaking and the impacts of the undertaking each represent one materiality perspective. The fitness check on corporate reporting shows that those two perspectives are often not well understood or applied. It is therefore necessary to clarify that undertakings should consider each materiality perspective in its own right, and should disclose information that is material from both perspectives as well as information that is material from only one perspective, bearing in mind that double-materiality is fundamental to understanding a company’s long-term value creation.

Amendment  23

 

Proposal for a directive

Recital 26

Text proposed by the Commission	Amendment
(26) Articles 19a(1) and 29a(1) of Directive 2013/34/EU require undertakings to disclose information about five reporting areas: business model, policies (including due diligence processes implemented), the outcome of those policies, risks and risk management, and key performance indicators relevant to the business. Article 19a(1) of Directive 2013/34/EU does not contain explicit references to other reporting areas that users of information consider relevant, some of which align with disclosures included in international frameworks, including the recommendations of the Task Force on Climate-related Financial Disclosures. Disclosure requirements should be specified in sufficient detail to ensure that undertakings report information on their resilience to risks related to sustainability matters. In addition to the reporting areas identified in Articles 19a(1) and 29a(1) of Directive 2013/34/EU, undertakings should therefore be required to disclose information about their business strategy and the resilience of the business model and strategy to risks related to sustainability matters, any plans they may have to ensure that their business model and strategy are compatible with the transition to a sustainable and climate-neutral economy; whether and how their business model and strategy take account of the interests of stakeholders; any opportunities for the undertaking arising from sustainability matters; the implementation of the aspects of the business strategy which affect, or are affected by sustainability matters; any sustainability targets set by the undertaking and the progress made towards achieving them; the role of the board and management with regard to sustainability matters; the principal actual and potential adverse impacts connected with the undertaking’s activities; and how the undertaking has identified the information that they report on. Once the disclosure of elements such as targets and the progress towards achieving them is required, the separate requirement to disclose the outcomes of policies is no longer necessary.	(26) Articles 19a(1) and 29a(1) of Directive 2013/34/EU require undertakings to disclose information about five reporting areas: business model, policies (including due diligence processes implemented), the outcome of those policies, risks and risk management, and key performance indicators relevant to the business. Article 19a(1) of Directive 2013/34/EU does not contain explicit references to other reporting areas that users of information consider relevant, some of which align with disclosures included in international frameworks, including the recommendations of the Task Force on Climate-related Financial Disclosures. Disclosure requirements should be specified in sufficient detail to ensure that undertakings report information on their resilience to risks related to sustainability matters. In addition to the reporting areas identified in Articles 19a(1) and 29a(1) of Directive 2013/34/EU, undertakings should therefore be required to disclose information about their business strategy and the resilience of the business model and strategy to risks related to sustainability matters, any plans they may have to ensure that their business model and strategy are compatible with the transition to a sustainable and climate-neutral economy and should include information on, as appropriate, climate change mitigation and adaptation; the sustainable use and protection of water and marine and soil resources; the transition to circular economy, including resource use; pollution prevention and control; and protection and restoration of biodiversity and ecosystems; whether and how their business model and strategy take account of the interests of stakeholders, including workers, indigenous people and local communities; any opportunities for the undertaking arising from sustainability matters; the implementation of the aspects of the business strategy which affect, or are affected by sustainability matters; any science-based and time-bound short-term, mid-term and long-term sustainability targets set by the undertaking and the progress made towards achieving them; the role of the board and management with regard to sustainability matters; a description of the due diligence strategy; the actual and potential adverse impacts connected with the undertaking’s activities; and how the undertaking has identified and evaluated the information that they report on. Once the disclosure of elements such as targets and the progress towards achieving them is required, the separate requirement to disclose the outcomes of policies is no longer necessary.

Amendment  24

 

Proposal for a directive

Recital 27

Text proposed by the Commission	Amendment
(27) To ensure consistency with international instruments such as the UN Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance for Responsible Business Conduct, the due diligence disclosure requirements should be specified in greater detail than is the case in Article 19a(1), point (b), and Article 29a(1), point (b) of Directive 2013/34/EU. Due diligence is the process that undertakings carry out to identify, prevent, mitigate and remediate the principal actual and potential adverse impacts connected with their activities and identifies how they address those adverse impacts. Impacts connected with an undertaking’s activities include impacts directly caused by the undertaking, impacts to which the undertaking contributes, and impacts which are otherwise linked to the undertaking’s value chain. The due diligence process concerns the whole value chain of the undertaking including its own operations, its products and services, its business relationships and its supply chains. In alignment with the UN Guiding Principles on Business and Human Rights, an actual or potential adverse impact is to be considered principal where it measures among the greatest impacts connected with the undertaking’s activities based on: the gravity of the impact on people or the environment; the number of individuals that are or could be affected, or the scale of damage to the environment; and the ease with which the harm could be remediated, restoring the environment or affected people to their prior state.	(27) To ensure consistency with international instruments such as the UN Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance for Responsible Business Conduct and the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, the due diligence disclosure requirements should be specified in greater detail than is the case in Article 19a(1), point (b), and Article 29a(1), point (b) of Directive 2013/34/EU. Due diligence is the process that undertakings carry out to identify, track, prevent, mitigate, cease and remediate the principal actual and potential adverse impacts connected with their activities and identifies how they address those adverse impacts. Impacts connected with an undertaking’s activities include impacts directly caused by the undertaking, impacts to which the undertaking contributes, and impacts which are otherwise linked to the undertaking’s value chain. The due diligence process concerns the whole value chain of the undertaking including its own operations, its products and services, its business relationships and its supply chains. In alignment with the UN Guiding Principles on Business and Human Rights, an actual or potential impact is to be considered adverse based on: the gravity of the impact on people or the environment; the number of individuals that are or could be affected, or the scale of damage to the environment; and the ease with which the harm could be remediated, restoring the environment or affected people to their prior state.

Amendment  25

 

Proposal for a directive

Recital 28

Text proposed by the Commission	Amendment
(28) Directive 2013/34/EU does not require the disclosure of information on intangibles other than intangible assets recognised in the balance sheet. It is widely recognised that information on intangible assets and other intangible factors, including internally-generated intangibles, is underreported, impeding the proper assessment of an undertaking’s development, performance and position and monitoring of investments. To enable investors to better understand the increasing gap between the accounting book value of many undertakings and their market valuation, which is observed in many sectors of the economy, adequate reporting on intangibles should be required. It is therefore necessary to require undertakings to disclose information on intangibles other than intangible assets recognised in the balance sheet, including intellectual capital, human capital, including skills development, and social and relationship capital, including reputation capital. Information on intangibles should also include information related to research and development.	(28) Directive 2013/34/EU does not require the disclosure of information on intangibles other than intangible assets recognised in the balance sheet. It is widely recognised that information on intangible assets and other intangible factors, including internally-generated intangibles, is underreported, impeding the proper assessment of an undertaking’s development, performance and position and monitoring of investments. To enable investors to better understand the increasing gap between the accounting book value of many undertakings and their market valuation, which is observed in many sectors of the economy, adequate reporting on intangibles should be required. It is therefore necessary to require undertakings to disclose relevant information on intangibles that are consistent with intangibles reported in the financial statement, including when material on intellectual capital, human capital, including skills development, and social and relationship capital, including reputation capital. Information on intangibles should also include information related to research and development.

Amendment  26

 

Proposal for a directive

Recital 29

Text proposed by the Commission	Amendment
(29) Articles 19a(1) and 29a(1) of Directive 2013/34/EU do not specify whether the information to be reported is to be forward looking or information about past performance. There is currently a lack of forward-looking disclosures, which users of sustainability information especially value. Articles 19a and 29a of Directive 2013/34/EU should therefore specify that the sustainability information reported shall include forward-looking and retrospective, and both qualitative and quantitative information. Reported sustainability information should also take into account short, medium and long-term time horizons and contain information about the undertaking’s whole value chain, including its own operations, its products and services, its business relationships, and its supply chain, as appropriate. Information about the undertaking’s whole value chain would include information related to its value chain within the EU and information that covers third countries if the undertaking’s value chain extends outside the EU.	(29) Articles 19a(1) and 29a(1) of Directive 2013/34/EU do not specify whether the information to be reported is to be forward looking or information about past performance. There is currently a lack of forward-looking disclosures, which users of sustainability information especially value. Articles 19a and 29a of Directive 2013/34/EU should therefore specify that the sustainability information reported shall include forward-looking and retrospective, and both qualitative and quantitative information that is based on science-based, harmonised, comparable and uniform indicators, while not endangering the commercial position of the undertaking. Reported sustainability information should also take into account short, medium and long-term time horizons and contain information about the undertaking’s whole value chain, including its own operations, its products and services, its business relationships, and its supply chain, as appropriate. Information about the undertaking’s whole value chain would include information related to its value chain within the EU and information that covers third countries if the undertaking’s value chain extends outside the EU. The Commission should help businesses and prepare non-binding guidelines on appropriate methodologies to generate the forward-looking information to be provided in the reporting.

Amendment  27

Proposal for a directive

Recital 29 a (new)

Text proposed by the Commission	Amendment
	(29a) For reporting purposes, Articles 19a(1) and 29a(1) of Directive 2013/34/EU should not require undertakings to publish confidential information, in accordance with Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (Trade Secrets Directive).

Amendment  28

 

Proposal for a directive

Recital 32

Text proposed by the Commission	Amendment
(32) Undertakings under the scope of Articles 19a(1) and 29a(1) of Directive 2013/34/EU may rely on national, Union-based or international reporting frameworks, and where they do so, they have to specify which frameworks they relied upon. However, Directive 2013/34/EU does not require undertakings to use a common reporting framework or standard, and it does not prevent undertakings from choosing not to use any reporting framework or standards at all. As required by Article 2 of Directive 2014/95/EU, the Commission published in 2017 non-binding guidelines for undertakings under the scope of that Directive52 . In 2019, the Commission published additional guidelines, specifically on reporting climate-related information53 . The climate reporting guidelines explicitly incorporated the recommendations of the Task Force on Climate-related Financial Disclosures. Available evidence indicates that those non-binding guidelines did not have a significant impact on the quality of non-financial reporting by undertakings under the scope of Articles 19a and 29a of Directive 2013/34/EU. The voluntary nature of the guidelines means that undertakings are free to apply them or not. The guidelines can therefore not ensure on their own the comparability of information disclosed by different undertakings or the disclosure of all information that users consider relevant. That is why there is a need for mandatory common reporting standards to ensure that information is comparable and that all relevant information is disclosed. Building on the double-materiality principle, standards should cover all information that is material to users. Common reporting standards are also necessary to enable the audit and digitalisation of sustainability reporting and to facilitate its supervision and enforcement. The development of mandatory common sustainability reporting standards is necessary to progress to a situation in which sustainability information has a status comparable to that of financial information.	(32) Undertakings under the scope of Articles 19a(1) and 29a(1) of Directive 2013/34/EU may rely on national, Union-based or international reporting frameworks, and where they do so, they have to specify which frameworks they relied upon. However, Directive 2013/34/EU does not require undertakings to use a common reporting framework or standard, and it does not prevent undertakings from choosing not to use any reporting framework or standards at all. As required by Article 2 of Directive 2014/95/EU, the Commission published in 2017 non-binding guidelines for undertakings under the scope of that Directive52 . In 2019, the Commission published additional guidelines, specifically on reporting climate-related information53 . The climate reporting guidelines explicitly incorporated the recommendations of the Task Force on Climate-related Financial Disclosures. Available evidence indicates that those non-binding guidelines did not have a significant impact on the quality of non-financial reporting by undertakings under the scope of Articles 19a and 29a of Directive 2013/34/EU. The voluntary nature of the guidelines means that undertakings are free to apply them or not. The guidelines can therefore not ensure on their own the comparability, reliability and sincerity of the information disclosed by different undertakings or the disclosure of all information that users consider relevant. That is why there is a need for mandatory common reporting standards to ensure that information is comparable, reliable and sincere and that all relevant information is disclosed. Building on the double-materiality principle, standards should cover all information that is material to users. Common reporting standards are also necessary to enable the audit and digitalisation of sustainability reporting and to facilitate its supervision and enforcement. The development of mandatory common sustainability reporting standards is necessary to progress to a situation in which sustainability information has a status comparable to that of financial information. When defining such standards, it is essential to givedue consideration to the main sustainability reporting standards used worldwidetoday.
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52 Communication from the Commission Guidelines on non-financial reporting (methodology for reporting non-financial information) (C/2017/4234).	52 Communication from the Commission Guidelines on non-financial reporting (methodology for reporting non-financial information) (C/2017/4234).
53 Communication from the Commission Guidelines on non-financial reporting: Supplement on reporting climate-related information (C/2019/4490).	53 Communication from the Commission Guidelines on non-financial reporting: Supplement on reporting climate-related information (C/2019/4490).

Amendment  29

 

Proposal for a directive

Recital 33

Text proposed by the Commission	Amendment
(33) No existing standard or framework satisfies the Union’s needs for detailed sustainability reporting by itself. Information required by Directive 2013/34/EU needs to cover information relevant from each of the materiality perspectives, needs to cover all sustainability matters and needs to be aligned, where appropriate, with other obligations under Union law to disclose sustainability information, including obligations laid down in Regulation (EU) 2020/852 and Regulation (EU) 2019/2088. In addition, mandatory sustainability reporting standards for Union undertakings must be commensurate with the level of ambition of the European Green Deal and the Union’s climate-neutrality objective for 2050. It is therefore necessary to empower the Commission to adopt Union sustainability reporting standards, enabling their rapid adoption and ensuring that the content of sustainability reporting standards are consistent with the Union’s needs.	(33) No existing standard or framework satisfies the Union’s needs for detailed sustainability reporting by itself. Information required by Directive 2013/34/EU needs to cover information relevant from each of the materiality perspectives, needs to cover all sustainability matters and needs to be aligned, including with obligations laid down in Regulation (EU) 2020/852 and Regulation (EU) 2019/2088 and with the EU acquis. This information must be based on science-based, harmonised, comparable and uniform indicators. In addition, mandatory sustainability reporting standards for Union undertakings must be commensurate with the level of ambition of the European Green Deal and the Union’s climate-neutrality objective for 2050 as well as intermediate targets under Regulation (EU) 2021/1119. It is therefore necessary to empower the Commission to adopt Union sustainability reporting standards, enabling their rapid adoption and ensuring that the content of sustainability reporting standards are consistent with the Union’s needs, while ensuring consistency with international standards.

Amendment  30

 

Proposal for a directive

Recital 34

Text proposed by the Commission	Amendment
(34) The European Financial Reporting Advisory Group (EFRAG) is a non-profit association established under Belgian law that serves the public interest by providing advice to the Commission on the endorsement of international financial reporting standards. EFRAG has established a reputation as a European centre of expertise on corporate reporting, and is well placed to foster coordination between European sustainability reporting standards and international initiatives that seek to develop standards that are consistent across the world. In March 2021, a multi-stakeholder task force set up by EFRAG published recommendations for the possible development of sustainability reporting standards for the European Union. Those recommendations contain proposals to develop a coherent and comprehensive set of reporting standards, covering all sustainability matters from a double-materiality perspective. Those recommendations also contain a detailed roadmap for developing such standards, and proposals for mutually reinforcing cooperation between global standard-setting initiatives and standard-setting initiatives of the European Union. In March 2021, the EFRAG President published recommendations for possible governance changes to EFRAG if it were to be asked to develop technical advice about sustainability reporting standards. These recommendations include offsetting up within EFRAG a new sustainability reporting pillar while not significantly modifying the existing financial reporting pillar. When adopting sustainability reporting standards, the Commission should take account of technical advice that EFRAG will develop. In order to ensure high-quality standards that contribute to the European public good and meet the needs of undertakings and of users of the information reported, EFRAG’s technical advice should be developed with proper due process, public oversight and transparency, accompanied by cost benefit analyses, and be developed with the expertise of relevant stakeholders. To ensure that Union sustainability reporting standards take account of the views of the Member States of the Union, before adopting the standards the Commission should consult the Member State Expert Group on Sustainable Finance referred to in Article 24 of Regulation (EU) 2020/852 on EFRAG’s technical advice. The European Securities and Markets Authority (ESMA) plays a role in drafting regulatory technical standards pursuant to Regulation (EU) 2019/2088 and there needs to be coherence between those regulatory technical standards and sustainability reporting standards. According to Regulation (EU) No 1095/2010 of the European Parliament and of the Council54 , ESMA also plays a role in promoting supervisory converge in the enforcement of corporate reporting by issuers whose securities are listed on EU regulated markets and who will be required to use these sustainability reporting standards. Therefore, ESMA should be required to provide an opinion on EFRAG’s technical advice. This opinion should be provided within two months from the date of receipt of the request from the Commission. In addition, the Commission should consult the European Banking Authority, the European Insurance and Occupational Pensions Authority, the European Environment Agency, the European Union Agency for Fundamental Rights, the European Central Bank, the Committee of European Auditing Oversight Bodies and the Platform on Sustainable Finance to ensure that the sustainability reporting standards are coherent with relevant Union policy and legislation. Where any of those bodies decide to submit an opinion, they shall do so within two months from the date of being consulted by the Commission.	(34) The European Financial Reporting Advisory Group (EFRAG) is a non-profit association established under Belgian law that serves the public interest by providing advice to the Commission on the endorsement of international financial reporting standards. EFRAG has established a reputation as a European centre of expertise on corporate reporting, and is well placed to foster coordination between European sustainability reporting standards and international initiatives that seek to develop standards that are consistent across the world. In March 2021, a multi-stakeholder task force set up by EFRAG published recommendations for the possible development of sustainability reporting standards for the European Union. Those recommendations contain proposals to develop a coherent and comprehensive set of reporting standards, covering all sustainability matters from a double-materiality perspective. Those recommendations also contain a detailed roadmap for developing such standards, and proposals for mutually reinforcing cooperation between global standard-setting initiatives and standard-setting initiatives of the European Union. In March 2021, the EFRAG President published recommendations for possible governance changes to EFRAG if it were to be asked to develop technical advice about sustainability reporting standards. These recommendations include offsetting up within EFRAG a new sustainability reporting pillar while not significantly modifying the existing financial reporting pillar. In January 2022, EFRAG announced the membership of several civil society organisations and hopes to enable a broader representation of all relevant sustainability reporting stakeholders. When adopting sustainability reporting standards, the Commission should take account of technical advice that EFRAG will develop. In order to ensure that EFRAG has sufficient independence from private funding contributions to its budget while being sufficiently equipped to develop high quality standard recommendations, the Commission should increase its funding to at least 75% of the work on sustainability issues in relative and absolute share. In order to ensure high-quality standards that contribute to the European public good and meet the needs of undertakings and of users of the information reported, EFRAG’s technical advice should be developed with proper due process, public oversight and transparency, accompanied by cost benefit analyses, and be developed with the expertise of a balanced representation relevant stakeholders, including social partners, NGOs and consumer organisations, who should be able to participate in the standard setting process on equal footing. Participation in the independent technical advisory group shall be based on expertise on matters outlined in articles 19a and 19b and shall not be conditional to any financial contribution. The Commission should guarantee a transparent process avoiding any risk of conflict of interest, as well as the full inclusion in the development of sustainability reporting standards of trade unions, consumer organisations, NGOs and all other relevant stakeholders, such as international organisations or governments from countries where the undertaking or its value and supply chain will operate, in order to represent the interests of all groups of users. To ensure that Union sustainability reporting standards take account of the views of the Member States of the Union, before adopting the standards the Commission should consult the Member State Expert Group on Sustainable Finance referred to in Article 24 of Regulation (EU) 2020/852 on EFRAG’s technical advice. The European Securities and Markets Authority (ESMA) plays a role in drafting regulatory technical standards pursuant to Regulation (EU) 2019/2088 and there needs to be coherence between those regulatory technical standards and sustainability reporting standards. According to Regulation (EU) No 1095/2010 of the European Parliament and of the Council54 , ESMA also plays a role in promoting supervisory converge in the enforcement of corporate reporting by issuers whose securities are listed on EU regulated markets and who will be required to use these sustainability reporting standards. Therefore, ESMA should be required to provide an opinion on EFRAG’s technical advice. This opinion should be provided within two months from the date of receipt of the request from the Commission. In addition, the Commission should consult the European Banking Authority, the European Insurance and Occupational Pensions Authority, the European Environment Agency, the European Union Agency for Fundamental Rights, the European Central Bank, the Committee of European Auditing Oversight Bodies and the Platform on Sustainable Finance to ensure that the sustainability reporting standards are coherent with relevant Union policy and legislation. Where any of those bodies decide to submit an opinion, they shall do so within two months from the date of being consulted by the Commission.
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54 Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, p. 84).	54 Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, p. 84).

Amendment  31

 

Proposal for a directive

Recital 34 a (new)

Text proposed by the Commission	Amendment
	(34 a) Every year the Commission should consult and associate the relevant Council working groups and European Parliament committees on the EFRAG working programme. In order to foster democratic control, parliamentary scrutiny and transparency, regular exchanges should be held between EFRAG and the relevant European Parliament committees.

Amendment  32

 

Proposal for a directive

Recital 35

Text proposed by the Commission	Amendment
(35) Sustainability reporting standards should be coherent with other Union legislation. Those standards should in particular be aligned with the disclosure requirements laid down in Regulation (EU) 2019/2088, and they should take account of underlying indicators and methodologies set out in the various delegated acts adopted pursuant to Regulation (EU) 2020/852, disclosure requirements applicable to benchmark administrators pursuant to Regulation (EU) 2016/1011 of the European Parliament and of the Council55 , the minimum standards for the construction of EU climate transition benchmarks and EU Paris-aligned benchmarks; and of any work carried out by the European Banking Authority in the implementation of the Pillar III disclosure requirements of Regulation (EU) No 575/2013. Standards should take account of Union environmental legislation, including Directive 2003/87/EC of the European Parliament and of the Council56 and Regulation (EC) No 1221/2009 of the European Parliament and of the Council57 , and should take account of Commission Recommendation 2013/179/EU58 and its annexes, and their updates. Other relevant Union legislation, including Directive 2010/75/EU of the European Parliament and of the Council59 , and requirements laid down in Union law for undertakings as regards directors’ duties and due diligence, should also be taken into account.	(35) Sustainability reporting standards should be coherent with other Union legislation. Those standards should in particular be aligned with the disclosure requirements laid down in Regulation (EU) 2019/2088, and they should be consistent with the underlying indicators and methodologies set out in the various delegated acts adopted pursuant to Regulation (EU) 2020/852, disclosure requirements applicable to benchmark administrators pursuant to Regulation (EU) 2016/1011 of the European Parliament and of the Council55 , the minimum standards for the construction of EU climate transition benchmarks and EU Paris-aligned benchmarks; and of any work carried out by the European Banking Authority in the implementation of the Pillar III disclosure requirements of Regulation (EU) No 575/2013. Standards should take account of Union environmental legislation, including Directive 2003/87/EC of the European Parliament and of the Council56 and Regulation (EC) No 1221/2009 of the European Parliament and of the Council57 , and should take account of Commission Recommendation 2013/179/EU58 and its annexes, and their updates. Other relevant Union legislation, including Directive 2010/75/EU of the European Parliament and of the Council59 , and requirements laid down in Union law for undertakings as regards directors’ duties and due diligence, should also be taken into account.
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55 Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (OJ L 171, 29.6.2016, p. 1).	55 Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (OJ L 171, 29.6.2016, p. 1).
56 Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32).	56 Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32).
57 Regulation (EC) No 1221/2009 of the European Parliament and of the Council of 25 November 2009 on the voluntary participation by organisations in a Community eco-management and audit scheme (EMAS), repealing Regulation (EC) No 761/2001 and Commission Decisions 2001/681/EC and 2006/193/EC (OJ L 342, 22.12.2009, p. 1).	57 Regulation (EC) No 1221/2009 of the European Parliament and of the Council of 25 November 2009 on the voluntary participation by organisations in a Community eco-management and audit scheme (EMAS), repealing Regulation (EC) No 761/2001 and Commission Decisions 2001/681/EC and 2006/193/EC (OJ L 342, 22.12.2009, p. 1).
58 Commission Recommendation 2013/179/EU of 9 April 2013 on the use of common methods to measure and communicate the life cycle environmental performance of products and organisations (OJ L 124, 4.5.2013, p. 1).	58 Commission Recommendation 2013/179/EU of 9 April 2013 on the use of common methods to measure and communicate the life cycle environmental performance of products and organisations (OJ L 124, 4.5.2013, p. 1).
59 Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control) (OJ L 334, 17.12.2010, p. 17).	59 Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control) (OJ L 334, 17.12.2010, p. 17).

Amendment  33

 

Proposal for a directive

Recital 36

Text proposed by the Commission	Amendment
(36) Sustainability reporting standards should take account of the Commission guidelines on non-financial reporting60 and the Commission guidelines on reporting climate-related information61 . They should also take account of other reporting requirements in Directive 2013/34/EU not directly related to sustainability, with the aim of providing the users of the reported information with a better understanding of the development, performance, position and impact of the undertaking, by maximising the links between the sustainability information and other information reported in accordance with Directive 2013/34/EU.	(36) Sustainability reporting standards should take account of the Commission guidelines on non-financial reporting60 and the Commission guidelines on reporting climate-related information, including the KPIs of these guidelines61 . They should also take account of other reporting requirements in Directive 2013/34/EU not directly related to sustainability, with the aim of providing the users of the reported information with a better understanding of the development, performance, position and impact of the undertaking, by maximising the links between the sustainability information and other information reported in accordance with Directive 2013/34/EU.
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60 2017/C 215/01.	60 2017/C 215/01.
61 2019/C 209/01.	61 2019/C 209/01.

Amendment  34

 

Proposal for a directive

Recital 37

Text proposed by the Commission	Amendment
(37) Sustainability reporting standards should be proportionate, and should not impose unnecessary administrative burden on companies that are required to use them. In order to minimise disruption for undertakings that already report sustainability information, sustainability reporting standards should take account of existing standards and frameworks for sustainability reporting and accounting where appropriate. Those include the Global Reporting Initiative, the Sustainability Accounting Standards Board, the International Integrated Reporting Council, the International Accounting Standards Board, the Task Force on Climate-related Financial Disclosures, the Carbon Disclosure Standards Board, and CDP (formerly the Carbon Disclosure Project). Standards of the European Union should take account of any sustainability reporting standards developed under the auspices of International Financial Reporting Standards Foundation. To avoid unnecessary regulatory fragmentation that may have negative consequences for undertakings operating globally, European standards should contribute to the process of convergence of sustainability reporting standards at global level.	(37) Sustainability reporting standards should be proportionate, and should not impose unnecessary administrative burden on companies that are required to use them. In order to minimise disruption for undertakings that already report sustainability information, sustainability reporting standards should take account of be consistent with existing standards and frameworks for sustainability reporting and accounting where appropriate. Those include the Global Reporting Initiative, the Sustainability Accounting Standards Board, the International Integrated Reporting Council, the International Accounting Standards Board, the Task Force on Climate-related Financial Disclosures, the Carbon Disclosure Standards Board, and CDP (formerly the Carbon Disclosure Project) and the greenhouse gases Protocol in the calculation of greenhouse gases emissions, including scope 1, 2 and 3 from undertakings from undertakings, and including emissions generated from industrial livestock production. Standards of the European Union should take account of any sustainability reporting standards developed under the auspices of International Financial Reporting Standards Foundation. To avoid unnecessary regulatory fragmentation that may have negative consequences for undertakings operating globally, European standards should contribute to the process of convergence of sustainability reporting standards at global level by supporting the work of the International Sustainability Standards Board (ISSB).

Amendment  35

 

Proposal for a directive

Recital 40

Text proposed by the Commission	Amendment
(40) It should be ensured that the information reported by undertakings in accordance with the sustainability reporting standards meet the needs of users. The reporting standards should therefore specify the information that undertakings are to disclose on all major environmental factors, including their impacts and dependencies on climate, air, land, water and biodiversity. Regulation (EU) 2020/852 provides a classification of the environmental objectives of the Union. For reasons of coherence, it is appropriate to use a similar classification to identify the environmental factors that should be addressed by sustainability reporting standards. The reporting standards should consider and specify any geographical or other contextual information that undertakings should disclose to provide an understanding of their principal impacts on sustainability matters and the principal risks to the undertaking arising from sustainability matters.	(40) It should be ensured that the information reported by undertakings in accordance with the sustainability reporting standards meet the needs of users and do not place a disproportionate burden in effort and costs on those reporting. The reporting standards should therefore specify the information that undertakings are to disclose on all major environmental factors, including their impacts and dependencies on climate, air, land, water and biodiversity. Regulation (EU)2020/852 provides a classification of the environmental objectives of the Union. For reasons of coherence, it is appropriate to use a similar classification to identify the environmental factors that should be addressed by sustainability reporting standards. The reporting standards should consider and specify any geographical or other contextual information that undertakings should disclose to provide an understanding of their principal impacts on sustainability matters and the principal risks to the undertaking arising from sustainability matters. When specifying the information about environmental factors that undertakings are to disclose, coherence should be ensured with the definitions in Article 2 and the reporting requirements of Article 8 in Regulation (EU) 2020/852 and the delegated acts adopted pursuant to that Regulation.

Amendment  36

 

Proposal for a directive

Recital 41

Text proposed by the Commission	Amendment
(41) With regard to climate-related information, users are interested in knowing about undertakings’ physical and transition risks, and about their resilience to different climate scenarios. They are also interested in the level and scope of greenhouse gas emissions and removals attributed to the undertaking, including the extent to which the undertaking uses offsets and the source of those offsets. Achieving a climate neutral economy requires the alignment of greenhouse gas accounting and offset standards. Users need reliable information regarding offsets that addresses concerns regarding possible double-counting and overestimations, given the risks to the achievement of climate-related targets that double-counting and overestimations can create. The reporting standards should therefore specify the information undertakings should report with regard to those matters.	(41) With regard to climate-related information, users, including consumers, are interested in knowing about undertakings’ physical and transition risks, and about their resilience and plans to adapt to different climate scenarios and to the EU’s climate neutrality goal. They are also interested in the level and scope of greenhouse gas emissions and removals attributed to the undertaking, including the extent to which the undertaking uses offsets and the source of those offsets. Achieving a climate neutral economy requires the alignment of greenhouse gas accounting and offset standards. Users need reliable information regarding offsets that addresses concerns regarding possible double-counting and over estimations, given the risks to the achievement of climate-related targets that double-counting and overestimations can create. These parties are also interested to know the efforts made by companies to effectively reduce absolute GHG emissions as part of their climate mitigation and adaption strategies. The reporting standards should therefore specify the information undertakings should report with regard to those matters.

Amendment  37

 

Proposal for a directive

Recital 42

Text proposed by the Commission	Amendment
(42) Achieving a climate neutral and circular economy and a toxic-free environment requires the full mobilisation of all economic sectors. Reducing energy use and increasing energy efficiency is key in this respect as energy is used across supply chains. Energy aspects should therefore be duly considered in sustainability reporting standards, in particular in relation to environmental matters.	(42) Achieving a climate neutral and circular economy without diffuse pollution requires the full mobilisation of all economic sectors. Reducing energy use and increasing energy efficiency is key in this respect as energy is used across supply chains. Energy aspects should therefore be duly considered in sustainability reporting standards, in particular in relation to environmental and climate related matters.

Amendment  38

 

Proposal for a directive

Recital 43

Text proposed by the Commission	Amendment
(43) Sustainability reporting standards should specify the information that undertakings should disclose on social factors, including employee factors and human rights. Such information should cover the impacts of undertakings on people, including on human health. The information that undertakings disclose about human rights should include information about forced labour in their value chains where relevant. Reporting standards that address social factors should specify the information that undertakings should disclose with regard to the principles of the European Pillar of Social Rights that are relevant to businesses, including equal opportunities for all and working conditions. The European Pillar of Social Rights Action Plan adopted in March 2021 calls for stronger requirements on undertakings to report on social issues. The reporting standards should also specify the information that undertakings should disclose with regard to the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the fundamental conventions of the International Labour Organisation, and the Charter of Fundamental Rights of the European Union.	(43) Sustainability reporting standards should specify the information that undertakings should disclose on social factors, including working conditions, workers' rights, social partner involvement, collective bargaining, equality, non-discrimination, prevention of workplace violence and harassment diversity and inclusion, and human rights. Such information should be disclosed country-by country, where relevant, in close consultation with trade unions and workers’ representatives and cover the impacts of undertakings on its workers, people and on human health. Where the administrative or management body of the undertaking receives an opinion on the sustainability report from the representatives of workers, it should append that opinion to the sustainability report, if that is provided for under national law and practices. The information that undertakings disclose about human rights should include information about forced labour and child labour in their value chains where relevant. Reporting requirements on forced labour should not replace the public authorities’ responsibility to address the import of goods, produced as a result of human rights abuses, including forced labour, through trade policy and diplomatic means. Undertakings should also be able to report on possible risks and negative trends regarding employment and incomes, due to the absence of a just transition process. Reporting standards that address social factors should specify the information that undertakings should disclose with regard to the 20 principles of the European Pillar of Social Rights, particularly equal opportunities for all and fair working conditions. The European Pillar of Social Rights Action Plan adopted in March 2021 calls for stronger requirements on undertakings to report on social issues. The reporting standards should also specify the information that undertakings should disclose with regard to the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, including the UN Convention on the Rights of Persons with Disabilities, the UN Declaration on the Rights of Indigenous Peoples, the UN Convention on the Rights of the Child, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the fundamental conventions of the International Labour Organisation, the International Labour Organization's Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, including the list of relevant standards under its Annex I, the European Convention of Human Rights, the (revised) European Social Charter, the Charter of Fundamental Rights of the European Union and the OECD Guidelines for Multinational Enterprises. Reporting carried out on social factors should be proportionate to the scope and the goals of this Directive.

Amendment  39

 

Proposal for a directive

Recital 44

Text proposed by the Commission	Amendment
(44) Users need information about governance factors, including information on the role of an undertaking’s administrative, management and supervisory bodies, including with regard to sustainability matters, the composition of such bodies, and an undertaking’s internal control and risk management systems, including in relation to the reporting process. Users also need information about undertakings’ corporate culture and approach to business ethics, including anti-corruption and anti-bribery, and about their political engagements, including lobbying activities. Information about the management of the undertaking and the quality of relationships with business partners, including payment practices relating to the date or period for payment, the rate of interest for late payment or the compensation for recovery costs referred to in Directive 2011/7/EU of the European Parliament and of the Council62 on late payment in commercial transactions, helps users to understand an undertaking’s risks as well as its impacts on sustainability matters. Every year, thousands of businesses, especially SMEs, suffer administrative and financial burdens because they are paid late, or not at all. Ultimately, late payments lead to insolvency and bankruptcy, with destructive effects on entire value chains. Increasing information about payment practices should empower other undertakings to identify prompt and reliable payers, detect unfair payment practices, access information about the businesses they trade with, and negotiate fairer payment terms.	(44) Users need information about governance factors, including information on the role of an undertaking’s administrative,management and supervisory bodies and committees, including with regard to sustainability matters, the composition of those, particularly with regard to workers' and women's participation and gender balance and whether the company has a policy in terms of incentives offered to members of these bodies which are linked to sustainability matters, , and an undertaking’s internal control and risk management systems, including in relation to the reporting process. Users also need information about undertakings’ corporate culture and approach to business ethics, including anti-corruption and anti-bribery, and about their political engagements, including lobbying activities. Information about the management of the undertaking and the quality of relationships with business partners, including payment practices relating to the date or period for payment, the rate of interest for late payment or the compensation for recovery costs referred to in Directive 2011/7/EU of the European Parliament and of the Council62 on late payment in commercial transactions, helps users to understand an undertaking’s risks as well as its impacts on sustainability matters. Every year, thousands of businesses, especially SMEs, suffer administrative and financial burdens because they are paid late, or not at all. Ultimately, late payments lead to insolvency and bankruptcy, with destructive effects on entire value chains. Increasing information about payment practices should empower other undertakings to identify prompt and reliable payers, detect unfair payment practices, access information about the businesses they trade with, and negotiate fairer payment terms.
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62 Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (OJ L 48, 23.2.2011, p. 1).	62 Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (OJ L 48, 23.2.2011, p. 1).

Amendment  40

 

Proposal for a directive

Recital 44 a (new)

Text proposed by the Commission	Amendment
	(44 a) Diversity on company boards contributes to better decision-making, corporate governance and resilience in undertakings. Workers' representatives as well as more women on boards would promote the sustainable development of undertakings.

Amendment  41

 

Proposal for a directive

Recital 45 a (new)

Text proposed by the Commission	Amendment
	(45 a) Member States should ensure that sustainability reporting is done in compliance with workers’ rights to information and consultation, including when it comes to take part in the design of the reporting system in close relation with administrative, management or supervisory bodies.

Amendment  42

 

Proposal for a directive

Recital 47

Text proposed by the Commission	Amendment
(47) To meet the information needs from users in a timely manner, and in particular given the urgency to meet the information needs of financial market participants subject to the requirements laid down in the delegated acts adopted pursuant to Article 4, paragraphs 6 and 7 of Regulation (EU) 2019/2088, the Commission should adopt a first set of reporting standards by 31 October 2022. That set of reporting standards should specify the information that undertakings should disclose with regard to all reporting areas and sustainability matters, and that financial market participants need to comply with the disclosure obligations laid down in Regulation (EU) 2019/2088. The Commission should adopt a second set of reporting standards at the latest by 31 October 2023, specifying complementary information that undertakings should disclose about sustainability matters and reporting areas where necessary, and information that is specific to the sector in which an undertaking operates. The Commission should review the standards every 3 years to take account of relevant developments, including the development of international standards.	(47) To meet the information needs from users in a timely manner, and in particular given the urgency to meet the information needs of financial market participants subject to the requirements laid down in the delegated acts adopted pursuant to Article 4, paragraphs 6 and 7 of Regulation (EU) 2019/2088, the Commission should adopt a first set of reporting standards by 30 April 2023. That set of reporting standards should specify the information that undertakings should disclose with regard to all reporting areas and sustainability matters, and that financial market participants need to comply with the disclosure obligations laid down in Regulation (EU) 2019/2088. To comply with those disclosure obligations, financial market participants should be given sufficient time to receive relevant information from undertakings. Financial Market Participants should therefore be required to report on sustainability matters that are specifically needed to comply with the measures laid down in Regulation (EU 2019/2088) on the financial year following the first transposition year of obligations for undertakings within the scope of this Directive. Other information should be reported according to transposition deadlines that apply to undertakings in the scope of the Directive. The Commission should adopt a second set of reporting standards at the latest by 31 January 2024, specifying complementary information that undertakings should disclose about sustainability matters and reporting areas where necessary, and information that is specific to the sector in which an undertaking operates. The Commission should review the standards every 3 years to take account of relevant developments, including the development of international standards.

Amendment  43

Proposal for a directive

Recital 47 a (new)

Text proposed by the Commission	Amendment
	(47 a) Undertakings in certain high emitting sectors such as the extractive and fossil fuel industries, should take into account the relevant sectoral guidance from the IPCC and the International Energy Agency. Undertakings active in the extractive industry as defined in Article 41(1) of Directive 2013/34/EU should be subject to additional sustainability disclosure, as they have high sustainability risks and impacts in terms of greenhouse gas emissions, pollution, biodiversity and human health, thereby bringing particular exposure to the climate and energy transformation in terms of their risks and opportunities.

Amendment  44

 

Proposal for a directive

Recital 48

Text proposed by the Commission	Amendment
(48) Directive 2013/34/EU does not require that the financial statements or the management report are provided in a digital format, which hinders the findability and usability of the reported information. Users of sustainability information increasingly expect such information to be findable and machine-readable in digital formats. Digitalisation creates opportunities to exploit information more efficiently and holds the potential for significant cost savings for both users and undertakings. Undertakings should therefore be required to prepare their financial statements and their management report in XHTML format in accordance with Article 3 of Commission Delegated Regulation (EU) 2019/815,63 and to mark-up sustainability information, including the disclosures required by Article 8 of Regulation (EU) 2020/852, in accordance with that Delegated Regulation. A digital taxonomy to the Union sustainability reporting standards will be necessary to allow for the information reported to be tagged in accordance with those standards. These requirements should feed into the work on digitalisation announced by the Commission in its Communication A European strategy for data64 and in the Digital Finance Strategy for the EU.65 These requirements also complement the creation of a European single access point for public corporate information as envisaged in the capital markets union action plan, which also considers the need for structured data.	(48) Directive 2013/34/EU does not require that the financial statements or the management report are provided in a digital format,which hinders the findability, accessibility and usability of the reported information. Users of sustainability information increasingly expect such information to be findable, comparable and machine-readable in digital formats and fully accessible, including to persons with disabilities. Digitalisation creates opportunities to exploit information more efficiently and holds the potential for significant cost savings for both users and undertakings. Digitalisation also enables the centralisation at Union and Member State level of data in an open and accessible format that facilitates reading and allows for the comparison of data. Undertakings should therefore be required to prepare and make publicly available their financial statements and their management report in XHTML format in accordance with Article 3 of Commission Delegated Regulation (EU) 2019/815,63 and to mark-up sustainability information, including the disclosures required by Article 8 of Regulation (EU) 2020/852, in accordance with that Delegated Regulation. A digital taxonomy to the Union sustainability reporting standards will be necessary to allow for the information reported to be tagged in accordance with those standards. These requirements should feed into the work on digitalisation announced by the Commission in its Communication A European strategy for data64 and in the Digital Finance Strategy for the EU.65 These requirements also complement the creation of a European single access point for public corporate information as envisaged in the capital markets union action plan, which also considers the need for structured data.
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63 Commission Delegated Regulation (EU) 2018/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (OJ L 143, 29.5.2019, p. 1).	63 Commission Delegated Regulation (EU) 2018/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (OJ L 143, 29.5.2019, p. 1).
64 https://ec.europa.eu/digital-single-market/en/european-strategy-data	64 https://ec.europa.eu/digital-single-market/en/european-strategy-data
65 https://ec.europa.eu/info/publications/200924-digital-finance-proposals_en	65 https://ec.europa.eu/info/publications/200924-digital-finance-proposals_en

Amendment  45

 

Proposal for a directive

Recital 49

Text proposed by the Commission	Amendment
(49) To allow for the inclusion of the reported sustainability information in the European single access point, Member States should ensure that undertakings publish the duly approved annual financial statements and the management report in the prescribed electronic format, and ensure that management reports containing sustainability reporting are made available, without delay following their publication, to the relevant officially appointed mechanism referred to in Article 21(2) of Directive 2004/109/EC.	(49) To allow for the inclusion of the reported sustainability information in the European single access point, Member States should ensure that undertakings publish the duly approved annual financial statements and the management report in the prescribed machine readable electronic format, and ensure that management reports containing sustainability reporting are made available, following their publication, to the relevant officially appointed mechanism referred to in Article 21(2) of Directive 2004/109/EC.

Amendment  46

 

Proposal for a directive

Recital 50

Text proposed by the Commission	Amendment
(50) Article 19a(4) of Directive 2013/34/EU enables Member States to exempt undertakings from including in the management report the non-financial statement required under Article 19a(1). Member States may do so where the undertaking concerned prepares a separate report that is published together with the management report in accordance with Article 30 of that Directive, or where that report is made publicly available on the undertaking's website within a reasonable period of time not exceeding 6 months, after the balance sheet date, and is referred to in the management report. The same possibility exists for the consolidated non-financial statement referred to in Article 29(a)(4) of Directive 2013/34/EU. Twenty Member States have used that option. The possibility to publish a separate report hinders, however, the availability of information that connects financial and information on sustainability matters. It also hinders the findability and accessibility of information for users, especially investors, who are interested in both financial and sustainability information. Possible different publication times for financial and sustainability information exacerbate this problem. Publication in a separate report can also give the impression, internally and externally, that sustainability information belongs to a category of less relevant information, which can impact negatively on the perceived reliability of the information. Undertakings should therefore report sustainability information in the management report and Member States should no longer be allowed to exempt undertakings from the obligation to include in the management report information on sustainability matters. Such obligation also helps to clarify the role of national competent authorities in supervising sustainability reporting, as part of the management report, in accordance with Directive 2004/109/EC. In addition, undertakings required to report sustainability information should in no case be exempted from the obligation to publish the management report as it is important to ensure that sustainability information is publically available.	(50) Article 19a(4) of Directive 2013/34/EU enables Member States to exempt undertakings from including in the management report the non-financial statement required under Article 19a(1). Member States may do so where the undertaking concerned prepares a separate report that is published together with the management report in accordance with Article 30 of that Directive, or where that report is made publicly available on the undertaking's website within a reasonable period of time not exceeding 6 months, after the balance sheet date, and is referred to in the management report. The same possibility exists for the consolidated non-financial statement referred to in Article 29(a)(4) of Directive 2013/34/EU. Twenty Member States have used that option. The possibility to publish a separate report hinders, however, the availability of information that connects financial and information on sustainability matters. It also hinders the findability and accessibility of information for users, especially investors, who are interested in both financial and sustainability information. Possible different publication times for financial and sustainability information exacerbate this problem. Publication in a separate report can also give the impression, internally and externally, that sustainability information belongs to a category of less relevant information, which can impact negatively on the perceived reliability of the information. Undertakings should therefore report sustainability information in the management report and Member States should no longer be allowed to exempt undertakings from the obligation to include in the management report information on sustainability matters but they should, at consolidated level, be allowed to publish sustainability matters information in a specific section of the management report and in a format equivalent to, and compatible with, that laid down for the publication of the financial statements. Such obligation also helps to clarify the role of national competent authorities in supervising sustainability reporting, as part of the management report, in accordance with Directive 2004/109/EC. In addition, undertakings required to report sustainability information should in no case be exempted from the obligation to publish the management report as it is important to ensure that sustainability information is publicly available.

Amendment  47

 

Proposal for a directive

Recital 51

Text proposed by the Commission	Amendment
(51) Article 20 of Directive 2013/34/EU requires undertakings with securities listed on regulated markets to include a corporate governance statement in their management report, which has to contain among other information a description of the diversity policy applied by the undertaking in relation to its administrative, management and supervisory bodies. Article 20 of Directive 2013/34/EU leaves flexibility to undertakings to decide what aspects of diversity they report on. It does not explicitly oblige undertakings to include information on any particular aspect of diversity. In order progress towards a more gender-balanced participation in economic decision-making, it is necessary to ensure that undertakings with securities listed on regulated markets always report on their gender diversity policies and the implementation thereof. However, to avoid unnecessary administrative burden, those undertakings should have the possibility to report some of the information required by Article 20 of Directive 2013/34/EU alongside other sustainability-related information.	(51) Article 20 of Directive 2013/34/EU requires undertakings with securities listed on regulated markets to include a corporate governance statement in their management report, which has to contain among other information a description of the diversity policy applied by the undertaking in relation to its administrative, management and supervisory bodies. Article 20 of Directive 2013/34/EU leaves flexibility to undertakings to decide what aspects of diversity they report on. It does not explicitly oblige undertakings to include information on any particular aspect of diversity. In order progress towards a more gender-balanced participation in economic decision-making, it is necessary to ensure that undertakings with securities listed on regulated markets always report on their gender diversity policies, as well as other aspects of policies such as, age, or educational and professional backgrounds or disabilities and the implementation thereof. However, to avoid unnecessary administrative burden, those undertakings should have the possibility to report some of the information required by Article 20 of Directive 2013/34/EU alongside other sustainability-related information.

Amendment  48

 

Proposal for a directive

Recital 52

Text proposed by the Commission	Amendment
(52) Article 33 of Directive 2013/34/EU requires Member States to ensure that the members of the administrative, management and supervisory bodies of an undertaking have collective responsibility for ensuring that the (consolidated) annual financial statements, the (consolidated) management report and the (consolidated) corporate governance statement are drawn up and published in accordance with the requirements of that Directive. That collective responsibility should be extended to the digitalisation requirements laid down in Delegated Regulation (EU) 2019/815, to the requirement to comply with Union sustainability reporting standards and to the requirement to mark up sustainability reporting.	(52) Article 33 of Directive 2013/34/EU requires Member States to ensure that the members of the administrative, management and supervisory bodies of an undertaking have collective responsibility that is well defined for ensuring that the (consolidated) annual financial statements, the (consolidated) management report and the (consolidated) corporate governance statement are drawn up and published in accordance with the requirements of that Directive. That collective responsibility should be extended to the digitalisation requirements laid down in Delegated Regulation (EU) 2019/815, to the requirement to comply with Union sustainability reporting standards and to the requirement to mark up sustainability reporting.

Amendment  49

 

Proposal for a directive

Recital 53

Text proposed by the Commission	Amendment
(53) The assurance profession distinguishes between limited and reasonable assurance engagements. The conclusion of a limited assurance engagement is usually provided in a negative form of expression by stating that no matter has been identified by the practitioner to conclude that the subject matter is materially misstated. The auditor performs fewer tests than in a reasonable assurance engagement. The amount of work for a limited assurance engagement is therefore less than for reasonable assurance. The work effort in a reasonable assurance engagement entails extensive procedures including consideration of internal controls of the reporting undertaking and substantive testing, and is therefore significantly higher than in a limited assurance engagement. The conclusion of this type of engagement is usually provided in a positive form of expression and states an opinion on the measurement of the subject matter against previously defined criteria. Article 19a(5) and Article 29a(5) of Directive 2013/34/EU require Member States to ensure that the statutory auditor or audit firm checks whether the non-financial statement or the separate report has been provided. It does not require that an independent provider of assurance services verifies the information, although it allows Member States to require such verification where they wish to. The absence of an assurance requirement on sustainability reporting, in contrast to the requirement for the statutory auditor to perform a reasonable assurance engagement on financial statements, would threaten the credibility of the sustainability information disclosed, thus failing to meet the needs of the intended users of that information. Although the objective is to have a similar level of assurance for financial and sustainability reporting, the absence of a commonly agreed standard for the assurance of sustainability reporting creates the risk of different understandings and expectations of what a reasonable assurance engagement would consist of for different categories of sustainability information, especially with regard to forward looking and qualitative disclosures. Therefore, a progressive approach to enhance the level of the assurance required for sustainability information should be considered, starting with an obligation on the statutory auditor or audit firm to express an opinion about the compliance of the sustainability reporting with Union requirements based on a limited assurance engagement. This opinion should cover the compliance of the sustainability reporting with Union sustainability reporting standards, the process carried out by the undertaking to identify the information reported pursuant to the sustainability reporting standards and compliance with the requirement to mark-up sustainability reporting. The auditor should also assess whether the undertaking’s reporting complies with the reporting requirements of Article 8 of Regulation (EU) 2020/852. To guarantee a common understanding and expectations of what a reasonable assurance engagement would consist of, the statutory auditor or audit firm should be required to express an opinion based on a reasonable assurance engagement about the compliance of the sustainability reporting with Union requirements, should the Commission adopt assurance standards for reasonable assurance of sustainability reporting. This would also allow for the progressive development of the assurance market for sustainability information, and of undertakings’ reporting practices. Finally, this progressive approach would phase in the increase in costs for reporting undertakings, given that reasonable assurance is more costly than limited assurance.	(53) The assurance profession distinguishes between limited and reasonable assurance engagements. The conclusion of a limited assurance engagement is usually provided in a negative form of expression by stating that no matter has been identified by the practitioner to conclude that the subject matter is materially misstated. The auditor performs fewer tests than in a reasonable assurance engagement. The amount of work for a limited assurance engagement is therefore less than for reasonable assurance. The work effort in a reasonable assurance engagement entails extensive procedures including consideration of internal controls of the reporting undertaking and substantive testing, and is therefore significantly higher than in a limited assurance engagement. The conclusion of this type of engagement is usually provided in a positive form of expression and states an opinion on the measurement of the subject matter against previously defined criteria. Article19a(5) and Article 29a(5) of Directive 2013/34/EU require Member States to ensure that the statutory auditor or audit firm checks whether the non-financial statement or the separate report has been provided. It does not require that an independent provider of assurance services verifies the information, although it allows Member States to require such verification where they wish to. The absence of an assurance requirement on sustainability reporting, in contrast to the requirement for the statutory auditor to performa reasonable assurance engagement on financial statements, would threaten the credibility of the sustainability information disclosed, thus failing to meet the needs of the intended users of that information. Although the objective is to have a similar level of assurance for financial and sustainability reporting, the absence of a commonly agreed standard for the assurance of sustainability reporting creates the risk of different understandings and expectations of what a reasonable assurance engagement would consist of fordifferent categories of sustainability information, especially with regard to forward looking and qualitative disclosures. Therefore, a progressive and conditioned approach to enhance the level of the assurance required for sustainability information should be considered, starting with an obligation on the statutory auditor or audit firm to express an opinion about the compliance of the sustainability reporting with Union requirements based on a limited assurance engagement. This opinion should cover the compliance of the sustainability reporting with Union sustainability reporting standards, the process carried out by the undertaking to identify the information reported pursuant to the sustainability reporting standards and compliance with the requirement to mark-up sustainability reporting. The auditor should also assess whether the undertaking’s reporting complies with the reporting requirements of Article 8 of Regulation (EU) 2020/852. To guarantee a common understanding and expectations of what a reasonable assurance engagement would consist of, the statutory auditor or audit firm should then be required to express an opinion based on a reasonable assurance engagement about the compliance of the sustainability reporting with Union requirements, after the Commission adopts assurance standards for reasonable assurance of sustainability reporting and following a positive outcome of the review mechanism and should the co-legislators decide to review the level of assurance compliance. This would also allow for the progressive development of the assurance market for sustainability information, and of undertakings’ reporting practices.

Amendment  50

 

Proposal for a directive

Recital 54

Text proposed by the Commission	Amendment
(54) Statutory auditors or audit firms already verify the financial statements and the management report. The assurance of sustainability reporting by the statutory auditors or audit firms would help to ensure the connectivity between, and consistency of, financial and sustainability information, which is particularly important for by users of sustainability information. However, there is a risk of further concentration of the audit market, which could risk the independence of auditors and increase audit or assurance fees. It is therefore desirable to offer undertakings a broader choice of independent assurance service providers for the assurance of sustainably reporting. Member States should therefore be allowed to accredit independent assurance services providers in accordance with Regulation (EC) No 765/2008 of the European Parliament and of the Council66 to provide an opinion on sustainability reporting, which should be published together with the management report. Member States should set out requirements that ensure consistent outcomes in the assurance of sustainability reporting carried out by different assurance service providers. Therefore, all independent assurance services providers should be subject to requirements that are consistent with those set out in Directive 2006/43/EC as regards the assurance of sustainability reporting. This will also guarantee a level playing field among all persons and firms allowed by Member States to provide the opinion on the assurance of sustainability reporting, including statutory auditors. If an undertaking seeks the opinion of an accredited independent assurance services provider other than the statutory auditor on its sustainability reporting, it should not in addition need to request this opinion from the statutory auditor.	(54) Statutory auditors or audit firms already verify the financial statements and the management report. The assurance of sustainability reporting by the statutory auditors or audit firms would help to ensure the connectivity between, and consistency of, financial and sustainability information, which is particularly important for by users of sustainability information. However, there is a risk of further concentration of the audit market, which could risk the independence of auditors and increase audit or assurance fees. It is therefore desirable to offer undertakings a broader choice of independent assurance service providers for the assurance of sustainably reporting. Member States should therefore be allowed to accredit independent assurance services providers in accordance with Regulation (EC) No 765/2008 of the European Parliament and of the Council66 to provide an opinion on sustainability reporting, which should be published together with the management report. Member States should set out requirements that ensure consistent outcomes in the assurance of sustainability reporting carried out by different assurance service providers. Therefore, all independent assurance services providers should be subject to requirements that are equivalent to those set out in Directive 2006/43/EC as regards the assurance of sustainability reporting. This will also guarantee a level playing field among all persons and firms allowed by Member States to provide the opinion on the assurance of sustainability reporting, including statutory auditors. If an undertaking seeks the opinion of an accredited independent assurance services provider other than the statutory auditor on its sustainability reporting, it should not in addition need to request this opinion from the statutory auditor. Furthermore, a high level of independence should been ensured for sustainability reporting assurance operations by establishing the principle of incompatibility between a statutory audit engagement and an assurance of sustainability reporting engagement being carried out by the same statutory auditor or the same audit firm or network.
__________________	__________________
66 Regulation (EC) No 765/2008 of the European Parliament and of the Council of 9 July 2008 setting out the requirements for accreditation and market surveillance relating to the marketing of products and repealing Regulation (EEC) No 339/93 (OJ L 218, 13.8.2008, p. 30).	66 Regulation (EC) No 765/2008 of the European Parliament and of the Council of 9 July 2008 setting out the requirements for accreditation and market surveillance relating to the marketing of products and repealing Regulation (EEC) No 339/93 (OJ L 218, 13.8.2008, p. 30).

Amendment  51

 

Proposal for a directive

Recital 56

Text proposed by the Commission	Amendment
(56) The rules on the approval and recognition of statutory auditors and audit firms should ensure that statutory auditors have the necessary level of theoretical knowledge of subjects relevant to the assurance of sustainability reporting and the ability to apply such knowledge in practice. However, statutory auditors that have already been approved or recognised by a Member State should continue to be allowed to carry out statutory audits and should be allowed to carry out assurance engagements of sustainability reporting. Member States should, however, ensure that already approved statutory auditors acquire the necessary knowledge in sustainability reporting and the assurance of sustainability reporting via continued professional education.	(56) The rules on the approval and recognition of statutory auditors and audit firms should ensure that statutory auditors have the necessary level of theoretical knowledge of subjects relevant to the assurance of sustainability reporting and the ability to apply such knowledge in practice. This knowledge could also be based on previous employment experiences and professional equivalences. However, statutory auditors that have already been approved or recognised by a Member State should continue to be allowed to carry out statutory audits and should be allowed to carry out assurance engagements of sustainability reporting. Member States should, however, ensure that already approved statutory auditors acquire the necessary knowledge in sustainability reporting and the assurance of sustainability reporting via continued professional education.

Amendment  52

 

Proposal for a directive

Recital 57

Text proposed by the Commission	Amendment
(57) It should be ensured that the requirements imposed on auditors as regards their work on the statutory audit and the assurance of sustainability reporting are consistent. It should therefore be laid down that, where the opinion on sustainability reporting is given by the statutory auditor or audit firm carrying out the statutory audit of financial statements, the key audit partners are actively involved in conducting the assurance of sustainability reporting. When carrying out the assurance of sustainability reporting, statutory auditors should be required to devote sufficient time to the engagement and assign sufficient resources to enable them to carry out their duties appropriately. Finally, the client account record should specify the fees charged for the assurance of sustainability reporting and the audit file should include information related to the assurance of sustainability reporting.	(57) It should be ensured that the requirements imposed on auditors as regards their work on the statutory audit and the assurance of sustainability reporting are consistent. It should therefore be laid down that, where the opinion on sustainability reporting is given by the statutory auditor or audit firm carrying out the statutory audit of financial statements, the key audit partners are actively involved in conducting the assurance of sustainability reporting. When carrying out the assurance of sustainability reporting, statutory auditors should be required to devote sufficient time to the engagement and assign sufficient resources and expertise to enable them to carry out their duties appropriately. Finally, the client account record should specify the fees charged for the assurance of sustainability reporting and the audit file should include information related to the assurance of sustainability reporting.

Amendment  53

 

Proposal for a directive

Recital 57 a (new)

Text proposed by the Commission	Amendment
	(57 a) The audit bodies for sustainability reports should have a high level of technical and specialised expertise in the field of sustainability in order to assess the information.

Amendment  54

 

Proposal for a directive

Recital 65

Text proposed by the Commission	Amendment
(65) Article 39 of Directive 2006/43/EC requires Member States to ensure that each public-interest entity has an audit committee, and specifies its tasks with regard to the statutory audit. That audit committee should be assigned with certain tasks with regard to the assurance of sustainability reporting. Those tasks should include the obligation to inform the administrative or supervisory body of the audited entity of the outcome of the assurance of sustainability reporting, and to explain how the audit committee contributed to the integrity of sustainability reporting and what the role of the audit committee was in that process.	(65) Article 39 of Directive 2006/43/EC requires Member States to ensure that each public-interest entity has an audit committee, and specifies its tasks with regard to the statutory audit. That audit committee should be assigned with certain tasks with regard to the assurance of sustainability reporting. Those tasks should include the obligation to inform the administrative or supervisory body of the audited entity of the outcome of the assurance of sustainability reporting, and to explain how the audit committee contributed to the integrity of sustainability reporting and what the role of the audit committee was in that process. Some companies have set up Sustainable Corporate Reporting Committees. Companies may decide to involve both the audit committee and any other committees involved on sustainable reporting.

Amendment  55

 

Proposal for a directive

Recital 69

Text proposed by the Commission	Amendment
(69) According to Article 51 of Directive 2013/34/EU, the enforcement of corporate reporting by undertakings the securities of which are not listed on regulated markets is carried out by Member States. The types of sanctions are, however, not specified, which means that sanctioning regimes can vary widely between Member States, so undermining the single market. To improve sustainability reporting in the internal market and to contribute to the transition towards a fully sustainable and inclusive economic and financial system in which the benefits of growth are broadly shared in accordance with the European Green Deal, Member States should provide for certain sanctions and administrative measures in the case of infringements of sustainability reporting requirements. The sanctioning regime of Directive 2013/34/EU should therefore be strengthened accordingly, whereby Member States are to provide for appropriate sanctions and administrative measures.	(69) According to Article 51 of Directive 2013/34/EU, the enforcement of corporate reporting by undertakings the securities of which are not listed on regulated markets is carried out by Member States. The types of sanctions are, however, not specified, which means that sanctioning regimes can vary widely between Member States, so undermining the single market. To improve sustainability reporting in the internal market and to contribute to the transition towards a fully sustainable and inclusive economic and financial system in which the benefits of growth are broadly shared in accordance with the European Green Deal, Member States should provide for certain types of sanctions and administrative measures in the case of infringements of sustainability reporting requirements. The sanctioning regime of Directive 2013/34/EU should therefore be strengthened accordingly, whereby Member States are to provide for appropriate types of sanctions and administrative measures.

Amendment  56

 

Proposal for a directive

Recital 69 a (new)

Text proposed by the Commission	Amendment
	(69 a) Non-EU companies would should be required to publish their non-financial sustainability reporting and their due diligence strategy on their website according to sustainability report requirements or requirements which are deemed equivalent by the European Commission. Non-compliant companies would should be publicly notified by the Commission that they failed to comply and be required to provide the necessary information. Tougher sanctions could be envisaged through the review mechanism.

Amendment  57

 

Proposal for a directive

Recital 71 a (new)

Text proposed by the Commission	Amendment
	(71 a) The Directive establishes that, by the end of 2026,the Commission shall submit a report on the effectiveness of the new provisions integrated in the present Directive and assess several aspects that were proposed in the negotiation phase. Such a review clause already existed in the NFRD. The review clause in CSRD should assess, in particular the scope enlargement, the level of assurance engagement by auditors, the need to improve European standards on human rights, the added value of expanding the list of activities and high-risk sectors and related economic activities, the development of sanction mechanisms for companies operating in Europe based in third-countries.

Amendment  58

 

Proposal for a directive

Article 1 – point 1

Directive 2013/34/EU

Article 1 – paragraph 3

Text proposed by the Commission	Amendment
	3. The coordination measures prescribed by Articles 19a, 19d, 29a, 30 and 33, Article 34(1), second subparagraph, point (aa), paragraphs 2 and 3 of Article 34, and Article 51 of this Directive shall also apply to the laws, regulations and administrative provisions of the Member States relating to the following undertakings regardless of their legal form:

Amendment  59

 

Proposal for a directive

Article 1 – point 1

Directive 2013/34/EU

Article 1 – paragraph 3 – subparagraph 1 - point b a (new)

Text proposed by the Commission	Amendment
	(b a) for profit legal entities organised as trusts or as similar legal arrangements.

Amendment  60

 

Proposal for a directive

Article 1 – point 1

Directive 2013/34/EU

Article 1 – paragraph 3 – subparagraph 2a (new)

Text proposed by the Commission	Amendment
	2a. By derogation of Article 1 paragraph 3, undertakings referred to in subparagraphs a) and b) shall report information defined in delegated acts referred to in Article 19b paragraph 1 (a) that correspond to the needs of disclosure obligations of Regulation (EU) 2019/2088, on the financial year following the first financial year referred to in Article 5.

Amendment  61

 

Proposal for a directive

Article 1 – point 2

Directive 2013/34/EU

Article 2 – point 17

Text proposed by the Commission	Amendment
(17) ‘sustainability matters’ means sustainability factors as defined in Article 2, point (24) of Regulation (EU) 2019/2088 of the European Parliament and of the Council*4, and governance factors;	(17) ‘sustainability matters’ means sustainability factors as defined in Article 2, point (24) of Regulation (EU) 2019/2088 of the European Parliament and of the Council*4, and further specified in the standards and delegated cts referred to in Article 4 thereof, as well as governance factors;

Amendment  62

 

Proposal for a directive

Article 1 – point 2

Directive 2013/34/EU

Article 2 – point 19

Text proposed by the Commission	Amendment
(19) ’intangibles’ means non-physical resources that contribute to the undertaking’s value creation;	(19) ’intangibles’ means non-physical resources that contribute to the undertaking’s value creation and are consistent with intangible assets already reported in the financial reporting framework;

Amendment  63

 

Proposal for a directive

Article 1 – point 2

Directive 2013/34/EU

Article 2 – point 20 a (new)

Text proposed by the Commission	Amendment
	(20 a) ‘Science-based target’ is a target defined on the basis of conclusive scientific evidence and with independent scientific validation, that when achieved by the undertaking ensures that the undertaking’s impacts, as specified in Article 19a, will be aligned with the sustainability goals and criteria of the European Union for the specific sustainability matters.

Amendment  64

 

Proposal for a directive

Article 1 – point 3

Directive 2013/34/EU

Article 19 a - paragraph 1

Text proposed by the Commission	Amendment
1. Large undertakings and, as of 1 January 2026, small and medium-sized undertakings which are undertakings referred to in Article 2, point (1), point (a), shall include in the management report information necessary to understand the undertaking’s impacts on sustainability matters, and information necessary to understand how sustainability matters affect the undertaking’s development, performance and position.	1. Large undertakings shall include in the management report information necessary to understand the undertaking’s impacts on sustainability matters, and information necessary to understand how sustainability matters affect the undertaking’s development, performance and position.

Amendment  65

 

Proposal for a directive

Article 1 – point 3

Directive 2013/34/EU

Article 19 a - paragraph 1 a (new)

Text proposed by the Commission	Amendment
	1 a. Third-country companies which are of a legal form comparable to undertakings referred to in Article 19a (1) and that are not established in the territory of the Union when they operate in the internal market selling goods or providing services under implementing measures set out in Article 19b (1) – iic) shall include in the management report information necessary to understand the undertaking’s impacts on sustainability matters, and information necessary to understand how sustainability matters affect the undertaking’s development, performance and position.

Amendment  66

 

Proposal for a directive

Article 1 – point 3

Directive 2013/34/EU

Article 19 a - paragraph 2 – subparagraph 1 - point a - point ii a (new)

Text proposed by the Commission	Amendment
	(ii a) the plans of the undertaking to ensure that its business model and strategy are consistent with securing employment in the EU and promoting fair working conditions as defined in the European Pillar of Social Rights

Amendment  67

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 2 – subparagraph 1 – point a – point iii

Text proposed by the Commission	Amendment
(iii) the plans of the undertaking to ensure that its business model and strategy are compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement;	(iii) the plans of the undertaking, taking into account the entire value chain, including transition plans with implementing actions and related financial and investment plans, and short-term and medium-term absolute emission reduction targets for 2025 and 2030, reviewed every five years up to 2050, to ensure that its overall business model and strategy are compatible with the transition to a sustainable economy and with the limiting of global warming to 1,5 °C in line with the Paris Agreement, with no or limited overshoot and pursuant to the latest recommendations of the IPCC and the European Scientific Advisory Board on Climate Change, and that the undertaking´s operations within the Union are aligned with the objective to achieve climate neutrality by 2050 at the latest, set out in the European Climate Law; and
	- where relevant, the degree of exposure of the undertaking to sectors listed in Divisions 05, 06,09, 19, 35, 46.71, 73.1 of Annex I to Regulation (EC) No1893/2006, insofar as they relate to coal, oil, gas-related activities;
	- where relevant, undertakings the activities of which particularly impact natural resources and/or that operate in sectors particularly relying on natural resources, shall disclose the nature-related impacts on and risks for biodiversity and ecosystems that are associated with the undertaking's business model, and plans by the undertaking to mitigate the loss of nature and restore nature in line with the latest science;

Amendment  68

 

Proposal for a directive

Article 1 – point 3

Directive 2013/34/EU

Article 19 a - paragraph 2 – subparagraph 1 – point a - point v

Text proposed by the Commission	Amendment
(v) how the undertaking’s strategy has been implemented with regard to sustainability matters;	(v) how the undertaking’s strategy has been implemented with regard to sustainability matters and science-based targets;

Amendment  69

 

Proposal for a directive

Article 1 – point 3

Directive 2013/34/EU

Article 19 a - paragraph 2 – subparagraph 1 – point b

Text proposed by the Commission	Amendment
(b) a description of the targets related to sustainability matters set by the undertaking and of the progress the undertaking has made towards achieving those targets;	(b) a description of the time-bound short-term, mid-term and long-term targets related to sustainability matters set by the undertaking with respect to the undertaking’s risks and opportunities and adverse impacts on sustainability matters, whether such targets are science-based and of the progress the undertaking has made towards achieving those targets including a clearly defined path and implementing actions to reach those;

Amendment  70

 

Proposal for a directive

Article 1 – point 3

Directive 2013/34/EU

Article 19 a - paragraph 2 – subparagraph 1 – point c

Text proposed by the Commission	Amendment
(c) a description of the role of the administrative, management and supervisory bodies with regard to sustainability matters;	(c) a description of the role and expertise of the administrative, management and supervisory bodies with regard to sustainability matters;

Amendment  71

 

Proposal for a directive

Article 1 – point 3

Directive 2013/34/EU

Article 19 a - paragraph 2 – subparagraph 1 – point d a (new)

Text proposed by the Commission	Amendment
	(d a) information about the existence of incentive schemes offered to members of the administrative, management and supervisory bodies which are linked to sustainability matters;

Amendment  72

 

Proposal for a directive

Article 1 – point 3

Directive 2013/34/EU

Article 19 a - paragraph 2 – subparagraph 1 – point e - point i

Text proposed by the Commission	Amendment
(i) the due diligence process implemented with regard to sustainability matters;	(i) the due diligence process implemented with regard to sustainability matters and, where applicable, pursuant to EU and/or national legislation;

Amendment  73

 

Proposal for a directive

Article 1 – point 3

Directive 2013/34/EU

Article 19 a - paragraph 2 – subparagraph 1 – point e – point iii

Text proposed by the Commission	Amendment
(iii) any actions taken, and the result of such actions, to prevent, mitigate or remediate actual or potential adverse impacts;	(iii) any actions taken, and the result of such actions, to identify, track, prevent, mitigate, remediate or cease actual or potential adverse impacts;

Amendment  74

 

Proposal for a directive

Article 1 – point 3

Directive 2013/34/EU

Article 19 a - paragraph 2 – subparagraph 1 – point g

Text proposed by the Commission	Amendment
(g) indicators relevant to the disclosures referred to in points (a) to (f).	(g) indicators and time-bound targets relevant to the disclosures referred to in points (a) to(f) based on the guidelines developed by the European Commission.

Amendment  75

 

Proposal for a directive

Article 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 2 – subparagraph 3

Text proposed by the Commission	Amendment
Undertakings shall report the process carried out to identify the information that they have included in the management report in accordance with paragraph 1 and in this process they shall take account of short, medium and long-term horizons.	Undertakings shall report the process carried out to identify the information that they have included in the management report in accordance with paragraph 1 and 2, in this process they shall take account of short, medium and long-term objectives, strategies and targets.

Amendment  76

 

Proposal for a directive

Article 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 3 – subparagraph 2

Text proposed by the Commission	Amendment
Where appropriate, the information referred to in paragraphs 1 and 2 shall contain information about the undertaking’s value chain, including the undertaking’s own operations, products and services, its business relationships and its supply chain.	Where applicable, the information referred to in paragraphs 1 and 2 shall contain information about the undertaking’s value chain, including the undertaking’s own operations, products and services, its business relationships and its supply chain.

Amendment  77

 

Proposal for a directive

Article – point 3

Directive 2013/34/EU

Article 19 a - paragraph 3 – subparagraph 3

Text proposed by the Commission	Amendment
Where appropriate, the information referred to in paragraphs 1 and 2 shall also contain references to, and additional explanations of, other information included in the management report in accordance with Article 19 and amounts reported in the annual financial statements.	Where applicable, the information referred to in paragraphs 1 and 2 shall also contain references to, and additional explanations of, other information included in the management report in accordance with Article 19 and amounts reported in the annual financial statements.

Amendment  78

 

Proposal for a directive

Article 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 4 a (new)

Text proposed by the Commission	Amendment
	4 a. The Commission shall prepare non-binding guidelines, on appropriate methodologies to generate the forward-looking information to be provided in the reporting.

Amendment  79

 

Proposal for a directive

Article 1 - point 3

Directive 2013/34/EU

Article 19 a – paragraph 5

Text proposed by the Commission	Amendment
5. By way of derogation from Article 19a, paragraphs 1 to 4, small and medium sized undertakings referred to in Article 2, point (1), point (a), may report in accordance with the sustainability reporting standards for small and medium sized undertakings referred to in Article 19c.	5. In accordance with applicable EU and nationallegislation and practice, the appropriate worker’s representatives shall take part in the design of the reporting system and the outcome should be presented, where applicable, to the relevant administrative, management or supervisory bodies.

Amendment  80

Proposal for a directive

Article 1– point 3

Directive 2013/34/EU

Article 19 a – paragraph 7 – subparagraph 1

Text proposed by the Commission	Amendment
An undertaking which is a subsidiary undertaking shall be exempted from the obligations set out in paragraphs 1 to 4 if that undertaking and its subsidiary undertakings are included in the consolidated management report of a parent undertaking, drawn up in accordance with Articles 29 and 29a. An undertaking that is a subsidiary undertaking from a parent undertaking that is established in a third country shall also be exempted from the obligations set out in paragraphs 1 to 4 where that undertaking and its subsidiary undertakings are included in the consolidated management report of that parent undertaking and where the consolidated management report is drawn up in a manner that may be considered equivalent, in accordance with the relevant implementing measures adopted pursuant to Article 23(4), point (i), of Directive 2004/109/EC of the European Parliament and of the Council*6, to the manner required by the sustainability reporting standards referred to in Article 19b of this Directive.	deleted
__________________
*6 Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (OJ L 390, 31.12.2004, p. 38).

Justification

L'exemption proposée par la Commission diffère des règles pour la communication des données financières qui ne dispensent pas les entreprises de publier leur bilan si ce dernier est intégré dans les comptes consolidés de la maison mère ou du groupe. La consolidation des données de durabilité sur base d’un critère de matérialité au niveau de la maison mère ou du groupe peut entrainer l’omission de certaines informations particulièrement pertinentes pour les investisseurs et les parties prenantes. Le rapporteur propose de conserver l’obligation en matière d'information pour les filiales et les maisons mères au niveau de l’entreprise. L'absence d'exemption ne remet pas en cause la possibilité pour une entreprise mère de mutualiser les coûts et les ressources avec ses filiales afin de remplir leurs obligations en matière d'information et d’audit de durabilité. Cela ne remet pas non plus en cause la possibilité pour les entreprises mères de produire un rapport de gestion consolidé.

Amendment  81

Proposal for a directive

Article 1 –point 3

Directive 2013/34/EU

Article 19 a – paragraph 7 – subparagraph 2

Text proposed by the Commission	Amendment
The consolidated management report of the parent undertaking referred to in subparagraph 1 shall be published in accordance with Article 30, in the manner prescribed by the law of the Member State by which the undertaking that is exempted from the obligations set out in paragraphs 1 to 4 is governed.	The consolidated management report of a parent undertaking shall be published in accordance with Article 30, in the manner prescribed by the law of the Member State by which the undertaking which meets the requirements referred to in paragraphs 1 to 4 is governed.

Amendment  82

Proposal for a directive

Article 1 –point 3

Directive 2013/34/EU

Article 19 a – paragraph 7 – subparagraph 3

Text proposed by the Commission	Amendment
The Member State by which the undertaking that is exempted from the obligations set out in paragraphs 1 to 4 is governed, may require that the consolidated management report referred to in the first subparagraph of this paragraph is published in an official language of the Member State or in a language customary in the sphere of international finance, and that any necessary translation into those languages is certified.	The Member State by which the undertaking which meets the requirements referred to in paragraphs 1 to 4 is governed may require that the consolidated management report of a parent undertaking is published in an official language of the Member State or in a language customary in the sphere of international finance, and that any necessary translation into those languages is certified.

Amendment  83

 

Proposal for a directive

Article 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 7 a (new)

Text proposed by the Commission	Amendment
	7 a. The Commission shall be empowered to adopt delegated acts in accordance with Article 49 to establish and amend a list of activities that shall include economic activities in the following high-risk sectors:
	- Garment and footwear, including manufacturing of textile,
	- Agriculture, including manufacturing of food an beverage,
	- Extractive sector (mining, oil and gas industries),
	- Minerals, including tin, tantalum, tungsten and gold, as well as all other mineral resources.
	The list should correspond to the European NACE codes and take into account, when possible, the lowest classification level.

Amendment  84

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 1 – subparagraph 1 – point a

Text proposed by the Commission	Amendment
(a) by 31 October 2022, the Commission shall adopt delegated acts specifying the information that undertakings are to report in accordance with paragraphs 1 and 2 of Article 19a, and at least specifying information corresponding to the needs of financial market participants subject to the disclosure obligations of Regulation (EU) 2019/2088.	(a) by 30 April 2023, the Commission shall adopt delegated acts specifying the information that undertakings are to report in accordance with paragraphs 1 and 2 of Article 19a, and at least specifying information corresponding to the needs of financial market participants subject to the disclosure obligations of Regulation (EU) 2019/2088.

Amendment  85

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 1 – subparagraph 1 – point b

Text proposed by the Commission	Amendment
(b) by 31 October 2023, the Commission shall adopt delegated acts specifying:	(b) by 1 January 2024, the Commission shall adopt delegated acts specifying:

Amendment  86

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 1 – subparagraph 1 – point b – point ii

Text proposed by the Commission	Amendment
(ii) information that undertakings shall report that is specific to the sector in which they operate.	(ii) information that undertakings shall report that is specific to the sector in which they operate, prioritising information in economic activities in high-risk sectors referred to in Article19a (7a);

Amendment  87

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 1 – subparagraph 1 – point ii a (new)

Text proposed by the Commission	Amendment
	(ii a) the specific measurable objectives based on scientific evidence set out in Article 2, point(20a);

Amendment  88

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 1 – subparagraph 1 – point ii b (new)

Text proposed by the Commission	Amendment
	(ii b) the criteria and implementing rules for sustainability reporting for undertakings operating economic activities in high-risk sectors referred to in Article 19a (7a);

Amendment  89

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 1 – subparagraph 1 – point ii c (new)

Text proposed by the Commission	Amendment
	(ii c) implementing rules and guidelines for sustainability reporting for undertakings referred to in Article 19 a) point 1a which are governed by the law of a third country and are not established in the territory of the Union when they operate in the internal market selling goods or providing services.

Amendment  90

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 2 – subparagraph 1

Text proposed by the Commission	Amendment
2. The sustainability reporting standards referred to in paragraph 1 shall require that the information to be reported is understandable, relevant, representative, verifiable, comparable, and is represented in a faithful manner.	2. The sustainability reporting standards referred to in paragraph 1 shall ensure the quality and relevance of reported information, by requiring that its representative, verifiable, reliable, easily accessible, comparable, and is represented in a faithful manner and, where possible, based on specific measurable science-based objectives as described in article 19b) 1 b.iia).

Amendment  91

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 2 – subparagraph 2 – point a – point i

Text proposed by the Commission	Amendment
(i) climate change mitigation;	(i) climate change mitigation including:
	- emissions on all scopes of greenhouse gas emissions, including Scope 1, 2 and 3 GHG emissions, and other relevant indicators, as appropriate;
	- transition, financial and investment plans related to GHG emissions and any emission reduction targets of the undertaking and any targeted date to achieve climate neutrality; and
	- the alignment of the undertaking’s business model and strategy with the goal of limiting of global warming to well-below 2 °C and pursuing efforts to limit it to 1.5° with no or limited overshoot,

Amendment  92

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 2 – subparagraph 2 – point a – point iii

Text proposed by the Commission	Amendment
(iii) water and marine resources;	(iii) the sustainable use and protection of water, marine and soil resources;

Amendment  93

 

Proposal for a directive

Article 1 - point 4

Directive 2013/34/EU

Article 19 b – paragraph 2 – subparagraph 2 – point a – point iv

Text proposed by the Commission	Amendment
(iv) resource use and circular economy;	(iv) the transition to circular economy, including resource use;

Amendment  94

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 2 – subparagraph 2 – point a – point v

Text proposed by the Commission	Amendment
(v) pollution;	(v) pollution prevention and control;

Amendment  95

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 2 – subparagraph 2 – point a – point vi

Text proposed by the Commission	Amendment
(vi) biodiversity and ecosystems;	(vi) protection and restoration of biodiversity and ecosystems;

Amendment  96

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 2 – subparagraph 2 – point b – point i

Text proposed by the Commission	Amendment
(i) equal opportunities for all, including gender equality and equal pay for equal work, training and skills development, and employment and inclusion of people with disabilities;	(i) equal treatment and opportunities for all, including gender equality and equal pay for work of equal value, diversity at all levels as defined under existing EU legislation, pay transparency, measures against violence and harassment, training and skills development, in particular the rate and breakdown of workers participating in training, and employment and inclusion of people with disabilities, specifying information on accessibility measures, on a country-by-country basis;

Amendment  97

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 2 – subparagraph 2 – point b – point i a (new)

Text proposed by the Commission	Amendment
	(i a) the composition of the workforce disaggregated by sex, on a country-by-country basis;

Amendment  98

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 2 – subparagraph 2 – point b – point i b (new)

Text proposed by the Commission	Amendment
	(i b) existence of collective agreements and the coverage of workers therein, and the existence of work councils, including international work councils, in accordance with applicable law and practice

Amendment  99

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point b – point ii

Text proposed by the Commission	Amendment
(ii) working conditions, including secure and adaptable employment, wages, social dialogue, collective bargaining and the involvement of workers, work-life balance, and a healthy, safe and well-adapted work environment;	(ii) working conditions, including secure employment, adequate and fair wages, working time, social dialogue, freedom of association, collective bargaining and the information, consultation and participation rights of workers, including with regard to their participation in administrative and supervisory boards, work-life balance, maternity, paternity and parental leave, and health and safety, and the rate of workers injured and sick at work;
	In accordance with the Union labour law acquis and national law and practice, the central management shall consult with the trade unions and workers' representatives at the beginning of the reporting period on the design of the reporting system, including the indicators included and the means of obtaining and verifying sustainability information. Central management shall also consult trade unions and workers' representatives in the identification of risks and impacts of the undertaking on the environment and people.
	Workers' representatives shall be provided with the necessary resources to ensure the effective exercise of the rights arising from this Directive. This shall include the support of an expert, where this is in line with national law and practice.
	Member States shall ensure that workers' rights to information and consultation are respected in relation to sustainability reporting and are exercised in accordance with the existing Union legal framework, such as Directive 2002/14/EC, Directive 2009/38/EC, Directive 2001/86/ EC and 2003/ 72/ EC.

Amendment  100

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 2 – subparagraph 2 – point b – point iii

Text proposed by the Commission	Amendment
(iii) respect for the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work and the ILO fundamental conventions and the Charter of Fundamental Rights of the European Union.	(iii) respect for the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights, the UN Guiding Principles on Business and Human Rights and other core UN human rights conventions, including the UN Convention on Persons with Disabilities, the UN Declaration on the Rights of Indigenous Peoples, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work and the ILO fundamental and governance conventions, the International Labour Organization's Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, including the list of relevant standards in Annex I, the European Convention of Human Rights, the revised European Social Charter, the Charter of Fundamental Rights of the European Union, the OECD Guidelines on Multinational Enterprises and the EU labour law acquis.

Amendment  101

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 2 – subparagraph 2 – point c – point i

Text proposed by the Commission	Amendment
(i) the role of the undertaking’s administrative, management and supervisory bodies, including with regard to sustainability matters, and their composition;	(i) the role and expertise of the undertaking’s administrative, management and supervisory bodies and committees, including with regard to sustainability matters and their composition;

Amendment  102

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 2 – subparagraph 2 – point c – point ii

Text proposed by the Commission	Amendment
(ii) business ethics and corporate culture, including anti-corruption and anti-bribery;	(ii) business ethics and corporate culture, including anti-corruption and anti-bribery and internal arrangements within the undertaking for protecting whistle-blowers and animal welfare where applicable ;

Amendment  103

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 2 – subparagraph 2 – point c – point iii

Text proposed by the Commission	Amendment
(iii) political engagements of the undertaking, including its lobbying activities;	(iii) political influence of the undertaking, including its lobbying activities and political donations;

Amendment  104

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 2 – subparagraph 2 – point c – point iv

Text proposed by the Commission	Amendment
(iv) the management and quality of relationships with business partners, including payment practices;	(iv) the management and quality of relationships with business partners, including payment practices, especially towards SMEs;

Amendment  105

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 2 – subparagraph 2 – point c – point v

Text proposed by the Commission	Amendment
(v) the undertaking’s internal control and risk management systems, including in relation to the undertaking’s reporting process.	(v) the undertaking’s internal control and risk management systems, including in relation to the undertaking’s reporting and decision-making process.

Amendment  106

 

Proposal for a directive

Article 1 –point 4

Directive 2013/34/EU

Article 19b – paragraph 2 - subparagraph 2a (new)

Text proposed by the Commission	Amendment
	When specifying the information about environmental factors that undertakings are to disclose, coherence should be ensured with the definitions in Article 2 and the reporting requirements of Article 8 in Regulation (EU) 2020/852 (Taxonomy Regulation) and the delegated acts adopted pursuant to that Regulation.

Amendment  107

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 3 – point aa

Text proposed by the Commission	Amendment
	(a a) administrative costs of the reporting for undertakings;

Amendment  108

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 3 – point c

Text proposed by the Commission	Amendment
(c) the criteria set out in the delegated acts adopted pursuant to Regulation (EU) 2020/852*7;	(c) the criteria, indicators and methodologies set out in the delegated acts adopted pursuant to Regulation (EU) 2020/852*7, including inter alia technical screening criteria, criteria for substantial contribution, DNSH criteria.
__________	__________
*7 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13).	*7 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13).

Amendment  109

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 3 – point g

Text proposed by the Commission	Amendment
(g) Directive 2003/87/EC of the European Parliament and of the Council*13;	(g) Regulation (EU) 2021/1119 of the European Parliament and of the Council*13;
________	______
*13 Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32).	*13 Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European Climate Law’) OJ L 243, 9.7.2021, p. 1–17.

Amendment  110

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 3 – point h a (new)

Text proposed by the Commission	Amendment
	(h a) Directive (EU) 2019/1937 of the European Parliament and of the Council.

Amendment  111

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 c

Text proposed by the Commission	Amendment
Sustainability reporting standards for SMEs	Voluntary sustainability reporting standards for SMEs
The Commission shall adopt delegated acts in accordance with Article 49 to provide for sustainability reporting standards proportionate to the capacities and characteristics of small and medium-sized undertakings. Those sustainability reporting standards shall specify which information referred to in Articles 19a and 29a small and medium-sized undertakings referred to in Article 2, point (1)(a) shall report. They shall take into account the criteria set out in Article 19b, paragraphs 2 and 3. They shall also, where relevant, specify the structure in which that information shall be reported.	The Commission shall adopt delegated acts in accordance with Article 49 to provide for sustainability reporting standards proportionate to the capacities and characteristics of small and medium-sized undertakings. Those sustainability reporting standards shall specify which information referred to in Articles 19a and 29a small and medium-sized undertakings that choose to use sustainability reporting standards for SMEs on a voluntary basis while meeting the requirements and obligations of this Directive concerning the content, auditing and publication of the management report, shall report. They shall take into account the criteria set out in Article 19b, paragraphs 2 and 3. They shall also, where relevant, specify the structure in which that information shall be reported.

Amendment  112

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 c – subparagraph 1a (new)

Text proposed by the Commission	Amendment
	Member States are invited to assess the impact of their transposition acts on SMEs givings pecific attention to small enterprises, in particular SMEs indirectly impacted by the Directive obligations, in order to ensure that they are not disproportionately affected, and to publish the results of such assessments. Member States may set up and operate measures, such as certified labels or financial support, to help SMEs apply voluntary sustainability reporting standards.

Amendment  113

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 c – subparagrpah 1b (new)

Text proposed by the Commission	Amendment
	Voluntary sustainability reporting standards should set a reference for undertakings that are within the scope of the Directive regarding the level of sustainability information that they could reasonably request from SME suppliers and clients in their value chains.

Amendment  114

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 d – paragraph 1

Text proposed by the Commission	Amendment
1. Undertakings subject to Article 19a shall prepare their financial statements and their management report in a single electronic reporting format in accordance with Article 3 of Commission Delegated Regulation (EU) 2019/815*15 and shall mark-up their sustainability reporting, including the disclosures laid down in Article 8 of Regulation (EU) 2020/852, in accordance with that Delegated Regulation.	1. Undertakings subject to Article 19a shall prepare their financial statements and their management report in a single electronic reporting format in accordance with Article 3 of Commission Delegated Regulation (EU) 2019/815*15 and shall mark-up their sustainability reporting, including the disclosures laid down in Article 8 of Regulation (EU) 2020/852, in accordance with that Delegated Regulation. The mark-up must be compatible with the consolidation and re-use of such data in a European single access point as described in Action 1 of the Commission Communication entitled ‘A Capital Markets Union for people and businesses – new action plan’.

Amendment  115

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 d – paragraph 1 a (new)

Text proposed by the Commission	Amendment
	1 a. Electronic financial statements and management reports must comply with the relevant access requirements laid down in Directive (EU)2019/882 on the accessibility requirements for products and services.

Amendment  116

 

Proposal for a directive

Article 1 – point 4

Directive 2013/34/EU

Article 19 d – paragraph 2

Text proposed by the Commission	Amendment
2. Undertakings subject to Article 29a shall prepare their consolidated financial statements and their consolidated management report in a single electronic reporting format in accordance with Article 3 of Delegated Regulation (EU) 2019/815 and shall mark-up sustainability reporting, including the disclosures laid down in Article 8 of Regulation (EU) 2020/852.	2. Undertakings subject to Article 29a shall prepare their consolidated financial statements and their consolidated management report in a single electronic reporting format in accordance with Article 3 of Delegated Regulation (EU) 2019/815 and shall mark-up sustainability reporting, including the disclosures laid down in Article 8 of Regulation (EU) 2020/852. The mark-up must be compatible with the format specified in paragraph 1.

Amendment  117

 

Proposal for a directive

Article 1 – point 5 – point a

Directive 2013/34/EU

Article 20 – paragraph 1 - point g

Text proposed by the Commission	Amendment
(g) a description of the diversity policy applied in relation to the undertaking's administrative, management and supervisory bodies with regard to gender and other aspects such as, age, or educational and professional backgrounds, the objectives of that diversity policy, how it has been implemented and the results in the reporting period. If no such policy is applied, the statement shall contain an explanation as to why this is the case.;	(g) a description of the diversity policy applied in relation to the undertaking's administrative, management and supervisory bodies with regard to gender and other aspects such as, age, or educational and professional backgrounds or disabilities, the objectives of that diversity policy, how it has been implemented and the results in the reporting period. If no such policy is applied, the statements hall contain an explanation as to why this is the case.

Amendment  118

 

Proposal for a directive

Article 2 – paragraph 1 – point 4

Directive 2004/109/EC

Article 28d – paragraph 1

Text proposed by the Commission	Amendment
After consulting the European Environment Agency and the European Union Agency for Fundamental Rights, ESMA shall issue guidelines in accordance with Article 16 of Regulation 1095/2010 on the supervision of sustainability reporting by national competent authorities.	After consulting the European Environment Agency, the European Union Agency for Fundamental Rights and the European Labour Authority, ESMA shall issue guidelines in accordance with Article 16 of Regulation (EU) No 1095/2010 on the supervision of sustainability reporting by national competent authorities within a reasonable timeframe.

Amendment  119

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29 a – paragraph 1

Text proposed by the Commission	Amendment
1. Parent undertakings of a large group shall include in the consolidated management report information necessary to understand the group's impacts on sustainability matters, and information necessary to understand how sustainability matters affect the group's development, performance and position.	1. Parent undertakings of a large group shall include in the consolidated management report information necessary to understand the group's impacts on sustainability matters, and information necessary to understand how sustainability matters affect the group's development, performance and position. This information shall be published in a specific section of the management report and in a format equivalent to, and compatible with, that laid down for the publication of the financial statements.

Amendment  120

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29 a - paragraph 2 – subparagraph 1 – introductory part

Text proposed by the Commission	Amendment
2. The information referred to in paragraph 1 shall contain in particular:	2. The information referred to in paragraph 1 shall contain:

Amendment  121

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29 a - paragraph 2 – subparagraph 1 – point a

Text proposed by the Commission	Amendment
(a) a brief description of the group's business model and strategy, including:	(a) a description of the group's business model and strategy, including:

Amendment  122

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29 a - paragraph 2 – subparagraph 1 – point a – point iii

Text proposed by the Commission	Amendment
(iii) the plans of the group to ensure that the group’s business model and strategy compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement;	(iii) the plans of the undertaking, taking into account the entire value chain, including transition plans with implementing actions and related financial and investment plans and short-term and medium-term absolute emission reduction targets for2025 and 2030, reviewed every five years up to 2050, to ensure that its overall business model and strategy are compatible with the transition to a sustainable economy and with the limiting of global warming to 1,5 °C inline with the Paris Agreement, with no or limited overshoot and pursuant to the latest recommendations of the IPCC and the European Scientific Advisory Board on Climate Change, and the undertaking´s operations within the Union are aligned with the objective to achieve climate neutrality by 2050 at the latest, set out in Regulation (EU)2021/1119 of the European Parliament and of the Council of 30 June 2021(“European Climate Law”); and
	- where relevant, the degree of exposure of the under taking to sectors listed in Divisions 05, 06,09, 19, 35, 46.71, 73.1 of Annex I to Regulation (EC) No 1893/2006 insofar as they relate to coal, oil, gas-related activities;
	- where relevant, undertakings, which activities particularly impact natural resources and, or that operate in sectors particularly relying on natural resources, should disclose the nature-related impacts and risks on biodiversity and ecosystems that are associated with the undertaking's business model and plans by the undertaking to mitigate the loss of nature and restore nature in consistence with the latest science;

Amendment  123

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29 a - paragraph 2 – subparagraph 1 – point a – point iv

Text proposed by the Commission	Amendment
(iv) how the group’s business model and strategy take account of the interests of the group’s stakeholders and of the impacts of the group on sustainability matters;	(iv) how the undertaking’s business model and strategy take account of the interests of the undertaking’s stakeholders and of the impact of the undertaking on sustainability matters;

Amendment  124

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29 a - paragraph 2 – subparagraph 1 – point a – point v

Text proposed by the Commission	Amendment
(v) how the group’s strategy has been implemented with regard to sustainability matters;	(v) how the undertaking’s strategy has been implemented with regard to sustainability matters and science-based targets;

Amendment  125

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29 a - paragraph 2 – subparagraph 1 – point b

Text proposed by the Commission	Amendment
(b) a description of the targets related to sustainability matters set by the group and of the progress of the undertaking towards achieving them;	(b) a description of the time-bound targets related to sustainability matters set by the undertaking with respect to the undertaking’s risks and opportunities and adverse impacts on sustainability matters, whether such targets are science-based and of the progress the undertaking has made towards achieving those targets including a clearly defined path and implementing actions to reach those;

Amendment  126

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29 a - paragraph 2 – subparagraph 1 – point c

Text proposed by the Commission	Amendment
(c) a description of the role of the administrative, management and supervisory bodies with regard to sustainability matters;	(c) a description of the role and expertise of the administrative, management and supervisory bodies with regard to sustainability matters;

Amendment  127

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29 a - paragraph 2 – subparagraph 1 – point d

Text proposed by the Commission	Amendment
(d) a description of the group’s policies in relation to sustainability matters;	(d) a description of the undertaking’s policies, in relation to sustainability matters;

Amendment  128

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29 a - paragraph 2 – subparagraph 1 – point d a (new)

Text proposed by the Commission	Amendment
	(da) information about the existence of incentive schemes offered to members of the administrative, management and supervisory bodies which are linked to sustainability matters;

 

Amendment  129

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29 a - paragraph 2 – subparagraph 1 – point e – point i

Text proposed by the Commission	Amendment
(i) the due diligence process implemented with regard to sustainability matters;	(i) the due diligence process implemented with regard to sustainability matters and, where applicable, pursuant to EU and/or national legislation;

Amendment  130

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29 a - paragraph 2 – subparagraph 1 – point e – point ii

Text proposed by the Commission	Amendment
(ii) the principal actual or potential adverse impacts connected with the group’s value chain, including its own operations, its products and services, its business relationships and its supply chain;	(ii) the actual or potential adverse impacts connected with the undertaking’s value chain, including its own operations, its products and services, its business relationships and its supply chain;

Amendment  131

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29 a - paragraph 2 – point e – point iii

Text proposed by the Commission	Amendment
(iii) any actions taken, and the result of such actions, to prevent, mitigate or remediate actual or potential adverse impacts;	(iii) any actions taken, and the result of such actions, to identify, track, prevent, and mitigate, remediate or cease actual or potential adverse impacts;

Amendment  132

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29 a - paragraph 2 – subparagraph 1 – point g

Text proposed by the Commission	Amendment
(g) indicators relevant to the relevant to the disclosures referred to in points (a) to (f).	(g) indicators and time-bound targets relevant to the disclosures referred to in points (a) to (f) based on the guidelines developed by the European Commission.

Amendment  133

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29 a – paragraph 3 - – subparagraph 1

Text proposed by the Commission	Amendment
3. The information referred to in paragraphs 1 and 2 shall contain forward-looking information and information about past performance, and qualitative and quantitative information. This information shall take into account short, medium and long-term time horizons, where appropriate.	3. The information referred to in paragraphs 1 and 2 shall contain forward-looking information and information about past performance, and qualitative and quantitative information. This informationshall take into account short, medium and long-term time objectives, strategies and targets, where appropriate.

Amendment  134

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29 a – paragraph 3 – subparagraph 2

Text proposed by the Commission	Amendment
The information referred to in paragraphs 1 and 2 shall include information about the group’s value chain, including its own operations, its products and services, its business relationships and its supply chain, where appropriate.	The information referred to in paragraphs 1 and 2 shall include information about the group’s value chain, including its own operations, its products and services, its business relationships and its supply chain, where applicable.

Amendment  135

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29 a – paragraph 3 – subparagraph 3

Text proposed by the Commission	Amendment
The information referred to in paragraphs 1 and 2 shall also, where appropriate, include references to, and additional explanations of, other information included in the consolidated management report in accordance with Article 29 of this Directive and amounts reported in the consolidated financial statements.	The information referred to in paragraphs 1 and 2 shall also, where applicable, include references to, and additional explanations of, other information included in the consolidated management report in accordance with Article 29 of this Directive and amounts reported in the consolidated financial statements.

Amendment  136

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29 a – paragraph 4 a (new)

Text proposed by the Commission	Amendment
	4 a. The Commission shall prepare non-binding guidelines, on appropriate methodologies to generate the forward-looking information to be provided in the reporting.

Amendment  137

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29 a – paragraph 5

Text proposed by the Commission	Amendment
5. By way of derogation from Article 29a, paragraphs 1-4, parent undertakings that are small and medium sized undertakings referred to in Article 2, point (1), point (a), may report in accordance with the sustainability reporting standards for small and medium sized undertakings referred to in Article 19c.	5. By way of derogation from Article 29a,paragraphs 1-4, parent undertakings that are small and medium sized undertakings referred to in Article 2, point (1), point (a), may report in accordance with the sustainability reporting standards for small and medium sized undertakings referred to in Article 19c. This derogation does not apply in case parent undertakings of a group referred to in Article 3(7) report the information in a consolidated sustainability report.

Amendment  138

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29 a – paragraph 5 a (new)

Text proposed by the Commission	Amendment
	5a. In accordance with applicable EU and national legislation and practice, the appropriate worker’s representatives shall take part in the design of the reporting system and the outcome should be presented, where applicable, to the relevant administrative, management or supervisory bodies.

 

Amendment  139

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 7 – subparagraph 1

Text proposed by the Commission	Amendment
7. A parent undertaking which is also a subsidiary undertaking shall be exempted from the obligation set out in paragraphs 1 to 4 if that exempted parent undertaking and its subsidiaries are included in the consolidated management report of another undertaking, drawn up in accordance with Article 29 and this Article. A parent undertaking that is a subsidiary undertaking from a parent undertaking that is established in a third country shall also be exempted from the obligations set out in paragraphs 1 to 4 where that undertaking and its subsidiary undertakings are included in the consolidated management report of that parent undertaking and where the consolidated management report is drawn up in a manner that may be considered equivalent, in accordance with the relevant implementing measures adopted pursuant to Article 23(4)(i) of Directive 2004/109/EC, to the manner required by the sustainability reporting standards referred to in Article 19b of this Directive.	7. A parent undertaking which is also a subsidiary undertaking shall be exempted from the obligation set out in paragraphs 1 and 2, with the exception of obligations set out in paragraph 2) a), b), e), f) and corresponding obligations set out in g), if that exempted parent undertaking and its subsidiaries are included in the consolidated management report of another undertaking, drawn up in accordance with Article 29 and this Article.

Amendment  140

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 7 – subparagraph 2

Text proposed by the Commission	Amendment
The consolidated management report of the parent undertaking referred to in subparagraph 1 shall be published in accordance with Article 30, in the manner prescribed by the law of the Member State by which the parent undertaking that is exempted from the obligations set out in paragraphs 1 to 4 is governed.	The consolidated management report of the parent undertaking referred to in subparagraph 1 shall be published in accordance with Article 30, in the manner prescribed by the law of the Member State by which the parent undertaking, which meets the requirements referred to in paragraphs 1 and 2 with the exception of obligations set out in paragraph 2 a), b), e), f) and corresponding obligations set out in g), is governed.

Amendment  141

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 7 – subparagraph 3

Text proposed by the Commission	Amendment
The Member State by which the parent undertaking that is exempted from the obligations set out in paragraphs 1 to 4 is governed may require that the consolidated management report referred to in in the first subparagraph of this paragraph is published in its official language or in a language customary in the sphere of international finance, and that any necessary translation into those languages is certified.	The Member State by which the parent undertaking, which meets the requirements referred to in paragraphs 1 and 2 with the exception of obligations set out in paragraph 2 a), b), e), f) and corresponding obligations set out in g), is governed, may require that the consolidated management report referred to in the first subparagraph of this paragraph is published in its official language or in a language customary in the sphere of international finance, and that any necessary translation into those languages is provided.

Amendment  142

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 7 – subparagraph 4 – introductory part

Text proposed by the Commission	Amendment
The consolidated management report of a parent undertaking that is exempted from the obligations set out in paragraphs 1 to 4 shall contain all of the following information:	The consolidated management report of a parent undertaking, which meets the requirements referred to in paragraphs 1 and 2 with the exception of obligations set out in paragraph 2 a), b), e), f) and corresponding obligations set out in g), shall contain all of the following information:

Amendment  143

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 7 – subparagraph 4 – point b

Text proposed by the Commission	Amendment
(b) the fact that the undertaking is exempted from the obligations set out in paragraphs 1 to 4 of this Article.;	(b) the fact that the undertaking is exempted from the obligations set out in paragraph 2 (c) and (d)’;

Amendment  144

 

Proposal for a directive

Article 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 7 – subparagraph 4 – point b a (new)

Text proposed by the Commission	Amendment
	(b a) the name and address of each consolidated entities.

Amendment  145

 

Proposal for a directive

Article 1 – point 8 – point a

Directive 2013/34/EU

Article 30 – paragarpah 1

Text proposed by the Commission	Amendment
1. Member States shall ensure that undertakings publish within a reasonable period of time, which shall not exceed 12 months after the balance sheet date, the duly approved annual financial statements and the management report in the format prescribed by Article 19d of this Directive where applicable, together with the opinions and statement submitted by the statutory auditor or audit firm referred to in Article 34 of this Directive, as laid down by the laws of each Member State in accordance with Chapter 3 of Directive (EU) 2017/1132 of the European Parliament and of the Council*16.’	1. Member States shall ensure that undertakings publish online within a reasonable period of time, which shall not exceed 12 months after the balance sheet date, the duly approved annual financial statements and the management report in the format prescribed by Article 19d of this Directive where applicable, together with the opinions and statement submitted by the statutory auditor or audit firm referred to in Article 34 of this Directive, as laid down by the laws of each Member State in accordance with Chapter 3 of Directive (EU) 2017/1132 of the European Parliament and of the Council*16.’

Amendment  146

 

Proposal for a directive

Article 1 – point 9

Directive 2013/34/EU

Article 33 - paragraph 1

Text proposed by the Commission	Amendment
1. Member States shall ensure that the members of the adminis­trative, management and supervisory bodies of an undertaking, acting within the competences assigned to them by national law, have collective responsibility for ensuring that the following documents are drawn up and published in accordance with the requirements of this Directive and, where applicable, with the international accounting standards adopted in accordance with Regulation (EC) No 1606/2002, with Delegated Regulation 2019/815, with the sustainability reporting standards referred to in Article 19b of this Directive, and with the requirements of Article 19d of this Directive:	1. Member States shall ensure that the members of the administrative, management and supervisory bodies of an undertaking, acting within the competences assigned to them by national law, have collective responsibility that is clearly defined for ensuring that the following documents are drawn up and published in accordance with the requirements of this Directive and, where applicable, with the international accounting standards adopted in accordance with Regulation (EC) No 1606/2002, with Delegated Regulation 2019/815, with the sustainability reporting standards referred to in Article 19b of this Directive, and with the requirements of Article 19d of this Directive:

Amendment  147

 

Proposal for a directive

Article 1 – point 10 – point a – point ii

Directive 2013/34/EU

Article 34 – paragraph 1 – subparagraph 2 – point aa

Text proposed by the Commission	Amendment
(aa) where applicable, express an opinion based on a limited assurance engagement as regards the compliance of the sustainability reporting with the requirements of this Directive, including the compliance of the sustainability reporting with the reporting standards adopted pursuant to Article 19b, the process carried out by the undertaking to identify the information reported pursuant to those reporting standards, and the compliance with the requirement to mark-up sustainability reporting in accordance with Article 19d, and as regards the compliance with the reporting requirements of Article 8 of Regulation (EU) 2020/852.;	(aa) where applicable, express an opinion based on a limited assurance engagement as regards the compliance of the sustainability reporting with the requirements and scope of this Directive, including the compliance of the sustainability reporting with the reporting standards adopted pursuant to Article 19b, the process carried out by the undertaking to identify the information reported pursuant to those reporting standards, and the compliance with the requirement to mark-up sustainability reporting in accordance with Article 19d, and as regards the compliance with the reporting requirements of Article 8 of Regulation (EU) 2020/852.’;

Amendment  148

 

Proposal for a directive

Article 1 – point 10 – point b

Directive 2013/34/EU

Article 34 – paragraph 3

Text proposed by the Commission	Amendment
3. Member States may allow an independent assurance services provider to express the opinion referred to in paragraph 1, second subparagraph, point (aa), provided that it is subject to requirements that are consistent with those set out in Directive 2006/43/EC as regards the assurance of sustainability reporting as defined in Article 2(1), point (r) of that Directive.	3. Member States shall allow an independent assurance services provider to express the opinion referred to in paragraph 1, second subparagraph, point (aa),provided that it is subject to requirements that are equivalent with those set out in Directive 2006/43/EC as regards the assurance of sustainability reporting as defined in Article 2(1), point (r)of that Directive. Member States shall allow proper equivalence of those requirements in the European Union by involving relevant national authorities. Member States shall specify such requirements applying to independent service providers produce identical effects in terms of the quality of the audit of sustainability information, while being adapted to an assurance provider which does not conduct a statutory audit on financial information.

Amendment  149

 

Proposal for a directive

Article 1 – point 11 – point a

Directive 2013/34/EU

Article 49 – paragraph 2

Text proposed by the Commission	Amendment
2. The power to adopt delegated acts referred to in Article 1(2), Article 3(13), Article 46(2), Article 19b and Article 19c shall be conferred on the Commission for an indeterminate period of time.	2. The power to adopt delegated acts referred to in Article 1(2), Article 3(13), Article 46(2), Article 19b and Article 19c shall be conferred on the Commission for 4 years from the entry into force of the basic legislative act or any other date set by the co-legislators. The delegation of power shall be tacitly extended for periods of an identical duration, unless the European Parliament or the Council revoke such delegation of power. The Commission shall draw up a report in respect of the delegation of power no later than nine months before the end of the four-year period.

Amendment  150

 

Proposal for a directive

Article 1 – point 11 – point b

Directive 2013/34/EU

Article 49 – paragraph 3 a – subparagraph 1

Text proposed by the Commission	Amendment
3a. When adopting delegated acts pursuant to Articles 19b and 19c, the Commission shall take into consideration technical advice from EFRAG, provided such advice has been developed with proper due process, public oversight and transparency and with the expertise of relevant stakeholders, and is accompanied by cost-benefit analyses that include analyses of the impacts of the technical advice on sustainability matters.	3a. When adopting delegated acts pursuant to Articles 19b and 19c, the Commission shall take into consideration technical advice from EFRAG, provided EFRAG receives sufficient public funding that is representing at least 75% of the budget dedicated to the work on sustainability matters and that such advice has been developed with proper transparent due process and public oversight, with sufficient independence and with the balanced participation of preparers, investors, civil society organisations and trade unions and is accompanied by cost-benefit analyses that include the impacts of the technical advice on sustainability matters. Participation in the independent technical advisory group shall be based on expertise on matters outlined in articles 19a and 19b and shall not be conditional to any financial contribution.

Amendment  151

 

Proposal for a directive

Article 1 – point 11 – point b

Directive 2013/34/EU

Article 49 – paragraph 3 a – subparagraph 1a (new)

Text proposed by the Commission	Amendment
	The Commission shall, at least once a year, associate and consult jointly the Member State Expert Group on Sustainable Finance referred to in Article 24 of Regulation (EU) 2020/852, the Accounting Regulatory Committee referred to in Article 6 of Regulation (EU) 1606/2002 and the competent committee of the European Parliament on EFRAG’s work programme as regards the development of sustainability reporting standards.

Amendment  152

 

Proposal for a directive

Article 1 – point 11 – point b

Directive 2013/34/EU

Article 49 – paragraph 3 a – subparagraph 4

Text proposed by the Commission	Amendment
The Commission shall also consult the European Banking Authority, the European Insurance and Occupational Pensions Authority, the European Environment Agency, the European Union Agency for Fundamental Rights, the European Central Bank, the Committee of European Auditing Oversight Bodies and the Platform on Sustainable Finance established pursuant to Article 20 of Regulation (EU) 2020/852 on the technical advice provided by EFRAG prior to the adoption of delegated acts referred to in Articles 19b and 19c. Where any of those bodies decide to submit an opinion, they shall do so within two months from the date of being consulted by the Commission.;	The Commission shall also consult the European Banking Authority, the European Insurance and Occupational Pensions Authority,the European Environment Agency, the European Union Agency for Fundamental Rights, the European Central Bank, the Committee of European Auditing Oversight Bodies and the Platform on Sustainable Finance established pursuant to Article 20 of Regulation (EU) 2020/852 on the technical advice provided by EFRAG prior to the adoption of delegated acts referred to in Articles 19b and 19c. Where any of those bodies decide to submit an opinion, they shall do so within two months from the date of being consulted by the Commission. The Commission shall ensure opinions are coordinated in a way that allows high quality implementation of delegated acts.

Amendment  153

 

Proposal for a directive

Article 1 - point 11 – point c

Directive 2013/34/EU

Article 49 – paragraph 5

Text proposed by the Commission	Amendment
5. A delegated act adopted pursuant to Article 1(2), Article 3(13), Article 46(2), Article 19b and Article 19c shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of two months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by two months at the initiative of the European Parliament or the Council.	5. A delegated act adopted pursuant to Article1(2), Article 3(13), Article 46(2), Article 19b and Article 19c shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of three months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by three months at the initiative of the European Parliament or the Council.’

Amendment  154

 

Proposal for a directive

Article 1 – point 12

Directive 2013/34/EU

Article 51 - paragraph 2 – point a

Text proposed by the Commission	Amendment
(a) a public statement indicating the natural person or the legal entity responsible and the nature of the infringement;	(a) a public statement indicating the responsible person or the legal entity responsible and the nature of the infringement;

Amendment  155

 

Proposal for a directive

Article 1 – point 12

Directive 2013/34/EU

Article 51 - paragraph 2 – point b

Text proposed by the Commission	Amendment
(b) an order requiring the natural person or the legal entity responsible to cease the conduct constituting the infringement and to desist from any repetition of that conduct;	(b) an order requiring the responsible person or the legal entity responsible to cease the conduct constituting the infringement and to desist from any repetition of that conduct;

Amendment  156

 

Proposal for a directive

Article 1 – point 12

Directive 2013/34/EU

Article 51 - paragraph 3 – point b

Text proposed by the Commission	Amendment
(b) the degree of responsibility of the natural person or legal entity responsible;	(b) the degree of responsibility of the responsible person or legal entity responsible;

Amendment  157

 

Proposal for a directive

Article 1 – point 12

Directive 2013/34/EU

Article 51 - paragraph 3 – point c

Text proposed by the Commission	Amendment
(c) the financial strength of the natural person or legal entity responsible;	(c) the financial strength of the responsible person or legal entity responsible;

Amendment  158

 

Proposal for a directive

Article 1 – point 12

Directive 2013/34/EU

Article 51 - paragraph 3 – point f

Text proposed by the Commission	Amendment
(f) the level of cooperation of the natural person or legal entity responsible with the competent authority;	(f) the level of cooperation of the responsible person or legal entity responsible with the competent authority;

Amendment  159

 

Proposal for a directive

Article 1 – point 12

Directive 2013/34/EU

Article 51 - paragraph 3 – point g

Text proposed by the Commission	Amendment
(g) previous infringements by the natural person or legal entity responsible.’.	(g) previous infringements by the responsible person or legal entity responsible.’.

Amendment  160

 

Proposal for a directive

Article 1 – point 12

Directive 2013/34/EU

Article 51 - paragraph 3 a (new)

Text proposed by the Commission	Amendment
	3 a. Member States shall ensure that, when determining the type and level of penalties, administrative sanctions or measures referred to in paragraph 2, they also provide for an effective redress mechanism based on national law

Amendment  161

 

Proposal for a directive

Article 1 – point 12

Directive 2013/34/EU

Article 51 - paragraph 3 b (new)

Text proposed by the Commission	Amendment
	3 b. If an undertaking referred to in Article 19a (1), that is governed by the law of a third country and that is not established in the territory of the Union when it operates in the internal market selling goods or providing services, fails to report according to implementing measures referred to Article 19b (1) – iic) the European Commission shall ensure compliance of reporting obligations within the internal market, publish and send a formal writing notification to the undertaking for failure to comply that include at least:
	- a request for the undertaking to comply with its reporting obligation within a reasonable deadline
	- a request to provide information on why the undertaking did not comply with its reporting obligations.

Amendment  162

 

Proposal for a directive

Article 2 –point 4 (new)

Directive 2013/34/EU

Article 28d (new)

Text proposed by the Commission	Amendment
	Article 28d ESMA guidelines
	After consulting the European Environment Agency and the European Union Agency for Fundamental Rights, ESMA shall issue guidelines in accordance with Article 16 of Regulation 1095/2010 on the supervision of sustainability reporting standards by competent national authorities.

Amendment  163

 

Proposal for a directive

Article 3 – point 5

Directive 2013/34/EU

Article 10 – paragraph 1

Text proposed by the Commission	Amendment
1. In order to ensure the ability to apply theoretical knowledge in practice, a test of which is included in the examination, a trainee shall complete a minimum of three years' practical training in, inter alia, the auditing of annual financial statements, consolidated financial statements or similar financial statements and the assurance of annual and consolidated sustainability reporting. At least two thirds of such practical training shall be completed with a statutory auditor or an audit firm approved in any Member State.;	1. In order to ensure the ability to apply theoretical knowledge in practice, a test of which is included in the examination, a trainee shall complete practical training in, inter alia, the auditing of annual financial statements, consolidated financial statements or similar financial statements and the assurance of annual and consolidated sustainability reporting. Assessments of the ability to apply theoretical knowledge in practice should take into account previous employment experiences and professional equivalences. Member States shall decide on the duration of the practical training, which must be equivalent in all Member States. At least two thirds of such practical training shall be completed with a statutory auditor or audit firm approved in any Member State.

Amendment  164

 

Proposal for a directive

Article 3 – point 8

Directive 2013/34/EU

Article 14a – subparagraph 2

Text proposed by the Commission	Amendment
Member States shall ensure that statutory auditors approved before 1 January 2023 acquire the necessary knowledge in sustainability reporting and the assurance of sustainability reporting via the continuing education requirement of Article 13.;	Member States shall ensure that statutory auditors approved before 1 January 2023 acquire the necessary knowledge in sustainability reporting and the assurance of sustainability reporting via the continuing education requirement of Article 13.’; Member States shall ensure that the audit bodies for sustainability reports have a high level of technical and specialised expertise in the field of sustainability in order to assess the information.’;

Amendment  165

 

Proposal for a directive

Article 3 – point 12

Directive 2013/34/EU

Article 26a – paragraph 2 – subparagraph 1

Text proposed by the Commission	Amendment
2. The Commission shall be empowered to adopt, by means of delegated acts in accordance with Article 48a, the assurance standards referred to in paragraph 1 in order to set out the procedures that the auditor shall perform in order to draw its conclusions on the assurance of sustainability reporting, including engagement planning, risk consideration and response to risks and type of conclusions to be included in the audit report.	2. The Commission shall be empowered to adopt, by means of delegated acts in accordance with Article 48a, limited assurance standards before 1 October 2023 and reasonable assurance standards before1 January 2026 in order to set out the procedures that the auditor shall perform in order to draw its conclusions on the assurance of sustainability reporting, including engagement planning, risk consideration and response to risks and type of conclusions to be included in the audit report.

Amendment  166

 

Proposal for a directive

Article 3 – point 12

Directive 2013/34/EU

Article 26a – paragraph 3

Text proposed by the Commission	Amendment
3. Where the Commission adopts standards for reasonable assurance, the opinion referred to in Article 34(1), second subparagraph, point (aa) of Directive 2013/34/EU shall be based on a reasonable assurance engagement.’;	3. Where the Commission adopts standards for reasonable assurance, following a positive outcome of the review mechanism referred to in Article 5a, the opinion referred to in Article 34(1), second subparagraph, point (aa) of Directive 2013/34/EU shall be based on a reasonable assurance engagement for the financial years following the adoption application of the delegated act referred to in paragraph 2.;

Amendment  167

 

Proposal for a directive

Article 3 – point 14 – point e

Directive 2013/34/EU

Text proposed by the Commission	Amendment
The audit report shall be signed and dated by the statutory auditor. Where an audit firm carries out the statutory audit and, where applicable, the assurance of sustainability reporting, the audit report shall bear the signature of at least the statutory auditor(s) carrying out the statutory audit and the assurance of sustainability reporting on behalf of the audit firm. Where more than one statutory auditor or audit firm have been simultaneously engaged, the audit report shall be signed by all statutory auditors or at least by the statutory auditors carrying out the statutory audit and the assurance of sustainability reporting on behalf of every audit firm. In exceptional circumstances Member States may provide that such signature(s) need not be disclosed to the public if such disclosure could lead to an imminent and significant threat to the personal security of any person.;	The audit report shall be signed and dated by the statutory auditor and by the statutory auditor or the audit firm carrying out the assurance of sustainability reporting. Where an audit firm carries out the statutory audit or, where applicable, the assurance of sustainability reporting, the audit report shall bear the signature of at least the statutory auditor(s) carrying out the statutory audit and the assurance of sustainability reporting on behalf of the audit firm. The statutory auditor(s) and the auditfirm(s) carrying out the assurance of sustainability reporting cannot belong to the same audit firm nor be a member of the same network. Where more than one statutory auditor or audit firm have been simultaneously engaged, the audit report shall be signed by all statutory auditors or at least by the statutory auditors carrying out the statutory audit and the assurance of sustainability reporting on behalf of every audit firm. In exceptional circumstances Member States may provide that such signature(s) need not be disclosed to the public if such disclosure could lead to an imminent and significant threat to the personal security of any person.’;

Amendment  168

 

Proposal for a directive

Article 3 – point 19

Directive 2013/34/EU

Text proposed by the Commission	Amendment
(a) inform the administrative or supervisory body of the audited entity of the outcome of the statutory audit and of the outcome of the assurance of sustainability reporting and explain how the statutory audit and the assurance of sustainability reporting contributed to the integrity of financial and sustainability reporting and what the role of the audit committee was in that process;	(a) inform the administrative or supervisory body of the audited entity of the outcome of the statutory audit and of the outcome of the assurance of sustainability reporting and explain how the statutory audit and the assurance of sustainability reporting contributed to the integrity of financial and sustainability reporting and what the role of the audit committee and any other committee that undertook an equivalent role, was in that process;

Amendment  169

 

Proposal for a directive

Article 5 – paragraph 1 – subparagraph 1

Text proposed by the Commission	Amendment
1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with Articles 1 to 3 of this Directive by 1 December 2022. They shall immediately inform the Commission thereof.	1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with Articles 1 to 3 of this Directive by 1 December 2023. They shall immediately inform the Commission thereof.

Amendment  170

 

Proposal for a directive

Article 5 – paragraph 1 – subparagraph 2

Text proposed by the Commission	Amendment
Member States shall provide that the provisions referred to in the first subparagraph shall apply for financial years starting on or after 1 January 2023	Member States shall provide that the provisions referred to in the first subparagraph shall apply for financial years starting on 1 January 2024, or later the same year, for large undertakings.

Amendment  171

 

Proposal for a directive

Article 5 – paragraph 1 – subparagraph 2a (new)

Text proposed by the Commission	Amendment
	Member States shall provide that the provisions referred to in the first subparagraph shall apply for financial years starting on 1 January 2026, or later the same year, for small medium-size undertakings which choose to use sustainability reporting standards for SMEs on a voluntary basis.

Amendment  172

 

Proposal for a directive

Article 5 – paragraph 1 – subparagraph 2b (new)

Text proposed by the Commission	Amendment
	By derogation to Article 5, reporting requirements laid down in the delegated acts referred to in Articles 19b and 19c shall not enter into force earlier than six months after their adoption by the Commission.

Amendment  173

 

Proposal for a directive

Article 5 a (new)

Text proposed by the Commission	Amendment
	Article 5 a
	Review and report
	The Commission shall submit a report to the European Parliament and to the Council on the implementation of this Directive,including, among other aspects:
	- an assessment of the possible extension of its scope to small and medium-sized undertakings which are undertakings referred to in Article 2, point (1), point (a) and small and medium-sized undertakings referred to in Article 3(2) and 3(3) which operate in one or more economic activities in high-risk sectors referred to in 19a (7a), and on whether extending the scope to those undertakings would facilitate the implementation of the SFDR and an assessment of the progress of the EU’s social and environmental goals,
	- an assessment of the number of SMEs using voluntary reporting standards referred to in article 19c
	- the added value of expanding the list of activities and high-risk sectors referred to in 19a (7a)
	- the application, effectiveness and the level of guidance and methods provided,
	- the convergence of reporting practises between Member States,
	- the progress with non-financial reporting throughout the world,
	- the convergence of the practices of data providers and users and of the level of guidance and methods provided,
	- the feasibility of applying standards for reasonable assurance,- the effectiveness of reporting standards related to human rights,
	- the possibility of developing specific measures to complete the formal notification for failure to comply with reporting obligations as referred to in Article 51 (4) of Directive 2013/34/EU.
	- An impact assessment on human rights carried out by the relevant public authorities
	The report shall be published by 31 December 2026 and every three years thereafter, and shall be accompanied, if appropriate, by legislative proposals.

Amendment  174

 

Proposal for a directive

Article 6 – paragraph 1

Text proposed by the Commission	Amendment
Article 4 of this Directive shall apply to financial years starting on or after 1 January 2023.	Article 4 of this Directive shall apply to financial years starting on or after 1 January 2024.

 

EXPLANATORY STATEMENT

In its resolution of 17 December 2020 on sustainable corporate governance[3], Parliament reiterated the need for a thorough revision of the Non-Financial Reporting Directive in force since 2014[4]. The proposal for a directive called the Corporate Sustainability Reporting Directive (CSRD) has largely incorporated Parliament’s requests, while including the need to communicate non-financial data with the same rigour and reliability as financial data.

 

With this revision, the European legislator is seeking to enhance the role of undertakings in addressing environmental and social challenges by establishing a common benchmark so that all undertakings communicate the same indicators. As the short- and long-term performance and even the financial survival of undertakings will increasingly depend on their ability to adapt to these challenges, environmental, social and governance performance indicators will enable their activities to be more effectively directed towards a resilient and more sustainable model. Undertakings’ overall performance should therefore be measured as a combination of their financial and non-financial performance.

 

Data reliability is based above all on a requirement for strict assurance as regards sustainability information. It is therefore essential to ensure that sustainability audits are carried out throughout the value chain and that the level of assurance is gradually increased over time. Audit providers will be able to operate in a more competitive market, which will be open to new entrants.

 

The European Union is not the only power involved in drawing up new non-financial standards. Whether at national level or under the auspices of the IFRS[5], other countries are in the process of devising their own indicators. If these were to dominate and become the international standard then sustainable development would be defined by a non-European vision, making it more difficult for European values to be effectively taken into account.

 

What is at stake is European independence and sovereignty and the achievement of the goals of a sustainable society which respects human, social and environmental rights.

 

The rapporteur’s proposal to amend the CSRD is therefore structured in three main areas:

 

1. Developing and deepening the proposal for a simplified common basis for non-financial reporting in terms of both the format and type of information to be taken into account for the development of reporting standards

 

The information which undertakings currently provide about their policies is not always clear and consistent, particularly when it comes to respect for human rights. There are many internationally developed ‘measurable, science-based indicators’ which can improve the quality of these reports. The rapporteur proposes further developing the definitions of the provisions on these measurable indicators while leaving it to the Commission, subject to supervision by the co-legislators, to reach a precise definition as to what needs to be reported (Amendments 11, 13, 14, 15, 16, 18, 22, 23, 24, 27, 29 and 35).

 

The exemption proposed by the Commission differs from the rules on reporting financial data, which do not exempt undertakings from publishing their balance sheet if it is included in the consolidated accounts of the parent company or of the group. Consolidation of sustainability data on the basis of a materiality criterion at parent or group level may lead to the omission of certain information that is particularly relevant to investors and stakeholders. The rapporteur proposes retaining the reporting obligation for subsidiaries and parent undertakings at undertaking level (Amendments 21 and 38). The absence of an exemption does not affect the possibility for a parent undertaking to pool costs and resources with its subsidiaries in order to meet their sustainability reporting and auditing obligations. Nor does it affect the possibility for parent undertakings to produce a consolidated management report.

 

2. Broadening the scope of the Directive to address the information needs of investors and stakeholders on sustainability issues

 

In order to assess the overall performance of an undertaking, it is important that, over time, the availability of sustainability information is not only comparable and compatible but also subject to the same level of requirement as financial data. As with statutory audits, in order to be accurate and fair the assurance of consolidated information at group level must be supplemented by an assurance of the same information at the level of parent undertakings and major subsidiaries, whether by business or by country.

 

The rapporteur therefore supports bringing the scope of the Directive into line with the threshold for ‘large undertakings’ in the Accounting Directive[6], which would help to simplify and harmonise the reporting system around a common basis. This logic also applies to all listed public undertakings, which are already subject to a transparency requirement in respect of the balance sheet part of their activities.

 

A guaranteed level playing field and equal treatment for undertakings operating in Europe should be a guiding principle of this revision. The rapporteur supports extending the scope to include certain undertakings established outside the EU but operating in the internal market (Amendments 1, 13 and 27).

Certain business activities operating in ‘risky’ sectors are already subject to enhanced transparency requirements (e.g. conflict minerals) or even bans on access to the European market (e.g. timber from illegal forestry) on account of the significant and repeated impact of these activities on human rights, the environment and good governance. However, the effective implementation of these sectoral policies is hampered by a lack of access to information and unreliable information. The rapporteur therefore wishes to extend the scope of the Directive to include medium-sized undertakings operating in ‘high-risk’ sectors, without increasing the administrative burden on small businesses. The Commission, subject to supervision by the co-legislators, will draw up a priority list of these ‘high-risk’ economic sectors in line with international work on the subject (Amendments 2, 11, 13, 23 and 26).

 

3. Allowing an opening-up of the sustainability audit market by promoting the emergence of independent assurance service providers and separating financial audits and sustainability audits

 

Given the hyper-concentration of the financial audit market in Europe, the risk of compromising the independence of auditors and the possible increase in audit or assurance fees that would result, it is important to encourage undertakings to issue calls for tender to choose assurance service providers. In order to ensure fair competition in the single market, independent audit operators must be subject to equivalent requirements not only between Member States but also with regard to other accredited audit providers.

 

There is a substantial difference in cost between audit engagements and assurance engagements. The audit engagement can represent more than 95% of the cost of the assurance engagement. With such a disproportion, there is a risk that a statutory auditor or an audit firm may be tempted to disregard the assurance engagement even though it deserves equal attention.

 

On the other hand, financial performance and sustainability performance may be contradictory. This would put statutory auditors and audit firms simultaneously carrying out audits of the financial statements and the assurance of sustainability reporting in a delicate conflict of interest, and one which would certainly be detrimental to the assurance engagement.

 

To prevent such situations, the rapporteur proposes prohibiting statutory auditors and audit firms from carrying out audits of the financial statements and of the sustainability reporting in the same undertaking or group (Amendments 8, 49, 50 and 51).

 

In view of the time limits for the adoption of the delegated acts pursuant to this revision and of the related regulations needed to draw up the reporting standards, and to ensure proper implementation of the text, the rapporteur proposes postponing its entry into force by one year, while keeping the deadlines as currently proposed for the development of reporting standards (Amendment 53).

 

OPINION OF THE COMMITTEE ON ECONOMIC AND MONETARY AFFAIRS (28.2.2022)

for the Committee on Legal Affairs

on the proposal for a directive of the European Parliament and of the Council amending Directive 2013/34/EU, Directive 2004/109/EC, Directive 2006/43/EC and Regulation (EU) No 537/2014, as regards corporate sustainability reporting

(COM(2021)0189 – C9‑0147/2021 – 2021/0104(COD))

Rapporteur for opinion: Jessica Polfjärd

 

 

AMENDMENTS

The Committee on Economic and Monetary Affairs calls on the Committee on Legal Affairs, as the committee responsible, to take into account the following amendments:

Amendment  1

 

Proposal for a directive

Recital 1

Text proposed by the Commission	Amendment
(1) In its communication on the European Green Deal adopted on 11 December 201930 , the European Commission made a commitment to review the provisions concerning non-financial reporting of Directive 2013/34/EU of the European Parliament and of the Commission.31 The European Green Deal is the European Union’s new growth strategy. It aims to transform the Union into a modern, resource-efficient and competitive economy with no net emissions of greenhouse gases by 2050. It also aims to protect, conserve and enhance the Union's natural capital, and protect the health and well-being of citizens from environment-related risks and impacts. The European Green Deal aims at decoupling economic growth from resource use, and ensuring that all regions and citizens of the Union participate in a socially just transition to a sustainable economic system. It will contribute to the objective of building an economy that works for the people, strengthening the EU’s social market economy, helping to ensure that it is future-ready and that it delivers stability, jobs, growth and investment. These goals are especially important considering the socio-economic damage caused by the COVID-19 pandemic and the need for a sustainable, inclusive and fair recovery. In its proposal of 4 March 2020 for a European Climate Law, the European Commission proposed to make the objective of climate neutrality by 2050 binding in the Union.32	(1) In its communication on the European Green Deal adopted on 11 December 2019, the European Commission made a commitment to review the provisions concerning non-financial reporting of Directive 2013/34/EU of the European Parliament and of the Commission.31 The European Green Deal is the European Union’s new growth strategy. It aims to transform the Union into a modern, resource-efficient and competitive economy with no net emissions of greenhouse gases by 2050. It also aims to protect, conserve and enhance the Union's natural capital, and protect the health and well-being of citizens from environment-related risks and impacts. The European Green Deal aims at decoupling economic growth from resource use, and ensuring that all regions and citizens of the Union participate in a socially just transition to a sustainable economic system. It will contribute to the objective of building an economy that works for the people, strengthening the EU’s social market economy, helping to ensure that it is future-ready and that it delivers stability, quality jobs, growth and investment. These goals are especially important considering the socio-economic damage caused by the COVID-19 pandemic and the need for a sustainable, inclusive and fair recovery. In its proposal of 4 March 2020 for a European Climate Law, the European Commission proposed to make the objective of climate neutrality by 2050 binding in the Union.32
__________________	__________________
30 COM(2019) 640 final.
31 Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19).	31 Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19).
32 Proposal for a Regulation of the European Parliament and of the Council establishing the framework for achieving climate neutrality and amending Regulation (EU) 2018/1999 (European Climate Law) [2020/0036 (COD)]	32 Proposal for a Regulation of the European Parliament and of the Council establishing the framework for achieving climate neutrality and amending Regulation (EU) 2018/1999 (European Climate Law) [2020/0036 (COD)]

Amendment  2

 

Proposal for a directive

Recital 2 a (new)

Text proposed by the Commission	Amendment
	(2 a) Diversity on company boards might have an influence on decision making, corporate governance and resilience.

Amendment  3

 

Proposal for a directive

Recital 7

Text proposed by the Commission	Amendment
(7) Many stakeholders consider the term ‘non-financial’ to be inaccurate, in particular because it implies that the information in question has no financial relevance. Increasingly, however, the information in question does have financial relevance. Many organisations, initiatives and practitioners in this field refer to ‘sustainability’ information. It is therefore preferable to use the term ‘sustainability information’ in place of ‘non-financial information’. Directive 2013/34/EU should therefore be amended to take account of this change in terminology.	(7) Many stakeholders consider the term ‘non-financial’ to be inaccurate, in particular because it implies that the information in question has no financial relevance. Increasingly, however, the information in question does have financial relevance. Many organisations, initiatives and practitioners in this field refer to ‘sustainability’ information. It is therefore preferable to use the term ‘sustainability information’ in place of ‘non-financial information’. Directive 2013/34/EU should therefore be amended to take account of this change in terminology and strive to improve the coherence between sustainability reporting standards and financial reporting standards.

Amendment  4

 

Proposal for a directive

Recital 8

Text proposed by the Commission	Amendment
(8) The ultimate beneficiaries of better sustainability reporting by undertakings are individual citizens and savers. Savers who want to invest sustainably will have the opportunity to do so, while all citizens should benefit from a stable, sustainable and inclusive economic system. To realise these benefits, the sustainability information disclosed in undertaking’s annual reports first has to reach two primary groups (‘users’). The first group of users consists of investors, including asset managers, who want to better understand the risks and opportunities that sustainability issues pose to their investments and the impacts of those investments on people and the environment. The second group of users consists of organisations, including non-governmental organisations and social partners, that wish to better hold undertakings to account for their impacts on people and the environment. Other stakeholders may also make use of sustainability information disclosed in annual reports. The business partners of undertakings, including customers, may rely on this information to understand, and where necessary report on, the sustainability risks and impacts through their own value chains. Policy makers and environmental agencies may use such information, in particular on an aggregate basis, to monitor environmental and social trends, to contribute to environmental accounts, and to inform public policy. Few individual citizens and consumers directly consult undertaking’s reports, but they may use such information indirectly such as when considering the advice or opinions of financial advisers or non-governmental organisations. Many investors and asset managers purchase sustainability information from third party data providers, who collect information from various sources, including public corporate reports.	(8) The ultimate beneficiaries of better sustainability reporting by undertakings are individual citizens and savers. Savers who want to invest sustainably will have the opportunity to do so, while all citizens should benefit from a stable, sustainable, transparent and inclusive economic system. To realise these benefits, the sustainability information disclosed in undertaking’s annual reports first has to reach two primary groups (‘users’). The first group of users consists of investors, including asset managers, who want to better understand the risks and opportunities that sustainability issues pose to their investments and the impacts of those investments on people and the environment. The second group of users consists of organisations, including non-governmental organisations and social partners, that wish to better hold undertakings to account for their impacts on people and the environment. Other stakeholders may also make use of sustainability information disclosed in annual reports. The business partners of undertakings, including customers, may rely on this information to understand, and where necessary report on, the sustainability risks and impacts through their own value chains. Policy makers, social partners, environmental agencies and non-governmental organisations may use such information, in particular on an aggregate basis, to monitor environmental and social trends, to contribute to environmental accounts and economic and social coherence, and to inform public policy. Few individual citizens and consumers directly consult undertaking’s reports, but they may use such information indirectly such as when considering the advice or opinions of financial advisers or non-governmental organisations. Many investors and asset managers purchase sustainability information from third party data providers, who collect information from various sources, including public corporate reports.

Amendment  5

 

Proposal for a directive

Recital 9

Text proposed by the Commission	Amendment
(9) There has been a very significant increase in demand for corporate sustainability information in recent years, especially on the part of the investment community. That increase in demand is driven by the changing nature of risks to undertakings and growing investor awareness of the financial implications of these risks. That is especially the case for climate-related financial risks. Awareness of the risks to undertakings and to investments resulting from other environmental issues and from social issues, including health issues, is also growing. The increase in demand for sustainability information is also driven by the growth in investment products that explicitly seek to meet certain sustainability standards or achieve certain sustainability objectives. Part of that increase is the logical consequence of previously adopted Union legislation, notably Regulation (EU) 2019/2088 and Regulation (EU) 2020/852. Some of the increase would have happened in any case, due to fast-changing citizen awareness, consumer preferences and market practices. The COVID-19 pandemic will further accelerate the increase in users’ information needs, in particular as it has exposed the vulnerabilities of workers and of undertaking’s value chains. Information on environmental impacts is also relevant in the context of mitigating future pandemics with human disturbance of ecosystems increasingly linked to the occurrence and spread of diseases.	(9) There has been a very significant increase in demand for corporate sustainability information in recent years, especially on the part of the investment community. That increase in demand is driven by the changing nature of risks to undertakings and growing investor awareness of the financial implications of these risks. That is especially the case for climate-related financial risks. Awareness of the risks to undertakings and to investments resulting from other environmental issues and from social issues, including health issues, is also growing. The increase in demand for sustainability information is also driven by the growth in investment products that explicitly seek to meet certain sustainability standards or achieve certain sustainability objectives. Part of that increase is the logical consequence of previously adopted Union legislation, notably Regulation (EU) 2019/2088 and Regulation (EU) 2020/852. Some of the increase would have happened in any case, due to fast-changing citizen awareness, consumer preferences and market practices. The COVID-19 pandemic will further accelerate the increase in users’ information needs, in particular as it has exposed the vulnerabilities of workers, particularly those in low-paid jobs and care roles, and of undertaking’s due diligence along the supply and value chains. Information on environmental impacts is also relevant in the context of mitigating future pandemics with human disturbance of ecosystems increasingly linked to the occurrence and spread of diseases.

Amendment  6

 

Proposal for a directive

Recital 9 a (new)

Text proposed by the Commission	Amendment
	(9a) Global value chains, in particular critical raw materials value chains, are impacted by the effects of natural or man-made hazards. The risks in critical supply chains have been made apparent by the COVID-19 crisis while the frequency and impact of those shocks are likely to increase in the future, leading to a subsequent increase of macroeconomic volatility as well as market and trade uncertainty.

Amendment  7

 

Proposal for a directive

Recital 9 b (new)

Text proposed by the Commission	Amendment
	(9b) Bureaucratic efforts need to be reduced to a minimum and should not create additional obstacles for companies and SMEs in general.

Amendment  8

 

Proposal for a directive

Recital 9 c (new)

Text proposed by the Commission	Amendment
	(9c) Legislative bodies should provide legal certainty. Undertakings, customers and trade unions, among others, should be allowed to agree upon guidelines that might support the application of this Directive.

Amendment  9

 

Proposal for a directive

Recital 11

Text proposed by the Commission	Amendment
(11) The report on the review clause of the Non-Financial Reporting Directive (Directive 2014/95/EU), and its accompanying fitness check on corporate reporting, identified problems as to the effectiveness of that Directive48 . There is significant evidence that many undertakings do not disclose material information on all major sustainability-related topics. The report also identified as significant problems the limited comparability and reliability of sustainability information. Additionally, many undertakings from which users need sustainability information are not obliged to report such information.	(11) The report on the review clause of the Non-Financial Reporting Directive (Directive 2014/95/EU), and its accompanying fitness check on corporate reporting, identified problems as to the effectiveness of that Directive48 . There is significant evidence that many undertakings do not disclose material information on all major sustainability-related topics. The report also identified as significant problems the limited comparability and reliability of sustainability information. Additionally, many undertakings from which users need sustainability information are not obliged to report such information a fact that underlines the need for a robust monitoring, reporting and verification framework and effective auditing within corporate sustainability reporting to ensure the reliability of data and avoid off-setting, green washing and/or double-accounting.
__________________	__________________
48 Publication office: please insert reference to Report from the Commission to the European Parliament, the Council and the European Economic and Social Committee on the review clauses in Directives 2013/34/EU, 2014/95/EU, and 2013/50/EU, and accompanying SWD- Fitness Check.	48 Publication office: please insert reference to Report from the Commission to the European Parliament, the Council and the European Economic and Social Committee on the review clauses in Directives 2013/34/EU, 2014/95/EU, and 2013/50/EU, and accompanying SWD- Fitness Check.

Amendment  10

 

Proposal for a directive

Recital 12

Text proposed by the Commission	Amendment
(12) In the absence of policy action, the gap between users’ information needs and the sustainability information reported by undertakings is expected to grow. This gap has significant negative consequences. Investors are unable to take sufficient account of sustainability-related risks and opportunities in their investment decisions. The aggregation of multiple investment decisions that do not take adequate account of sustainability-related risks has the potential to create systemic risks that threaten financial stability. The European Central Bank and international organisations such as the Financial Stability Board have drawn attention to those systemic risks, in particular in the case of climate. Investors are also less able to channel financial resources to undertakings and economic activities that address and do not exacerbate social and environmental problems, which undermines the objectives of the European Green Deal and the Action Plan on Financing Sustainable Growth. Non-governmental organisations, social partners, communities affected by undertakings’ activities, and other stakeholders are less able to hold undertakings accountable for their impacts on people and the environment. This creates an accountability deficit, and may contribute to lower levels of citizen trust in businesses, which in turn may have negative impacts on the efficient functioning of the social market economy. The lack of generally accepted metrics and methods for measuring, valuing, and managing sustainability-related risks is also an obstacle to the efforts of undertakings to ensure that their business models and activities are sustainable.	(12) In the absence of policy action, the gap between users’ information needs and the sustainability information reported by undertakings is expected to grow. This gap has significant negative consequences. Investors are unable to take sufficient account of sustainability-related risks and opportunities in their investment decisions. The aggregation of multiple investment decisions that do not take adequate account of sustainability-related risks has the potential to create systemic risks that threaten financial stability and delay the development and expansion of SMEs. The European Central Bank and international organisations such as the Financial Stability Board have drawn attention to those systemic risks, in particular in the case of climate. Investors are also less able to channel financial resources to undertakings and economic activities that address and do not exacerbate social and environmental problems, which undermines the objectives of the European Green Deal and the Action Plan on Financing Sustainable Growth. Non-governmental organisations, social partners, communities affected by undertakings’ activities, and other stakeholders are less able to hold undertakings accountable for their impacts on people and the environment. This creates an accountability deficit, and may contribute to lower levels of citizen trust in businesses, which in turn may have negative impacts on the efficient functioning of the social market economy. The lack of generally accepted metrics and methods for measuring, valuing, and managing sustainability-related risks is also an obstacle to the efforts of undertakings to ensure that their business models and activities are sustainable and continues to hamper the mainstreaming of sustainable economic activity across Europe and the rest of the world. Impact measurement and valuation provides guidance for quantification and monetary valuation of an undertaking’s environmental impacts.

Amendment  11

 

Proposal for a directive

Recital 14

Text proposed by the Commission	Amendment
(14) The growing gap between users’ information needs and the current reporting practices of undertakings makes it more likely that individual Member States will introduce increasingly divergent national rules or standards. Different reporting requirements in different Member States would create additional costs and complexity for undertakings operating across borders and therefore undermine the single market, and would undermine the right of establishment and the free movement of capital across the Union. Those different reporting requirements also make reported information less comparable across borders, undermining the capital markets union.	(14) The growing gap between users’ information needs and the current reporting practices of undertakings makes it more likely that individual Member States will introduce increasingly divergent national rules or standards. Different reporting requirements in different Member States would create additional costs and complexity for undertakings operating across borders and therefore undermine the single market, and would undermine the right of establishment and the free movement of capital across the Union. Those different reporting requirements also make reported information less comparable across borders, undermining the capital markets union. The requirements laid down in this Directive are intended to ensure harmonized practices as regards sustainability reporting as well as allow undertakings to comply with Union law relating to sustainability reporting at corporate level based on one set of sustainability reporting standards.

Amendment  12

Proposal for a directive

Recital 15

Text proposed by the Commission	Amendment
(15) Articles 19a and 29a of Directive 2013/34/EU apply to large undertakings that are public-interest entities with an average number of employees in excess of 500, and to public-interest entities that are parent undertakings of a large group with an average number of employees in excess of 500 on a consolidated basis, respectively. In view of the growth of users’ needs for sustainability information, additional categories of undertakings should be required to report such information. It is therefore appropriate to require all large undertakings and all undertakings listed on regulated markets, except micro undertakings, to report detailed sustainability information. In addition, all undertakings that are parent undertakings of large groups should prepare sustainability reporting at group level.	(15) Articles 19a and 29a of Directive 2013/34/EU apply to large undertakings that are public-interest entities with an average number of employees in excess of 500, and to public-interest entities that are parent undertakings of a large group with an average number of employees in excess of 500 on a consolidated basis, respectively. In view of the growth of users’ needs for sustainability information, additional categories of undertakings should be required to report such information. It is therefore appropriate to require all large undertakings and all undertakings listed on regulated markets, except micro undertakings, to report detailed sustainability information. Additionally, all undertakings that are parent undertakings of large groups should prepare sustainability reporting at group level. Undertakings that are not established in the Union but fulfil those criteria and operate in the internal market should be subject to the same requirements in order to account for their sustainability impacts and to provide a level playing field for undertakings established in the Union.

Amendment  13

Proposal for a directive

Recital 17 a (new)

Text proposed by the Commission	Amendment
	(17a) The requirement that undertakings established in third countries that operate in the Union also disclose information on sustainability matters is necessary to take account of the need of European users, consumers and investors to access information about sustainability matters related to their activities. It is also necessary in order to guarantee a level playing field in the single market between undertakings established in the Union and third-country undertakings.

Amendment  14

Proposal for a directive

Recital 21

Text proposed by the Commission	Amendment
(21) Articles 19a(3) and 29a(3) of Directive 2013/34/EU currently exempt all subsidiary undertakings from the obligation to report non-financial information where such undertakings and their subsidiary undertakings are included in the consolidated management report of their parent undertaking, provided this includes the required non-financial information. It is necessary, however to ensure that sustainability information is easily accessible for users, and to bring transparency about which is the parent undertaking of the exempted subsidiary undertaking which is reporting at consolidated level. It is therefore necessary to require those subsidiary undertakings to publish the consolidated management report of their parent undertaking and to include a reference in their management report to the fact that they are exempted from reporting sustainability information. That exemption should also apply where the parent undertaking reporting at consolidated level is a third country undertaking reporting sustainability information in accordance with the requirements of this Directive or in a manner equivalent to EU sustainability reporting standards.	(21) Articles 19a(3) and 29a(3) of Directive 2013/34/EU currently exempt all subsidiary undertakings from the obligation to report non-financial information where such undertakings and their subsidiary undertakings are included in the consolidated management report of their parent undertaking, as defined in that Directive, provided this includes the required non-financial information. It is necessary, however to ensure that sustainability information is easily accessible for users, and to bring transparency about the activities of all the undertakings within the scope of the Directive. It is therefore necessary to require those subsidiary undertakings to publish a management report containing information on sustainability. The absence of an exemption does not affect the possibility for a parent undertaking to pool costs and resources with its subsidiaries in order for them to fulfil their obligations concerning sustainability reporting and auditing of sustainability reporting. Nor does it affect the possibility for parent undertakings to produce a consolidated management report.

Amendment  15

Proposal for a directive

Recital 22

Text proposed by the Commission	Amendment
(22) Article 23 of Directive 2013/34/EU exempts parent undertakings from the obligation to prepare consolidated financial statements and a consolidated management report where those undertakings are subsidiaries of another parent undertaking that complies with that obligation. It should be specified, however, that the exemption regime for consolidated financial statements and consolidated management reports operates independently from the exemption regime for consolidated sustainability reporting. An undertaking can therefore be exempted from consolidated financial reporting obligations but not exempted from consolidated sustainability reporting obligations where its ultimate parent prepares consolidated financial statements and consolidated management reports in accordance with Union law, or in accordance with equivalent requirements if the undertaking is established in a third country, but does not prepare consolidated sustainability reporting in accordance with EU law, or in accordance with equivalent requirements if the undertaking is established in a third country.	deleted

Amendment  16

Proposal for a directive

Recital 24

Text proposed by the Commission	Amendment
(24) The list of sustainability matters on which undertakings are required to report should be as coherent as possible with the definition of ‘sustainability factors’ laid down in Regulation (EU) 2019/2088. That list should also correspond to the needs and expectations of users and undertakings themselves, who often use the terms ‘environmental’, ‘social’ and ‘governance’ as a means to categorise the three main sustainability matters. The list of sustainability factors laid down in Regulation (EU) 2019/2088 does not explicitly include governance matters. The definition of sustainability matters in Directive 2013/34/EU should therefore be based on the definition of ‘sustainability factors’ laid down in Regulation (EU) 2019/2088, but with the addition of governance matters.	(24) The list of sustainability matters on which undertakings are required to report should be as coherent as possible with the definition of ‘sustainability factors’ laid down in Regulation (EU) 2019/2088. That list should also correspond to the needs and expectations of users and undertakings themselves, who often use the terms ‘environmental’, ‘social’ and ‘governance’ as a means to categorise the three main sustainability matters. The list of sustainability factors laid down in Regulation (EU) 2019/2088 does not explicitly include governance matters. The definition of sustainability matters in Directive 2013/34/EU should therefore be based on the definition of ‘sustainability factors’ laid down in Regulation (EU) 2019/2088, but with the addition of governance matters. The list is a minimum requirement, which will not lower existing national reporting requirements.

Amendment  17

Proposal for a directive

Recital 25

Text proposed by the Commission	Amendment
(25) Articles 19a and 29a of Directive 2013/34/EU require reporting not only on information ‘to the extent necessary for an understanding of the undertaking's development, performance, position’, but also on information necessary for an understanding of the impact of the undertaking’s activities on environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters. Those articles therefore require undertakings to report both on how various sustainability matters affect the undertaking, and on the impacts of the activities of the undertaking on people and the environment. That is referred to as the double-materiality perspective, in which the risks to the undertaking and the impacts of the undertaking each represent one materiality perspective. The fitness check on corporate reporting shows that those two perspectives are often not well understood or applied. It is therefore necessary to clarify that undertakings should consider each materiality perspective in its own right, and should disclose information that is material from both perspectives as well as information that is material from only one perspective.	(25) Articles 19a and 29a of Directive 2013/34/EU require reporting not only on information ‘to the extent necessary for an understanding of the undertaking's development, performance, position’, but also on information necessary for an understanding of the impact of the undertaking’s activities on environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters. Those articles therefore require undertakings to report both on how various sustainability matters affect the undertaking, and on the impacts of the activities of the undertaking on people and the environment. That is referred to as the double-materiality perspective, in which the risks to the undertaking and the impacts of the undertaking each represent one materiality perspective. The fitness check on corporate reporting shows that those two perspectives are often not well understood or applied. It is therefore necessary to clarify that undertakings should consider each materiality perspective in its own right, and should disclose information that is material from both perspectives as well as information that is material from only one perspective, bearing in mind that double-materiality is fundamental to understanding a company’s long-term value creation.

Amendment  18

Proposal for a directive

Recital 26

Text proposed by the Commission	Amendment
(26) Articles 19a(1) and 29a(1) of Directive 2013/34/EU require undertakings to disclose information about five reporting areas: business model, policies (including due diligence processes implemented), the outcome of those policies, risks and risk management, and key performance indicators relevant to the business. Article 19a(1) of Directive 2013/34/EU does not contain explicit references to other reporting areas that users of information consider relevant, some of which align with disclosures included in international frameworks, including the recommendations of the Task Force on Climate-related Financial Disclosures. Disclosure requirements should be specified in sufficient detail to ensure that undertakings report information on their resilience to risks related to sustainability matters. In addition to the reporting areas identified in Articles 19a(1) and 29a(1) of Directive 2013/34/EU, undertakings should therefore be required to disclose information about their business strategy and the resilience of the business model and strategy to risks related to sustainability matters, any plans they may have to ensure that their business model and strategy are compatible with the transition to a sustainable and climate-neutral economy; whether and how their business model and strategy take account of the interests of stakeholders; any opportunities for the undertaking arising from sustainability matters; the implementation of the aspects of the business strategy which affect, or are affected by sustainability matters; any sustainability targets set by the undertaking and the progress made towards achieving them; the role of the board and management with regard to sustainability matters; the principal actual and potential adverse impacts connected with the undertaking’s activities; and how the undertaking has identified the information that they report on. Once the disclosure of elements such as targets and the progress towards achieving them is required, the separate requirement to disclose the outcomes of policies is no longer necessary.	(26) Articles 19a(1) and 29a(1) of Directive 2013/34/EU require undertakings to disclose information about five reporting areas: business model, policies (including due diligence processes implemented), the outcome of those policies, risks and risk management, and key performance indicators relevant to the business. Article 19a(1) of Directive 2013/34/EU does not contain explicit references to other reporting areas that users of information consider relevant, some of which align with disclosures included in international frameworks, including the recommendations of the Task Force on Climate-related Financial Disclosures. Disclosure requirements should be specified in sufficient detail to ensure that undertakings report information on their resilience to risks related to sustainability matters. In addition to the reporting areas identified in Articles 19a(1) and 29a(1) of Directive 2013/34/EU, undertakings should therefore be required to disclose information about their business strategy and the resilience of the business model and strategy to risks related to sustainability matters, any plans they may have to ensure that their business model and strategy are compatible with the transition to a sustainable and climate-neutral economy; whether and how their business model and strategy take account of the interests of stakeholders; any opportunities for the undertaking arising from sustainability matters; the implementation of the aspects of the business strategy which affect, or are affected by sustainability matters; any sustainability targets set by the undertaking and the progress made towards achieving them; the role of the board and management with regard to sustainability matters; the principal actual and potential adverse impacts connected with the undertaking’s activities; and how the undertaking has identified the information that they report on. Once the disclosure of elements such as targets and the progress towards achieving them is required, the separate requirement to disclose the outcomes of policies is no longer necessary. In order to protect the competitiveness of enterprises, the information needs to be provided at an aggregated level.

Amendment  19

Proposal for a directive

Recital 27

Text proposed by the Commission	Amendment
(27) To ensure consistency with international instruments such as the UN Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance for Responsible Business Conduct, the due diligence disclosure requirements should be specified in greater detail than is the case in Article 19a(1), point (b), and Article 29a(1), point (b) of Directive 2013/34/EU. Due diligence is the process that undertakings carry out to identify, prevent, mitigate and remediate the principal actual and potential adverse impacts connected with their activities and identifies how they address those adverse impacts. Impacts connected with an undertaking’s activities include impacts directly caused by the undertaking, impacts to which the undertaking contributes, and impacts which are otherwise linked to the undertaking’s value chain. The due diligence process concerns the whole value chain of the undertaking including its own operations, its products and services, its business relationships and its supply chains. In alignment with the UN Guiding Principles on Business and Human Rights, an actual or potential adverse impact is to be considered principal where it measures among the greatest impacts connected with the undertaking’s activities based on: the gravity of the impact on people or the environment; the number of individuals that are or could be affected, or the scale of damage to the environment; and the ease with which the harm could be remediated, restoring the environment or affected people to their prior state.	(27) To ensure consistency with international instruments such as the UN Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance for Responsible Business Conduct, the due diligence disclosure requirements should be specified in greater detail than is the case in Article 19a(1), point (b), and Article 29a(1), point (b) of Directive 2013/34/EU. Due diligence is the process that undertakings carry out to identify, prevent, mitigate and remediate the principal actual and potential adverse impacts connected with their activities and identifies how they address those adverse impacts. Impacts connected with an undertaking’s activities include impacts directly caused by the undertaking, impacts to which the undertaking contributes, and impacts which are otherwise linked to the undertaking’s value chain. A transparent project provides the methodology for impact measurement and valuation across the entire value chain. The due diligence process concerns the whole value chain of the undertaking including its own operations, its products and services, its business relationships and its supply chains. In alignment with the UN Guiding Principles on Business and Human Rights, an actual or potential adverse impact is to be considered principal where it measures among the greatest impacts connected with the undertaking’s activities based on: the gravity of the impact on people or the environment; the number of individuals that are or could be affected, or the scale of damage to the environment; and the ease with which the harm could be remediated, restoring the environment or affected people to their prior state.

Amendment  20

Proposal for a directive

Recital 29

Text proposed by the Commission	Amendment
(29) Articles 19a(1) and 29a(1) of Directive 2013/34/EU do not specify whether the information to be reported is to be forward looking or information about past performance. There is currently a lack of forward-looking disclosures, which users of sustainability information especially value. Articles 19a and 29a of Directive 2013/34/EU should therefore specify that the sustainability information reported shall include forward-looking and retrospective, and both qualitative and quantitative information. Reported sustainability information should also take into account short, medium and long-term time horizons and contain information about the undertaking’s whole value chain, including its own operations, its products and services, its business relationships, and its supply chain, as appropriate. Information about the undertaking’s whole value chain would include information related to its value chain within the EU and information that covers third countries if the undertaking’s value chain extends outside the EU.	(29) Articles 19a(1) and 29a(1) of Directive 2013/34/EU do not specify whether the information to be reported is to be forward looking or information about past performance. There is currently a lack of forward-looking disclosures, which users of sustainability information especially value. At the same time it is essential to take account of the sensitive nature of such information from a perspective of business confidentiality as well as the fact that such information is subject to uncertainty and not audit-proofed in a robust way. Articles 19a and 29a of Directive 2013/34/EU should therefore specify that the sustainability information reported shall include forward-looking and retrospective, and both qualitative and quantitative information that is based on science-based harmonised, comparable and uniform indicators and consistent with the harmonised life cycle assessment, while not endangering the commercial position of the undertaking. Reported sustainability information should also take into account short, medium and long-term time horizons and contain information about the undertaking’s whole value chain impact on society, including its own operations, its products and services, its business relationships, and its supply chain, as appropriate. Information about the undertaking’s whole value chain would include information related to its value chain within the EU and information that covers third countries if the undertaking’s value chain extends outside the EU.

Amendment  21

Proposal for a directive

Recital 31

Text proposed by the Commission	Amendment
(31) Articles 19a(1) and 29a(1) of Directive 2013/34/EU require undertakings to provide a clear and reasoned explanation for not pursuing policies in relation to one or more of the matters listed, where the undertaking does not do so. The different treatment of disclosures on the policies that undertakings may have, compared to the other reporting areas included in those articles, has created confusion among reporting undertakings and has not helped to improve the quality of the reported information. Therefore, there is no need to maintain this different treatment of policies in the Directive. The standards will determine what information needs to be disclosed in relation to each of the reporting areas mentioned in Articles 19a and 29a.	(31) Articles 19a(1) and 29a(1) of Directive 2013/34/EU require undertakings to provide a clear and reasoned explanation for not pursuing policies in relation to one or more of the matters listed, where the undertaking does not do so. The different treatment of disclosures on the policies that undertakings may have, compared to the other reporting areas included in those articles, created confusion among reporting undertakings and has not helped to improve the quality of the reported information. Therefore, there is no need to maintain this different treatment of policies in the Directive. The standards will determine what information needs to be disclosed in relation to each of the reporting areas mentioned in Articles 19a and 29a.

Justification

Editorial amendment.

Amendment  22

Proposal for a directive

Recital 33

Text proposed by the Commission	Amendment
(33) No existing standard or framework satisfies the Union’s needs for detailed sustainability reporting by itself. Information required by Directive 2013/34/EU needs to cover information relevant from each of the materiality perspectives, needs to cover all sustainability matters and needs to be aligned, where appropriate, with other obligations under Union law to disclose sustainability information, including obligations laid down in Regulation (EU) 2020/852 and Regulation (EU) 2019/2088. In addition, mandatory sustainability reporting standards for Union undertakings must be commensurate with the level of ambition of the European Green Deal and the Union’s climate-neutrality objective for 2050. It is therefore necessary to empower the Commission to adopt Union sustainability reporting standards, enabling their rapid adoption and ensuring that the content of sustainability reporting standards are consistent with the Union’s needs.	(33) In developing its own sustainability reporting standards the Union should ensure consistency with global equivalent standards. Information required by Directive 2013/34/EU needs to cover information relevant from each of the materiality perspectives, needs to cover all sustainability matters, including the monetary valuation of business impacts on society, where beneficial for data preparers and users to compare the relevance of different indicators. In order to avoid duplication of obligations and inconsistencies in definitions, the scope and objectives of applicable requirements, and of sustainability and needs to be aligned, where appropriate, with other obligations under Union law to disclose sustainability information, including, but not limited to obligations laid down in Regulation (EU) 2020/852 and Regulation (EU) 2019/2088. This information should be based on science-based harmonised, comparable and uniform indicators and consistent with the harmonised life cycle assessment. In addition, mandatory sustainability reporting standards for Union undertakings must be commensurate with the Union’s social and economic objectives under Article 3(3) of the Treaty on European Union, the level of ambition of the European Green Deal and the Union’s climate-neutrality objective for 2050, while taking into account global standards. It is therefore necessary to empower the Commission to adopt Union sustainability reporting standards in convergence with the development of International Sustainability Standards (ISS) adopted by the International Sustainability Standards Board (ISSB), enabling their rapid adoption and where necessary ensuring that the content of sustainability reporting standards are consistent with the Union’s needs.

Amendment  23

Proposal for a directive

Recital 34

Text proposed by the Commission	Amendment
(34) The European Financial Reporting Advisory Group (EFRAG) is a non-profit association established under Belgian law that serves the public interest by providing advice to the Commission on the endorsement of international financial reporting standards. EFRAG has established a reputation as a European centre of expertise on corporate reporting, and is well placed to foster coordination between European sustainability reporting standards and international initiatives that seek to develop standards that are consistent across the world. In March 2021, a multi-stakeholder task force set up by EFRAG published recommendations for the possible development of sustainability reporting standards for the European Union. Those recommendations contain proposals to develop a coherent and comprehensive set of reporting standards, covering all sustainability matters from a double-materiality perspective. Those recommendations also contain a detailed roadmap for developing such standards, and proposals for mutually reinforcing cooperation between global standard-setting initiatives and standard-setting initiatives of the European Union. In March 2021, the EFRAG President published recommendations for possible governance changes to EFRAG if it were to be asked to develop technical advice about sustainability reporting standards. These recommendations include offsetting up within EFRAG a new sustainability reporting pillar while not significantly modifying the existing financial reporting pillar. When adopting sustainability reporting standards, the Commission should take account of technical advice that EFRAG will develop. In order to ensure high-quality standards that contribute to the European public good and meet the needs of undertakings and of users of the information reported, EFRAG’s technical advice should be developed with proper due process, public oversight and transparency, accompanied by cost benefit analyses, and be developed with the expertise of relevant stakeholders. To ensure that Union sustainability reporting standards take account of the views of the Member States of the Union, before adopting the standards the Commission should consult the Member State Expert Group on Sustainable Finance referred to in Article 24 of Regulation (EU) 2020/852 on EFRAG’s technical advice. The European Securities and Markets Authority (ESMA) plays a role in drafting regulatory technical standards pursuant to Regulation (EU) 2019/2088 and there needs to be coherence between those regulatory technical standards and sustainability reporting standards. According to Regulation (EU) No 1095/2010 of the European Parliament and of the Council54 , ESMA also plays a role in promoting supervisory converge in the enforcement of corporate reporting by issuers whose securities are listed on EU regulated markets and who will be required to use these sustainability reporting standards. Therefore, ESMA should be required to provide an opinion on EFRAG’s technical advice. This opinion should be provided within two months from the date of receipt of the request from the Commission. In addition, the Commission should consult the European Banking Authority, the European Insurance and Occupational Pensions Authority, the European Environment Agency, the European Union Agency for Fundamental Rights, the European Central Bank, the Committee of European Auditing Oversight Bodies and the Platform on Sustainable Finance to ensure that the sustainability reporting standards are coherent with relevant Union policy and legislation. Where any of those bodies decide to submit an opinion, they shall do so within two months from the date of being consulted by the Commission.	(34) The European Financial Reporting Advisory Group (EFRAG) is a non-profit association established under Belgian law that serves the public interest by providing advice to the Commission on the endorsement of international financial reporting standards. EFRAG has established a reputation as a European centre of expertise on corporate reporting, and is well placed to foster coordination between European sustainability reporting standards and international initiatives that seek to develop standards that are consistent across the world. In March 2021, a multi-stakeholder task force set up by EFRAG published recommendations for the possible development of sustainability reporting standards for the European Union. Those recommendations contain proposals to develop a coherent and comprehensive set of reporting standards, covering all sustainability matters, including monetary valuation of impacts and natural capital accounting methods from a double-materiality perspective. Those recommendations also contain a detailed roadmap for developing such standards, and proposals for mutually reinforcing convergence between global standard-setting initiatives such as International Sustainability Standards (ISS) adopted by the International Sustainability Standards Board (ISSB) and standard-setting initiatives of the European Union. In March 2021, the EFRAG President published recommendations for possible governance changes to EFRAG if it were to be asked to develop technical advice about sustainability reporting standards. These recommendations include offsetting up within EFRAG a new sustainability reporting pillar while not significantly modifying the existing financial reporting pillar. When adopting sustainability reporting standards, the Commission should take account of technical advice that EFRAG will develop. In order to ensure high-quality standards that contribute to the convergence with global standard-setting initiatives and within the Union such as SFDR and taxonomy and to the European public good and meet the needs of undertakings, and of users of the information reported, EFRAG’s technical advice should be developed with proper due process, public oversight and transparency, accompanied by public consultations and cost benefit analyses, and be developed with the expertise of relevant stakeholders, including the Platform on Sustainable Finance, and relevant national experts of the Member States. To ensure that Union sustainability reporting standards take account of the views of the Member States of the Union, before adopting the standards the Commission should consult the Member State Expert Group on Sustainable Finance referred to in Article 24 of Regulation (EU) 2020/852 on EFRAG’s technical advice. To ensure that Union sustainability reporting standards take account of the need for consistency with Regulation (EU) 2020/852, before adopting the standards the Commission should consult the Platform on Sustainable Finance referred to in Article 20 of Regulation (EU) 2020/852 on EFRAG’s technical advice. To ensure that Union sustainability reporting standards take account of the need for convergence with global standard-setting initiatives, before adopting the standards, the Commission should consult with the International Sustainability Standards Board. The European Securities and Markets Authority (ESMA) plays a role in drafting regulatory technical standards pursuant to Regulation (EU) 2019/2088 and there needs to be coherence between those regulatory technical standards and sustainability reporting standards. According to Regulation (EU) No 1095/2010 of the European Parliament and of the Council54 , ESMA also plays a role in promoting supervisory converge in the enforcement of corporate reporting by issuers whose securities are listed on EU regulated markets and who will be required to use these sustainability reporting standards. Therefore, ESMA should be required to provide an opinion on EFRAG’s technical advice. This opinion should be provided within four months of the date of receipt of the request from the Commission and it shall provide its opinion on amendments to existing standards within three months from the date of receipt of the request from the Commission. In addition, the Commission should consult the European Banking Authority, the European Insurance and Occupational Pensions Authority, the European Environment Agency, the European Union Agency for Fundamental Rights, the European Central Bank, the Committee of European Auditing Oversight Bodies and the Platform on Sustainable Finance to ensure that the sustainability reporting standards are coherent with relevant Union policy and legislation. Also the expertise and opinion of the International Sustainability Standards Board (ISSB) of the International Financial Reporting Standard (IFRS) Foundation should be taken into account. Where any of those bodies decide to submit an opinion, they shall do so within two months from the date of being consulted by the Commission.
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54 Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, p. 84).	54 Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, p. 84).

Amendment  24

Proposal for a directive

Recital 35

Text proposed by the Commission	Amendment
(35) Sustainability reporting standards should be coherent with other Union legislation. Those standards should in particular be aligned with the disclosure requirements laid down in Regulation (EU) 2019/2088, and they should take account of underlying indicators and methodologies set out in the various delegated acts adopted pursuant to Regulation (EU) 2020/852, disclosure requirements applicable to benchmark administrators pursuant to Regulation (EU) 2016/1011 of the European Parliament and of the Council55 , the minimum standards for the construction of EU climate transition benchmarks and EU Paris-aligned benchmarks; and of any work carried out by the European Banking Authority in the implementation of the Pillar III disclosure requirements of Regulation (EU) No 575/2013. Standards should take account of Union environmental legislation, including Directive 2003/87/EC of the European Parliament and of the Council56 and Regulation (EC) No 1221/2009 of the European Parliament and of the Council57 , and should take account of Commission Recommendation 2013/179/EU58 and its annexes, and their updates. Other relevant Union legislation, including Directive 2010/75/EU of the European Parliament and of the Council59 , and requirements laid down in Union law for undertakings as regards directors’ duties and due diligence, should also be taken into account.	(35) Sustainability reporting standards should be coherent with other Union legislation. Those standards should in particular be aligned with the disclosure requirements laid down in Regulation (EU) 2019/2088, and they should take account of underlying criteria, indicators and methodologies set out in the various delegated acts adopted pursuant to Regulation (EU) 2020/852, disclosure requirements applicable to benchmark administrators pursuant to Regulation (EU) 2016/1011 of the European Parliament and of the Council55 , the minimum standards for the construction of EU climate transition benchmarks and EU Paris-aligned benchmarks; and of any work carried out by the European Banking Authority in the implementation of the Pillar III disclosure requirements of Regulation (EU) No 575/2013. Standards should take account of Union environmental legislation, including Directive 2003/87/EC of the European Parliament and of the Council56 and Regulation (EC) No 1221/2009 of the European Parliament and of the Council57 , and should take account of Commission Recommendation 2013/179/EU58 and its annexes, and their updates. Other relevant Union legislation, including Directive 2010/75/EU of the European Parliament and of the Council59 should also be taken into account.
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55 Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (OJ L 171, 29.6.2016, p. 1).	55 Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (OJ L 171, 29.6.2016, p. 1).
56 Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32).	56 Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32).
57 Regulation (EC) No 1221/2009 of the European Parliament and of the Council of 25 November 2009 on the voluntary participation by organisations in a Community eco-management and audit scheme (EMAS), repealing Regulation (EC) No 761/2001 and Commission Decisions 2001/681/EC and 2006/193/EC (OJ L 342, 22.12.2009, p. 1).	57 Regulation (EC) No 1221/2009 of the European Parliament and of the Council of 25 November 2009 on the voluntary participation by organisations in a Community eco-management and audit scheme (EMAS), repealing Regulation (EC) No 761/2001 and Commission Decisions 2001/681/EC and 2006/193/EC (OJ L 342, 22.12.2009, p. 1).
58 Commission Recommendation 2013/179/EU of 9 April 2013 on the use of common methods to measure and communicate the life cycle environmental performance of products and organisations (OJ L 124, 4.5.2013, p. 1).	58 Commission Recommendation 2013/179/EU of 9 April 2013 on the use of common methods to measure and communicate the life cycle environmental performance of products and organisations (OJ L 124, 4.5.2013, p. 1).
59 Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control) (OJ L 334, 17.12.2010, p. 17).	59 Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control) (OJ L 334, 17.12.2010, p. 17).

Amendment  25

Proposal for a directive

Recital 36

Text proposed by the Commission	Amendment
(36) Sustainability reporting standards should take account of the Commission guidelines on non-financial reporting60 and the Commission guidelines on reporting climate-related information61 . They should also take account of other reporting requirements in Directive 2013/34/EU not directly related to sustainability, with the aim of providing the users of the reported information with a better understanding of the development, performance, position and impact of the undertaking, by maximising the links between the sustainability information and other information reported in accordance with Directive 2013/34/EU.	(36) Sustainability reporting standards should take account of the Commission guidelines on non-financial reporting and the Commission guidelines on reporting climate-related information. In particular, they should refer to key performance indicators including those developed under Section 3.5 of the Commission Communication of 18 June 2019 entitled “Guidelines on non-financial reporting: Supplement on reporting climate-related information” as well as additional indicators covering all the environmental objectives. These indicators should be defined in accordance with the Commission Communication of 26 June 2017 entitled “Guidelines on non-financial reporting (methodology for reporting non-financial information)” and in close collaboration and involvement with organisations promoting environmental protection, social partners, investors and stakeholders involved in international human rights and social matters. Sustainability reporting standards should also take account of other reporting requirements in Directive 2013/34/EU not directly related to sustainability, with the aim of providing the users of the reported information with a better understanding of the development, performance, position and impact of the undertaking, by maximising the links between the sustainability information and other information reported in accordance with Directive 2013/34/EU.
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60 2017/C 215/01.
61 2019/C 209/01.

Amendment  26

Proposal for a directive

Recital 37

Text proposed by the Commission	Amendment
(37) Sustainability reporting standards should be proportionate, and should not impose unnecessary administrative burden on companies that are required to use them. In order to minimise disruption for undertakings that already report sustainability information, sustainability reporting standards should take account of existing standards and frameworks for sustainability reporting and accounting where appropriate. Those include the Global Reporting Initiative, the Sustainability Accounting Standards Board, the International Integrated Reporting Council, the International Accounting Standards Board, the Task Force on Climate-related Financial Disclosures, the Carbon Disclosure Standards Board, and CDP (formerly the Carbon Disclosure Project). Standards of the European Union should take account of any sustainability reporting standards developed under the auspices of International Financial Reporting Standards Foundation. To avoid unnecessary regulatory fragmentation that may have negative consequences for undertakings operating globally, European standards should contribute to the process of convergence of sustainability reporting standards at global level.	(37) Sustainability reporting standards should be proportionate, and should not impose unnecessary administrative burden and costs on companies that are required to use them. In order to minimise disruption for undertakings that already report sustainability information, sustainability reporting standards should take account of and ensure consistency with existing standards and frameworks for sustainability reporting and accounting where appropriate. Those include the Global Reporting Initiative, the Sustainability Accounting Standards Board, the International Integrated Reporting Council, the International Accounting Standards Board, the Task Force on Climate-related Financial Disclosures, the Carbon Disclosure Standards Board, and CDP (formerly the Carbon Disclosure Project). Standards of the European Union should take account of any sustainability reporting standards developed under the auspices of International Financial Reporting Standards Foundation, in particular of the International Sustainability Standards Board (ISSB). To avoid unnecessary regulatory fragmentation that may have negative consequences for undertakings operating globally, European standards should contribute to the process of convergence of sustainability reporting standards at global level. Union sustainability standards should take into account, as far as possible, equivalent global sustainable reporting standards. Where possible, the Union should cooperate with other international players to promote the use of the sustainability reporting standards set out in this Directive at international level.

Amendment  27

Proposal for a directive

Recital 38

Text proposed by the Commission	Amendment
(38) In its communication on the European Green Deal, the European Commission committed to support businesses and other stakeholders in developing standardised natural capital accounting practices within the Union and internationally, with the aim of ensuring appropriate management of environmental risks and mitigation opportunities, and reduce related transaction costs. The Transparent Project sponsored under the LIFE programme is developing the first natural capital accounting methodology, which will make existing methods easier to compare and more transparent while lowering the threshold for companies to adopt and use the systems in support of future-proofing their business. The Natural Capital Protocol is also an important reference in this field. While natural capital accounting methods serve principally to strengthen internal management decisions, they should be duly considered when establishing sustainability reporting standards. Some natural capital accounting methodologies seek to assign a monetary value to the environmental impacts of companies’ activities, which may help users to better understand those impacts. It is therefore appropriate that sustainability reporting standards should be able to include monetised indicators of sustainability impacts if that is deemed necessary.	(38) In its communication on the European Green Deal, the European Commission committed to support businesses and other stakeholders in developing standardised natural capital accounting practices within the Union and internationally, with the aim of ensuring appropriate management of environmental risks and mitigation opportunities as well as their impact on social, economic and governance risks, and reduce related transaction costs. The Transparent Project sponsored under the LIFE programme is developing and testing the first natural capital accounting methodology, which consolidates the existing methods and best practices to make performance easier to compare and more transparent while lowering the threshold for companies to adopt and use the systems in support of future-proofing their business. The Transparent Project’s methodology builds upon the Natural Capital Protocol which is also an important reference in this field and reflects the double-materiality perspective. While natural capital accounting methods serve principally to strengthen internal management decisions, they should be duly considered when establishing sustainability reporting standards as information collected and audited will be used for external disclosures as well. Some natural capital accounting methodologies seek to assign a monetary value to the environmental impacts of companies’ activities, which will help users to better understand those impacts and their interdependencies. It is therefore appropriate that sustainability reporting standards should be able to include monetised indicators of sustainability impacts if that is deemed necessary.

Amendment  28

Proposal for a directive

Recital 41

Text proposed by the Commission	Amendment
(41) With regard to climate-related information, users are interested in knowing about undertakings’ physical and transition risks, and about their resilience to different climate scenarios. They are also interested in the level and scope of greenhouse gas emissions and removals attributed to the undertaking, including the extent to which the undertaking uses offsets and the source of those offsets. Achieving a climate neutral economy requires the alignment of greenhouse gas accounting and offset standards. Users need reliable information regarding offsets that addresses concerns regarding possible double-counting and overestimations, given the risks to the achievement of climate-related targets that double-counting and overestimations can create. The reporting standards should therefore specify the information undertakings should report with regard to those matters.	(41) With regard to climate-related information, users are interested in knowing about undertakings’ physical and transition risks, about its detailed plans to mitigate its own emissions, and about their resilience and plans to adapt to different climate scenarios. They are also interested in the level and scope of greenhouse gas emissions and removals attributed to the undertaking, including the extent to which the undertaking uses offsets and the source of those offsets. Achieving a climate neutral economy requires the alignment of greenhouse gas accounting and offset standards. Users need reliable information regarding offsets that addresses concerns regarding possible double-counting and overestimations, given the risks to the achievement of climate-related targets that double-counting and overestimations can create. The reporting standards should therefore specify the information undertakings should report with regard to those matters.

Amendment  29

Proposal for a directive

Recital 43

Text proposed by the Commission	Amendment
(43) Sustainability reporting standards should specify the information that undertakings should disclose on social factors, including employee factors and human rights. Such information should cover the impacts of undertakings on people, including on human health. The information that undertakings disclose about human rights should include information about forced labour in their value chains where relevant. Reporting standards that address social factors should specify the information that undertakings should disclose with regard to the principles of the European Pillar of Social Rights that are relevant to businesses, including equal opportunities for all and working conditions. The European Pillar of Social Rights Action Plan adopted in March 2021 calls for stronger requirements on undertakings to report on social issues. The reporting standards should also specify the information that undertakings should disclose with regard to the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the fundamental conventions of the International Labour Organisation, and the Charter of Fundamental Rights of the European Union.	(43) Sustainability reporting standards should specify the information that undertakings should disclose on social factors, including employee factors and human rights. Such information should cover the impacts of undertakings on people. The information that undertakings disclose about human rights should include information about forced labour in their value chains where relevant. Reporting standards that address social factors should specify the information that undertakings should disclose with regard to the principles of the European Pillar of Social Rights that are relevant to businesses, including equal opportunities for all and working conditions. The European Pillar of Social Rights Action Plan adopted in March 2021 calls for stronger requirements on undertakings to report on social issues. The reporting standards should also specify the information that undertakings should disclose with regard to the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the relevant conventions of the International Labour Organization and in particular the fundamental conventions of the International Labour Organisation, the European Convention on Human Rights, the European Social Charter, the Charter of Fundamental Rights of the European Union, the United Nations Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises.

Amendment  30

Proposal for a directive

Recital 48

Text proposed by the Commission	Amendment
(48) Directive 2013/34/EU does not require that the financial statements or the management report are provided in a digital format, which hinders the findability and usability of the reported information. Users of sustainability information increasingly expect such information to be findable and machine-readable in digital formats. Digitalisation creates opportunities to exploit information more efficiently and holds the potential for significant cost savings for both users and undertakings. Undertakings should therefore be required to prepare their financial statements and their management report in XHTML format in accordance with Article 3 of Commission Delegated Regulation (EU) 2019/815,63 and to mark-up sustainability information, including the disclosures required by Article 8 of Regulation (EU) 2020/852, in accordance with that Delegated Regulation. A digital taxonomy to the Union sustainability reporting standards will be necessary to allow for the information reported to be tagged in accordance with those standards. These requirements should feed into the work on digitalisation announced by the Commission in its Communication A European strategy for data64 and in the Digital Finance Strategy for the EU.65 These requirements also complement the creation of a European single access point for public corporate information as envisaged in the capital markets union action plan, which also considers the need for structured data.	(48) Directive 2013/34/EU does not require that the financial statements or the management report are provided in a digital format, which hinders the findability, accessibility and usability of the reported information. Users of sustainability information increasingly expect such information to be findable, comparable and machine-readable in digital formats and published under open data principles. Digitalisation creates opportunities to exploit information more efficiently and holds the potential for significant cost savings for both users and undertakings. Undertakings should therefore be required to prepare and make publicly available their financial statements and their management report in XHTML format in accordance with Article 3 of Commission Delegated Regulation (EU) 2019/815,63 and to mark-up sustainability information, including the disclosures required by Article 8 of Regulation (EU) 2020/852, in accordance with that Delegated Regulation. A digital taxonomy to the Union sustainability reporting standards will be necessary to allow for the information reported to be tagged in accordance with those standards. These requirements should feed into the work on digitalisation announced by the Commission in its Communication A European strategy for data64 and in the Digital Finance Strategy for the EU.65 These requirements also complement the creation of a European single access point for public corporate information as envisaged in the capital markets union action plan, which also considers the need for structured data.
__________________	__________________
63 Commission Delegated Regulation (EU) 2018/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (OJ L 143, 29.5.2019, p. 1).	63 Commission Delegated Regulation (EU) 2018/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (OJ L 143, 29.5.2019, p. 1).
64 https://ec.europa.eu/digital-single-market/en/european-strategy-data	64 https://ec.europa.eu/digital-single-market/en/european-strategy-data
65 https://ec.europa.eu/info/publications/200924-digital-finance-proposals_en	65 https://ec.europa.eu/info/publications/200924-digital-finance-proposals_en

Amendment  31

Proposal for a directive

Recital 49

Text proposed by the Commission	Amendment
(49) To allow for the inclusion of the reported sustainability information in the European single access point, Member States should ensure that undertakings publish the duly approved annual financial statements and the management report in the prescribed electronic format, and ensure that management reports containing sustainability reporting are made available, without delay following their publication, to the relevant officially appointed mechanism referred to in Article 21(2) of Directive 2004/109/EC.	(49) To allow and ensure the inclusion of the reported sustainability information in the European single access point, Member States should ensure that undertakings publish the duly approved annual financial statements and the management report in the prescribed open data and machine-readable electronic format, and ensure that management reports containing sustainability reporting are made available, without undue delay following their publication, to the relevant officially appointed mechanism referred to in Article 21(2) of Directive 2004/109/EC.

 

Amendment  32

 

Proposal for a directive

Recital 50

Text proposed by the Commission	Amendment
(50) Article 19a(4) of Directive 2013/34/EU enables Member States to exempt undertakings from including in the management report the non-financial statement required under Article 19a(1). Member States may do so where the undertaking concerned prepares a separate report that is published together with the management report in accordance with Article 30 of that Directive, or where that report is made publicly available on the undertaking's website within a reasonable period of time not exceeding 6 months, after the balance sheet date, and is referred to in the management report. The same possibility exists for the consolidated non-financial statement referred to in Article 29(a)(4) of Directive 2013/34/EU. Twenty Member States have used that option. The possibility to publish a separate report hinders, however, the availability of information that connects financial and information on sustainability matters. It also hinders the findability and accessibility of information for users, especially investors, who are interested in both financial and sustainability information. Possible different publication times for financial and sustainability information exacerbate this problem. Publication in a separate report can also give the impression, internally and externally, that sustainability information belongs to a category of less relevant information, which can impact negatively on the perceived reliability of the information. Undertakings should therefore report sustainability information in the management report and Member States should no longer be allowed to exempt undertakings from the obligation to include in the management report information on sustainability matters. Such obligation also helps to clarify the role of national competent authorities in supervising sustainability reporting, as part of the management report, in accordance with Directive 2004/109/EC. In addition, undertakings required to report sustainability information should in no case be exempted from the obligation to publish the management report as it is important to ensure that sustainability information is publically available.	(50) Article 19a(4) of Directive 2013/34/EU enables Member States to exempt undertakings from including in the management report the non-financial statement required under Article 19a(1). Member States may do so where the undertaking concerned prepares a separate report that is published together with the management report in accordance with Article 30 of that Directive, or where that report is made publicly available on the undertaking's website within a reasonable period of time not exceeding 6 months, after the balance sheet date, and is referred to in the management report. The same possibility exists for the consolidated non-financial statement referred to in Article 29(a)(4) of Directive 2013/34/EU. Twenty Member States have used that option.

Amendment  33

 

Proposal for a directive

Recital 51

Text proposed by the Commission	Amendment
(51) Article 20 of Directive 2013/34/EU requires undertakings with securities listed on regulated markets to include a corporate governance statement in their management report, which has to contain among other information a description of the diversity policy applied by the undertaking in relation to its administrative, management and supervisory bodies. Article 20 of Directive 2013/34/EU leaves flexibility to undertakings to decide what aspects of diversity they report on. It does not explicitly oblige undertakings to include information on any particular aspect of diversity. In order progress towards a more gender-balanced participation in economic decision-making, it is necessary to ensure that undertakings with securities listed on regulated markets always report on their gender diversity policies and the implementation thereof. However, to avoid unnecessary administrative burden, those undertakings should have the possibility to report some of the information required by Article 20 of Directive 2013/34/EU alongside other sustainability-related information.	(51) Article 20 of Directive 2013/34/EU requires undertakings with securities listed on regulated markets to include a corporate governance statement in their management report, which has to contain among other information a description of the diversity policy applied by the undertaking in relation to its administrative, management and supervisory bodies. Article 20 of Directive 2013/34/EU leaves flexibility to undertakings to decide what aspects of diversity they report on. It does not explicitly oblige undertakings to include information on any particular aspect of diversity. In order progress towards a more gender-balanced participation in economic decision-making, it is necessary to ensure that undertakings with securities listed on regulated markets always report on their gender diversity policies, including with regards to women on boards, and the implementation thereof. However, to avoid unnecessary administrative burden, those undertakings should have the possibility to report some of the information required by Article 20 of Directive 2013/34/EU alongside other sustainability-related information.

Amendment  34

 

Proposal for a directive

Recital 52

Text proposed by the Commission	Amendment
(52) Article 33 of Directive 2013/34/EU requires Member States to ensure that the members of the administrative, management and supervisory bodies of an undertaking have collective responsibility for ensuring that the (consolidated) annual financial statements, the (consolidated) management report and the (consolidated) corporate governance statement are drawn up and published in accordance with the requirements of that Directive. That collective responsibility should be extended to the digitalisation requirements laid down in Delegated Regulation (EU) 2019/815, to the requirement to comply with Union sustainability reporting standards and to the requirement to mark up sustainability reporting.	(52) Article 33 of Directive 2013/34/EU requires Member States to ensure that the members of the administrative, management and supervisory bodies of an undertaking have collective responsibility for ensuring that the (consolidated) annual financial statements, the (consolidated) management report and the (consolidated) corporate governance statement are drawn up and published in accordance with the requirements of that Directive. That collective responsibility should be extended to the digitalisation requirements laid down in Delegated Regulation (EU) 2019/815, to the requirement to comply with Union sustainability reporting standards and to the requirement to mark up sustainability reporting and to publish in an open data format.

Amendment  35

 

Proposal for a directive

Recital 56

Text proposed by the Commission	Amendment
(56) The rules on the approval and recognition of statutory auditors and audit firms should ensure that statutory auditors have the necessary level of theoretical knowledge of subjects relevant to the assurance of sustainability reporting and the ability to apply such knowledge in practice. However, statutory auditors that have already been approved or recognised by a Member State should continue to be allowed to carry out statutory audits and should be allowed to carry out assurance engagements of sustainability reporting. Member States should, however, ensure that already approved statutory auditors acquire the necessary knowledge in sustainability reporting and the assurance of sustainability reporting via continued professional education.	(56) The rules on the approval and recognition of statutory auditors and audit firms should ensure that statutory auditors have the necessary level of theoretical knowledge of subjects relevant to the assurance of sustainability reporting and the ability to apply such knowledge in practice. However, statutory auditors that have already been approved or recognised by a Member State should continue to be allowed to carry out statutory audits and should be allowed to carry out assurance engagements of sustainability reporting. Member States should, however, ensure that already approved statutory auditors acquire the necessary knowledge in sustainability reporting and the assurance of sustainability reporting via continued professional education. Nothing in this Directive should prevent statutory auditors from also performing assurance work.

Amendment  36

Proposal for a directive

Article 1 – paragraph 1 – point 1

Directive 2013/34/EU

Article 1 – paragraph 3 – subparagraph 1 – introductory part

Text proposed by the Commission	Amendment
(3) The coordination measures prescribed by Articles 19a, 19d, 29a, 30 and 33, Article 34(1), second subparagraph, point (aa), paragraphs 2 and 3 of Article 34, and Article 51 of this Directive shall also apply to the laws, regulations and administrative provisions of the Member States relating to the following undertakings regardless of their legal form:	(3) The coordination measures prescribed by Articles 19a, 19d, 29a, 30 and 33, Article 34(1), second subparagraph, point (aa), paragraphs 2 and 3 of Article 34, and Article 51 of this Directive shall also apply to the laws, regulations and administrative provisions of the Member States relating to the following undertakings regardless of their legal form provided they have over 500 employees:

Amendment  37

Proposal for a directive

Article 1 – paragraph 1 – point 1

Directive 2013/34/EU

Article 1 – paragraph 3 – subparagraph 2

Text proposed by the Commission	Amendment
Member States may choose not to apply the coordination measures referred to in the first subparagraph to the undertakings listed in Article 2(5), points (2) to (23), of Directive 2013/36/EU of the European Parliament and of the Council*3.	Member States may choose, under a justified reason, not to apply the coordination measures referred to in the first subparagraph to the undertakings listed in Article 2(5), points (2) to (23), of Directive 2013/36/EU of the European Parliament and of the Council*3.

Amendment  38

 

Proposal for a directive

Article 1 – paragraph 1 – point 2

Directive 2013/34/EU

Article 2 – point 17

Text proposed by the Commission	Amendment
(17) ‘sustainability matters’ means sustainability factors as defined in Article 2, point (24) of Regulation (EU) 2019/2088 of the European Parliament and of the Council*4, and governance factors;	(17) ‘sustainability matters’ means sustainability factors as defined in Article 2, point (24)of Regulation (EU) 2019/2088 of the European Parliament and of the Council*4,and governance factors, where the environmental factors are understood in line with the environmental objectives set out in Article 9 of Regulation (EU) 2020/852;

Amendment  39

 

Proposal for a directive

Article 1 – paragraph 1 – point 2

Directive 2013/34/EU

Article 2 – point 19

Text proposed by the Commission	Amendment
(19) ’intangibles’ means non-physical resources that contribute to the undertaking’s value creation;	(19) ’intangibles’ means non-physical resources that contribute to the undertaking’s value creation and are consistent with intangible assets already reported in the financial reporting framework;

Amendment  40

Proposal for a directive

Article 1 – paragraph 1 – point 2

Directive 2013/34/EU

Article 2 – point 20 a (new)

Text proposed by the Commission	Amendment
	(20a) ‘high-risk economic activities’ are economic activities likely to have serious negative impacts on sustainability matters or those which are exposed to sustainability risks and included in the list referred to in Article 19a(7a);

Amendment  41

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 1

Text proposed by the Commission	Amendment
1. Large undertakings and, as of 1 January 2026, small and medium-sized undertakings which are undertakings referred to in Article 2, point (1), point (a), shall include in the management report information necessary to understand the undertaking’s impacts on sustainability matters, and information necessary to understand how sustainability matters affect the undertaking’s development, performance and position.	1. The following entities shall include in the full audited management report information necessary to understand the undertaking’s impacts on sustainability matters, and information necessary to understand how sustainability matters affect the undertaking’s development, performance and position:
	(a) large undertakings, including undertakings organised as foundations, trusts or franchises;
	(b) large undertakings and undertakings referred to in Article 3(7) which are governed by the law of a third country and are not established in the territory of the Union when they operate in the internal market selling goods or providing services under the arrangements;
	(c) small and medium-sized undertakings whose transferable securities are admitted to trading on a trading venue of any Member State within the meaning of Article 4(1), point (24), of Directive 2014/65/EU
	(d) small and medium sized undertakings carrying out high-risk economic activities.

Amendment  42

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – introductory part

Text proposed by the Commission	Amendment
2. The information referred to in paragraph 1 shall contain in particular:	2. The information referred to in paragraph 1 shall contain:

Amendment  43

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point a – point i

Text proposed by the Commission	Amendment
(i) the resilience of the undertaking's business model and strategy to risks related to sustainability matters;	(i) the resilience of the undertaking's business model and strategy to risks related to sustainability matters and climate change in particular;

Amendment  44

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point a – point ii

Text proposed by the Commission	Amendment
(ii) the opportunities for the undertaking related to sustainability matters;	(ii) the opportunities and risks for the undertaking related to sustainability matters, including the transition to a carbon-neutral economy;

Amendment  45

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point a – point iv

Text proposed by the Commission	Amendment
(iv) how the undertaking’s business model and strategy take account of the interests of the undertaking’s stakeholders and of the impacts of the undertaking on sustainability matters;	(iv) how the undertaking’s business takes account of risk management, the interests of the undertaking’s stakeholders and of the impacts of the undertaking on sustainability matters;

Amendment  46

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point a – point v

Text proposed by the Commission	Amendment
(v) how the undertaking’s strategy has been implemented with regard to sustainability matters;	(v) how the undertaking’s strategy has been implemented with regard to sustainability matters and climate change in particular;

Amendment  47

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point c

Text proposed by the Commission	Amendment
(c) a description of the role of the administrative, management and supervisory bodies with regard to sustainability matters;	(c) a description of the role of the administrative, management and supervisory bodies with regard to sustainability matters, as well as their composition and expertise, the stakeholders they consult with on sustainability matters and related targets, their decision-making processes, and whether incentives linked to sustainability matters are offered to members of those bodies;

Amendment  48

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point d

Text proposed by the Commission	Amendment
(d) a description of the undertaking’s policies in relation to sustainability matters;	(d) a description of the undertaking’s policies in relation to sustainability matters and related targets;

Amendment  49

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point e – point i

Text proposed by the Commission	Amendment
(i) the due diligence process implemented with regard to sustainability matters;	(i) the due diligence process implemented with regard to sustainability matters, in accordance with international conventions on social and human rights, in particular the UN Guiding Principles on Business and Human Rights, the OECD Due Diligence Guidance for Responsible Business Conduct, the International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work, the ILO fundamental conventions and the Charter of Fundamental Rights of the European Union;

Amendment  50

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point e – point ii

Text proposed by the Commission	Amendment
(ii) the principal actual or potential adverse impacts connected with the undertaking’s value chain, including its own operations, its products and services, its business relationships and its supply chain;	(ii) the principal actual or potential adverse impacts connected with the undertaking’s value chain, including its own operations, its products and services, its business relationships and its supply chain, given that the competitiveness of the undertaking is preserved by protecting professional or industrial sensitive data;

Amendment  51

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point e – point iii

Text proposed by the Commission	Amendment
(iii) any actions taken, and the result of such actions, to prevent, mitigate or remediate actual or potential adverse impacts;	(iii) any actions taken, and the result of such actions, to identify, assess, prevent, mitigate, cease, monitor, communicate, account for, address and remediate actual impacts;

Amendment  52

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 2

Text proposed by the Commission	Amendment
Undertakings shall also disclose information on intangibles, including information on intellectual, human, and social and relationship capital.	Undertakings shall also disclose information on intangibles as defined in Article 2, point(19).

Amendment  53

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 3

Text proposed by the Commission	Amendment
Undertakings shall report the process carried out to identify the information that they have included in the management report in accordance with paragraph 1 and in this process they shall take account of short, medium and long-term horizons.	Undertakings shall report the process carried out to identify the information that they have included in the management report in accordance with paragraph 1 and in this process they shall take account of short and medium-term horizons.

Amendment  54

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 3 – subparagraph 1

Text proposed by the Commission	Amendment
The information referred to in paragraphs 1 and 2 shall contain forward-looking and retrospective information, and qualitative and quantitative information.	The information referred to in paragraphs 1 and 2 shall contain retrospective and, when relevant, forward-looking information. The information shall combine qualitative and quantitative information to ensure that the most relevant information is reported under each standard. Where appropriate, the information shall take into account short, medium and long-term horizons. The information shall be provided in an aggregated manner covering areas where the undertaking operates.

Amendment  55

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 3 – subparagraph 2

Text proposed by the Commission	Amendment
Where appropriate, the information referred to in paragraphs 1 and 2 shall contain information about the undertaking’s value chain, including the undertaking’s own operations, products and services, its business relationships and its supply chain.	The information referred to in paragraphs 1 and 2 shall contain information about the undertaking’s value and supply chain, including the undertaking’s own operations, products and services, and its business relationships, provided that the competitiveness of the undertaking is preserved by protecting professional or industrial sensitive data.

Amendment  56

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 3 – subparagraph 4

Text proposed by the Commission	Amendment
Member States may allow information relating to impending devel­opments or matters in the course of negotiation to be omitted in excep­tional cases where, in the duly justified opinion of the members of the administrative, management and supervisory bodies, acting within the competences assigned to them by national law and having collective responsibility for that opinion, the disclosure of such information would be seriously prejudicial to the commercial position of the undertaking, provided that such omission does not prevent a fair and balanced under­standing of the undertaking's development, performance, position and impact of its activity.	Member States may allow information relating to impending developments or matters in the course of negotiation to be omitted in certain cases where, in the duly justified opinion of the members of the administrative, management and supervisory bodies, acting within the competences assigned to them by national law and having collective responsibility for that opinion, the disclosure of such information would be prejudicial to the commercial and competitive position of the undertaking.

Amendment  57

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 3 – subparagraph 4 a (new)

Text proposed by the Commission	Amendment
	The Commission shall prepare guidelines, taking into consideration technical advice from EFRAG, on appropriate methodology to generate the forward-looking information to be provided in the reporting. The guidelines shall be short and concise and take into account the administrative burden of the reporting undertaking.

Amendment  58

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 5

Text proposed by the Commission	Amendment
5. By way of derogation from Article 19a, paragraphs 1 to 4, small and medium sized undertakings referred to in Article 2, point (1), point (a), may report in accordance with the sustainability reporting standards for small and medium sized undertakings referred to in Article 19c.	5. By way of derogation from Article 19a(1) to (4), small and medium sized undertakings referred to in Article 19a(1), points (d) and (c), may report in accordance with the sustainability reporting standards for small and medium sized undertakings referred to in Article 19c.

Amendment  59

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 5 b (new)

Text proposed by the Commission	Amendment
	5b. In accordance with Article 34, Member States shall ensure that the management report is audited by one or more statutory auditors or audit firms approved by Member States to carry out statutory audits pursuant to Directive 2006/43/EC.

Amendment  60

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 7 – subparagraph 1

Text proposed by the Commission	Amendment
An undertaking which is a subsidiary undertaking shall be exempted from the obligations set out in paragraphs 1 to 4 if that undertaking and its subsidiary undertakings are included in the consolidated management report of a parent undertaking, drawn up in accordance with Articles 29 and 29a. An undertaking that is a subsidiary undertaking from a parent undertaking that is established in a third country shall also be exempted from the obligations set out in paragraphs 1 to 4 where that undertaking and its subsidiary undertakings are included in the consolidated management report of that parent undertaking and where the consolidated management report is drawn up in a manner that may be considered equivalent, in accordance with the relevant implementing measures adopted pursuant to Article 23(4), point (i), of Directive 2004/109/EC of the European Parliament and of the Council*6, to the manner required by the sustainability reporting standards referred to in Article 19b of this Directive.	deleted
__________
*6 Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (OJ L 390, 31.12.2004, p. 38).’;

Amendment 61

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 7 – subparagraph 2

Text proposed by the Commission	Amendment
The consolidated management report of the parent undertaking referred to in subparagraph 1 shall be published in accordance with Article 30, in the manner prescribed by the law of the Member State by which the undertaking that is exempted from the obligations set out in paragraphs 1 to 4 is governed.	The consolidated management report of the parent undertaking referred to in subparagraph 1 shall be published in accordance with Article 30, in the manner prescribed by the law of the Member State by which the undertaking is governed.

Amendment  62

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 7 – subparagraph 3

Text proposed by the Commission	Amendment
The Member State by which the undertaking that is exempted from the obligations set out in paragraphs 1 to 4 is governed, may require that the consolidated management report referred to in the first subparagraph of this paragraph is published in an official language of the Member State or in a language customary in the sphere of international finance, and that any necessary translation into those languages is certified.	The Member State by which the undertaking is governed, may require that the consolidated management report referred to in the first subparagraph of this paragraph is published in an official language of the Member State or in a language customary in the sphere of international finance, and that any necessary translation into those languages is certified.

Amendment  63

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 7 a (new)

Text proposed by the Commission	Amendment
	7a. The Commission shall be empowered to adopt delegated acts in accordance with Article 49 to establish a list of economic activities that are considered high-risk in terms of actual or potential negative impacts on sustainability matters or exposure to sustainability risks. The list of high-risk activities shall include economic activities ranked with a risk level of “high” in either the environmental or social category of the EBRD list of Environmental and Social Risk Categorisation or that are excluded from being financed with EBRD funds. In duly justified cases, the Commission may deviate from the EBRD list or supplement the list with other economic activities with actual or potential negative sustainability impacts or risks, taking into account the work of the Platform on Sustainable Finance established in accordance with Article 20 of Regulation (EU) 2020/852 and the OECD Due Diligence Guidance for Responsible Business Conduct, including for mining, extractive industries, agriculture, clothing and footwear, finance and international shipping. Every three years, the Commission shall review these delegated acts as appropriate.

Amendment  64

Proposal for a directive

Article 1 – paragraph 1 – point 4 – introductory part

Directive 2013/34/EU

Article 19b, Article 19c and Article 19d

Text proposed by the Commission	Amendment
(4) the following Articles 19b, 19c and 19d are inserted:	(4) the subsequent Articles 19b, 19c and 19d are inserted:

Amendment  65

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1 – subparagraph 1 – introductory part

Text proposed by the Commission	Amendment
The Commission shall adopt delegated acts in accordance with Article 49 to provide for sustainability reporting standards. Those sustainability reporting standards shall specify the information that undertakings are to report in accordance with Articles 19a and 29a and, where relevant, shall specify the structure in which that information shall be reported. In particular:	The Commission shall adopt delegated acts in accordance with Article 49 to provide for principle based sustainability reporting standards. The sustainability reporting standards shall ensure simplicity, and shall be implemented in such a way that stakeholders receive relevant and material information and that any unnecessary administrative burden for the reporting undertaking is avoided. Those sustainability reporting standards shall specify the information that undertakings are to report in accordance with Articles 19a and 29a and, where relevant, shall specify the structure in which that information shall be reported. In particular:

Amendment  66

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1 – subparagraph 1 – point a

Text proposed by the Commission	Amendment
(a) by 31 October 2022, the Commission shall adopt delegated acts specifying the information that undertakings are to report in accordance with paragraphs 1 and 2 of Article 19a, and at least specifying information corresponding to the needs of financial market participants subject to the disclosure obligations of Regulation (EU) 2019/2088.	(a) by ... [18 months after the entry into force of this Directive], the Commission shall adopt delegated acts specifying the information that undertakings are to report in accordance with  Article 19a(1) and (2), in line with the disclosure obligations of Regulation (EU) 2019/2088.

Amendment  67

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1 – subparagraph 1 – point b – introductory part

Text proposed by the Commission	Amendment
(b) by 31 October 2023, the Commission shall adopt delegated acts specifying:	(b) by ... [30 months after the entry into force of this Directive], the Commission shall adopt delegated acts specifying:

Amendment  68

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1 – subparagraph 1 – point b – point i

Text proposed by the Commission	Amendment
(i) complementary information that undertakings shall report with regard to the sustainability matters and reporting areas listed in Article 19a(2), where necessary;	(i) complementary information that undertakings shall report with regard to the sustainability matters and reporting areas listed in Article 19a(2), where necessary, in a precise and easy accessible form;

Amendment  69

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1 – subparagraph 1 – point b – point ii a (new)

Text proposed by the Commission	Amendment
	(iia) the criteria and implementing rules for sustainability reporting for medium-sized undertakings referred to in Article 19a(1);

Amendment  70

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1 – subparagraph 1 – point b – point ii b (new)

Text proposed by the Commission	Amendment
	(ii b) the specific measurable objectives based on scientific evidence;

Amendment  71

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1 – subparagraph 1 – point b – point ii c(new)

Text proposed by the Commission	Amendment
	(ii c) the criteria and implementing rules for sustainability reporting for undertakings referred to in Article 3(7), which are governed by the law of a third country and are not established in the Union when they operate in the internal market selling goods or providing services.

Amendment  72

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1 – subparagraph 1 a (new)

Text proposed by the Commission	Amendment
	The Commission shall, at least once a year, consult the Platform on Sustainable Finance referred to in Article 20 and the Member State Expert Group on Sustainable Finance referred to in Article 24 of Regulation (EU) 2020/852 on EFRAG’s work programme as regards the development of sustainability reporting standards.

 

Amendment  73

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 1

Text proposed by the Commission	Amendment
The sustainability reporting standards referred to in paragraph 1 shall require that the information to be reported is understandable, relevant, representative, verifiable, comparable, and is represented in a faithful manner.	The sustainability reporting standards referred to in paragraph 1 shall require that the information to be reported is understandable, relevant, representative, verifiable, reliable comparable, and is represented in a faithful manner. Where possible this information should be science-based. The sustainability reporting standards shall ensure simplicity, and shall be implemented in such a way that stakeholders receive relevant and material information.

 

Amendment  74

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – introductory part

Text proposed by the Commission	Amendment
The sustainability reporting standards shall, taking into account the subject matter of a particular standard:	The sustainability reporting standards shall reflect the environmental objectives set out in Article 9 of Regulation (EU) 2020/852 and be consistent with the definitions and requirements set out in that Regulation and the associated delegated acts and specify:

Amendment  75

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point a – introductory part

Text proposed by the Commission	Amendment
(a) specify the information that undertakings are to disclose about environmental factors, including information about:	deleted

Amendment  76

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point a – point iii

Text proposed by the Commission	Amendment
(iii) water and marine resources;	(iii) the sustainable use and protection of water and marine resources;

Amendment  77

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point a – point iv

Text proposed by the Commission	Amendment
(iv) resource use and circular economy;	(iv) the transition to a circular economy;

Amendment  78

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point a – point v

Text proposed by the Commission	Amendment
(v) pollution;	(v) pollution prevention and control;

Amendment  79

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point a – point vi

Text proposed by the Commission	Amendment
(vi) biodiversity and ecosystems;	(vi) the protection and restoration of biodiversity and ecosystems;

Amendment  80

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point c – point ii

Text proposed by the Commission	Amendment
(ii) business ethics and corporate culture, including anti-corruption and anti-bribery;	(ii) business ethics, including anti-corruption and anti-bribery;

Amendment  81

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point c – point iii

Text proposed by the Commission	Amendment
(iii) political engagements of the undertaking, including its lobbying activities;	(iii) direct political influence on the formulation or implementation of policy and the decision-making processes;

Amendment  82

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point c – point v a (new)

Text proposed by the Commission	Amendment
	(v a) the undertaking's overall business model and strategy in relation to sustainability matters, and its engagement with civil society and state actors.

 

Amendment  83

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 a (new)

Text proposed by the Commission	Amendment
	The information may be based on, inter alia, the monetary valuation of sustainability impacts, if deemed useful.

Amendment  84

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 3 – point c

Text proposed by the Commission	Amendment
(c) the criteria set out in the delegated acts adopted pursuant to Regulation (EU) 2020/852*7;	(c) the criteria, indicators and methodologies set out in the delegated acts adopted pursuant to Regulation (EU) 2020/852*7, including inter alia technical screening criteria, criteria for substantial contribution, DNSH criteria.
__________	__________
*7 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13).	*7 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13).

Amendment  85

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 3 – point h a (new)

Text proposed by the Commission	Amendment
	(ha) natural capital accounting methods to strengthen internal management decisions to assign a monetary value to the environmental impacts of companies’ activities, which may help users to better understand those impacts.

Amendment  86

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19 c – paragraph 1

Text proposed by the Commission	Amendment
The Commission shall adopt delegated acts in accordance with Article 49 to provide for sustainability reporting standards proportionate to the capacities and characteristics of small and medium-sized undertakings. Those sustainability reporting standards shall specify which information referred to in Articles 19a and 29a small and medium-sized undertakings referred to in Article 2, point (1)(a) shall report. They shall take into account the criteria set out in Article 19b, paragraphs 2 and 3. They shall also, where relevant, specify the structure in which that information shall be reported.	The Commission shall adopt delegated acts in accordance with Article 49 to provide for sustainability reporting standards proportionate to the capacities and characteristics of small and medium-sized undertakings. Those sustainability reporting standards shall specify how small and medium-sized undertakings referred to in Article 19a(1), points (d) and (c), shall report on information referred to in Articles 19a and 29a. They shall take into account the criteria set out in Article 19b(2) and (3). They shall also, where relevant, specify the structure in which that information shall be reported.

Amendment  87

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19 d – paragraph 2 a (new)

Text proposed by the Commission	Amendment
	2a. The online platform to access the information should allow users to easily compare the data disclosed by companies online, including by categories such as themes, sectors, countries, turnover and number of employees.

Amendment  88

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 1

Text proposed by the Commission	Amendment
1. Parent undertakings of a large group shall include in the consolidated management report information necessary to understand the group's impacts on sustainability matters, and information necessary to understand how sustainability matters affect the group's development, performance and position.	1. Public-interest entities which are parent undertakings of a large group exceeding on its balance sheet date, on a consolidated basis, the criterion of the average number of 500 employees during the financial year shall include in the consolidated management report information necessary to understand the group's impacts on sustainability matters, and information necessary to understand how sustainability matters affect the group's development, performance and position.

Amendment  89

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point a – point i

Text proposed by the Commission	Amendment
(i) the resilience of the group's business model and strategy to risks related to sustainability matters;	(i) the resilience of the group's business model and strategy to risks related to sustainability matters and climate change in particular;

Amendment  90

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point a – point ii

Text proposed by the Commission	Amendment
(ii) the opportunities for the group related to sustainability matters;	(ii) the opportunities for the group related to sustainability matters and mainly transition to a carbon-neutral economy;

Amendment  91

Proposal for a directive

Article 1 – paragraph 1 – point 7

Article 1 – paragraph 1 – point 7

Article 29 a – paragraph 2 – subparagraph 1 – point a – point iv

Text proposed by the Commission	Amendment
(iv) how the group’s business model and strategy take account of the interests of the group’s stakeholders and of the impacts of the group on sustainability matters;	(iv) how the group’s business model and strategy take account of the interests of the group’s stakeholders, sustainability risks faced by the group and of the principal actual or potential adverse impacts of the group on sustainability matters;

Amendment  92

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29 a – paragraph 2 – subparagraph 1 – point a – point v

Text proposed by the Commission	Amendment
(v) how the group’s strategy has been implemented with regard to sustainability matters;	(v) how the group’s strategy has been implemented with regard to sustainability matters and related targets;

Amendment  93

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29 a –paragraph 2 – subparagraph 1 – point e – point i

Text proposed by the Commission	Amendment
(i) the due diligence process implemented with regard to sustainability matters;	(i) the due diligence process implemented with regard to sustainability matters, in accordance with international conventions on social and human rights, in particular the UN Guiding Principles on Business and Human Rights, the OECD Due Diligence Guidance for Responsible Business Conduct, the International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work, the ILO fundamental conventions and the Charter of Fundamental Rights of the European Union;

Amendment  94

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29 a – paragraph 2 – subparagraph 1 – point e – point iii

Text proposed by the Commission	Amendment
(iii) any actions taken, and the result of such actions, to prevent, mitigate or remediate actual or potential adverse impacts;	(iii) any actions taken, and the result of such actions, to prevent, mitigate or remediate actual or potential adverse impacts and the effectiveness of their results;

Amendment  95

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29 a – paragraph 2 – subparagraph 1 a (new)

Text proposed by the Commission	Amendment
	If deemed necessary, the disclosures referred to in point (a) to (f) of the first subparagraph shall be designed to include the monetary valuation of sustainability impacts.

Amendment  96

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 3 – subparagraph 1

Text proposed by the Commission	Amendment
The information referred to in paragraphs 1 and 2 shall contain forward-looking information and information about past performance, and qualitative and quantitative information. This information shall take into account short, medium and long-term time horizons, where appropriate.	The information referred to in paragraphs 1 and 2 shall contain retrospective and, where relevant, forward-looking information. The information shall combine qualitative and quantitative information to ensure that the most relevant information is reported under each standard. Where appropriate, this information shall take into account short, medium and long-term time horizons. The information shall be provided in an aggregated manner covering areas where the undertaking operates.

Amendment  97

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 3 – subparagraph 4

Text proposed by the Commission	Amendment
Member States may allow information relating to impending devel­opments or matters in the course of negotiation to be omitted in excep­tional cases where, in the duly justified opinion of the members of the administrative, management and supervisory bodies, acting within the competences assigned to them by national law and having collective responsibility for that opinion, the disclosure of such information would be seriously prejudicial to the commercial position of the group, provided that such omission does not prevent a fair and balanced under­standing of the group's development, performance, position and impact of its activity.	Member States may allow information relating to impending developments or matters in the course of negotiation to be omitted in certain cases where, in the duly justified opinion of the members of the administrative, management and supervisory bodies, acting within the competences assigned to them by national law and having collective responsibility for that opinion, the disclosure of such information would be prejudicial to the commercial and competitive position of the group.

Amendment  98

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 7 – subparagraph 1

Text proposed by the Commission	Amendment
A parent undertaking which is also a subsidiary undertaking shall be exempted from the obligation set out in paragraphs 1 to 4 if that exempted parent undertaking and its subsidiaries are included in the consolidated management report of another undertaking, drawn up in accordance with Article 29 and this Article. A parent undertaking that is a subsidiary undertaking from a parent undertaking that is established in a third country shall also be exempted from the obligations set out in paragraphs 1 to 4 where that undertaking and its subsidiary undertakings are included in the consolidated management report of that parent undertaking and where the consolidated management report is drawn up in a manner that may be considered equivalent, in accordance with the relevant implementing measures adopted pursuant to Article 23(4)(i) of Directive 2004/109/EC, to the manner required by the sustainability reporting standards referred to in Article 19b of this Directive.	deleted

Amendment  99

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 7 – subparagraph 3

Text proposed by the Commission	Amendment
The Member State by which the parent undertaking that is exempted from the obligations set out in paragraphs 1 to 4 is governed may require that the consolidated management report referred to in in the first subparagraph of this paragraph is published in its official language or in a language customary in the sphere of international finance, and that any necessary translation into those languages is certified.	The Member State by which the parent undertaking is governed may require that the consolidated management report referred to in in the first subparagraph of this paragraph is published in its official language or in a language customary in the sphere of international finance, and that any necessary translation into those languages is certified.

Amendment  100

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 7 – subparagraph 4 – introductory part

Text proposed by the Commission	Amendment
The consolidated management report of a parent undertaking that is exempted from the obligations set out in paragraphs 1 to 4 shall contain all of the following information:	The consolidated management report of a parent undertaking shall contain all of the following information:

Amendment  101

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 7 – subparagraph 4 – point b

Text proposed by the Commission	Amendment
(b) the fact that the undertaking is exempted from the obligations set out in paragraphs 1 to 4 of this Article.;	deleted

Amendment  102

Proposal for a directive

Article 1 – paragraph 1 – point 8 – point a

Directive 2013/34/EU

Article 30 – paragraph 1 – subparagraph 1

Text proposed by the Commission	Amendment
Member States shall ensure that undertakings publish within a reasonable period of time, which shall not exceed 12 months after the balance sheet date, the duly approved annual financial statements and the management report in the format prescribed by Article 19d of this Directive where applicable, together with the opinions and statement submitted by the statutory auditor or audit firm referred to in Article 34 of this Directive, as laid down by the laws of each Member State in accordance with Chapter 3 of Directive (EU) 2017/1132 of the European Parliament and of the Council*16.’	Member States shall ensure that undertakings publish within a reasonable period of time, which shall not exceed 18 months after the balance sheet date, the duly approved annual financial statements and the management report in the format prescribed by Article 19d of this Directive where applicable, together with the opinions and statement submitted by the statutory auditor or audit firm referred to in Article 34 of this Directive, as laid down by the laws of each Member State in accordance with Chapter 3 of Directive (EU) 2017/1132 of the European Parliament and of the Council*16.’
__________________	__________________
*16 Directive (EU) 2017/1132 of the European Parliament and of the Council of 14 June 2017 relating to certain aspects of company law (OJ L 169, 30.6.2017, p. 46).	*16 Directive (EU) 2017/1132 of the European Parliament and of the Council of 14 June 2017 relating to certain aspects of company law (OJ L 169, 30.6.2017, p. 46).

Amendment  103

Proposal for a directive

Article 1 – paragraph 1 – point 8 – point a

Directive 2013/34/EU

Article 30 – paragraph 1 – subparagraph 3

Text proposed by the Commission	Amendment
Member States may, however, exempt undertakings from the obligation to publish the management report where a copy of all or part of any such report can be easily obtained upon request at a price not exceeding its administrative cost.’	deleted

Amendment  104

 

Proposal for a directive

Article 1 – paragraph 1 – point 9

Directive 2013/34/EU

Article 33 – paragraph 1 – introductory part

Text proposed by the Commission	Amendment
1. Member States shall ensure that the members of the adminis­trative, management and supervisory bodies of an undertaking, acting within the competences assigned to them by national law, have collective responsibility for ensuring that the following documents are drawn up and published in accordance with the requirements of this Directive and, where applicable, with the international accounting standards adopted in accordance with Regulation (EC) No 1606/2002, with Delegated Regulation 2019/815, with the sustainability reporting standards referred to in Article 19b of this Directive, and with the requirements of Article 19d of this Directive:	1. Member States shall ensure that the members of the administrative, management and supervisory bodies of an undertaking, acting within the competences assigned to them by national law and having a clearly defined division of responsibility, ensure that the following documents are drawn up and published in accordance with the requirements of this Directive and, where applicable, with the international accounting standards adopted in accordance with Regulation (EC) No 1606/2002, with Delegated Regulation 2019/815, with the sustainability reporting standards referred to in Article19b of this Directive, and with the requirements of Article 19d of this Directive:

Amendment  105

 

Proposal for a directive

Article 1 – paragraph 1 – point 10 – point b

Directive 2013/34/EU

Article 34 – paragraph 3

Text proposed by the Commission	Amendment
3. Member States may allow an independent assurance services provider to express the opinion referred to in paragraph 1, second subparagraph, point (aa), provided that it is subject to requirements that are consistent with those set out in Directive 2006/43/EC as regards the assurance of sustainability reporting as defined in Article 2(1), point (r) of that Directive.	3. Member States shall allow independent assurance services providers to express the opinion referred to in paragraph 1,second subparagraph, point (aa), provided that it is subject to requirements that are consistent with those set out in Directive 2006/43/EC as regards the assurance of sustainability reporting as defined in Article 2(1), point (r) of that Directive.

Amendment  106

 

Proposal for a directive

Article 1 – paragraph 1 – point 11 – point a

Directive 2013/34/EU

Article 49 – paragraph 2

Text proposed by the Commission	Amendment
2. The power to adopt delegated acts referred to in Article 1(2), Article 3(13), Article 46(2), Article 19b and Article 19c shall be conferred on the Commission for an indeterminate period of time.	2. The power to adopt delegated acts referred to in Article 1(2), Article 3(13), Article 46(2), Article 19a, Article 19b, Article 19c and Article 19ca shall be conferred on the Commission for an indeterminate period of time.

Amendment  107

 

Proposal for a directive

Article 1 – paragraph 1 – point 11 – point a

Directive 2013/34/EU

Article 49 – paragraph 3

Text proposed by the Commission	Amendment
3. The delegation of power referred to in Article 1(2), Article 3(13), Article 46(2), Article 19b and Article 19c may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of that decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.’;	3. The delegation of power referred to in Article 1(2), Article 3(13),Article 46(2), Article 19a, Article 19b, Article 19c and Article 19ca may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of that decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force’;

Amendment  108

 

Proposal for a directive

Article 1 – paragraph 1 – point 11 – point b

Directive 2013/34/EU

Article 49 – paragraph 3a – subparagraph 1

Text proposed by the Commission	Amendment
When adopting delegated acts pursuant to Articles 19b and 19c, the Commission shall take into consideration technical advice from EFRAG, provided such advice has been developed with proper due process, public oversight and transparency and with the expertise of relevant stakeholders, and is accompanied by cost-benefit analyses that include analyses of the impacts of the technical advice on sustainability matters.	When adopting delegated acts pursuant to Articles 19b and 19c, the Commission shall take into consideration technical advice from EFRAG, provided such advice has been developed with proper due process, public oversight and transparency and with the expertise and involvement of social partners and other relevant stakeholders, and is accompanied by cost-benefit analyses that include analyses of the impacts of the technical advice on sustainability matters.

Amendment  109

 

Proposal for a directive

Article 1 – paragraph 1 – point 11 – point b

Directive 2013/34/EU

Article 49 – paragraph 3a – subparagraph 3

Text proposed by the Commission	Amendment
The Commission shall request the opinion of the European Securities and Markets Authority on the technical advice provided by EFRAG, in particular with regard to its consistency with Regulation (EU) 2019/2088 and its delegated acts. The European Securities and Markets Authority shall provide its opinion within two months from the date of receipt of the request from the Commission.	The Commission shall request the opinion of the European Securities and Markets Authority on the technical advice provided by EFRAG, in particular with regard to its consistency with Regulation (EU) 2019/2088 and its delegated acts. The European Securities and Markets Authority shall provide its opinion on new standards within four months of the date of receipt of the request from the Commission and it shall provide its opinion on amendments to existing standards within three months from the date of receipt of the request from the Commission. The Commission shall address any significant issues identified in those opinions prior to the adoption of the delegated acts referred to in Article19b.

Amendment  110

 

Proposal for a directive

Article 1 – paragraph 1 – point 11 – point b

Directive 2013/34/EU

Article 49 – paragraph 3a – subparagraph 4

Text proposed by the Commission	Amendment
The Commission shall also consult the European Banking Authority, the European Insurance and Occupational Pensions Authority, the European Environment Agency, the European Union Agency for Fundamental Rights, the European Central Bank, the Committee of European Auditing Oversight Bodies and the Platform on Sustainable Finance established pursuant to Article 20 of Regulation (EU) 2020/852 on the technical advice provided by EFRAG prior to the adoption of delegated acts referred to in Articles 19b and 19c. Where any of those bodies decide to submit an opinion, they shall do so within two months from the date of being consulted by the Commission.’;	The Commission shall also consult the European Banking Authority, the European Insurance and Occupational Pensions Authority, the European Labour Authority, the European Environment Agency, the European Union Agency for Fundamental Rights, the European Central Bank, the Committee of European Auditing Oversight Bodies and the Platform on Sustainable Finance established pursuant to Article 20 of Regulation (EU)2020/852 on the technical advice provided by EFRAG prior to the adoption of delegated acts referred to in Articles 19b and 19c. Where any of those bodies decide to submit an opinion, they shall do so within three months from the date of being consulted by the Commission’;

Amendment  111

 

Proposal for a directive

Article 1 – paragraph 1 – point 11 – point c

Directive 2013/34/EU

Article 49 – paragraph 5

Text proposed by the Commission	Amendment
5. A delegated act adopted pursuant to Article 1(2), Article 3(13), Article 46(2), Article 19b and Article 19c shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of two months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by two months at the initiative of the European Parliament or the Council.	5. A delegated act adopted pursuant to Article 1(2), Article 3(13), Article 46(2), Article 19a, Article 19b, Article 19c and Article 19ca shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of four months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by four months at the initiative of the European Parliament or the Council.

Amendment  112

 

Proposal for a directive

Article 2 – paragraph 1 – point 2 – point a

Directive 2004/109/EC

Article 4 – paragraph 2 – point c

Text proposed by the Commission	Amendment
(c) statements made by the persons responsible within the issuer, whose names and functions shall be clearly indicated, to the effect that, to the best of their knowledge, the financial statements prepared in accordance with the applicable set of accounting standards give a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer and the undertakings included in the consolidation taken as a whole and that the management report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face and, where appropriate, that it is prepared in accordance with sustainability reporting standards referred to in Article 19b of Directive 2013/34/EU.;	(c) statements made by the persons responsible within the issuer, whose names and functions shall be clearly indicated, to the effect that, to the best of their knowledge, the financial statements prepared in accordance with the applicable set of accounting standards give a transparent view of the assets, liabilities, financial position and profit or loss of the issuer and the undertakings included in the consolidation taken as a whole and that the management report includes a transparent review of the development and performance of the business and the position of the issuer, risk analysis and management and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face and, where appropriate, that it is prepared in accordance with sustainability reporting standards referred to in Article 19b of Directive 2013/34/EU;

Amendment  113

 

Proposal for a directive

Article 2 – paragraph 1 – point 2 – point b

Directive 2004/109/EC

Article 4 – paragraph 4 – subparagraph 2

Text proposed by the Commission	Amendment
The audit report, signed by the person or persons responsible for carrying out the work set out in paragraphs 1 and 2 of Article 34 of Directive 2013/34/EU shall be disclosed in full to the public together with the annual financial report.	The audit report, signed by the person or persons responsible for carrying out the work set out in paragraphs 1 and 2 of Article 34 of Directive 2013/34/EU shall be disclosed in full to the public, while safeguarding sensitive business information, together with the annual financial report.

Amendment  114

 

Proposal for a directive

Article 2 – paragraph 1 – point 3

Directive 2004/109/EC

Article 23 – paragraph 4 – subparagraph 3

Text proposed by the Commission	Amendment
The Commission shall, in accordance with the procedure referred to in Article 27(2), take the necessary decisions on the equivalence of accounting standards and on the equivalence of sustainability reporting standards as referred to in Article 19b of Directive 2013/34/EU which are used by third-country issuers under the conditions set out in Article 30(3). If the Commission decides that the accounting standards or the sustainability reporting standards of a third country are not equivalent, it may allow the issuers concerned to continue using such accounting standards during an appropriate transitional period.	The Commission shall, in accordance with the procedure referred to in Article 27(2), take the necessary decisions on the equivalence of accounting standards and on the equivalence of sustainability reporting standards as referred to in Article 19b of Directive 2013/34/EU which are used by third-country issuers under the conditions set out in Article 30(3). If the Commission decides that the accounting standards or the sustainability reporting standards of a third country are not equivalent, it may allow the issuers concerned to continue using such accounting standards during an appropriate transitional period that shall not exceed two years from the adoption of the delegated acts referred to in Article 19b(1), point (b), of Directive 2013/34/EU.

Amendment  115

 

Proposal for a directive

Article 2 – paragraph 1 – point 4

Directive 2004/109/EC

Article 28d – paragraph 1

Text proposed by the Commission	Amendment
After consulting the European Environment Agency and the European Union Agency for Fundamental Rights, ESMA shall issue guidelines in accordance with Article 16 of Regulation 1095/2010 on the supervision of sustainability reporting by national competent authorities.	After consulting the European Environment Agency, the European Union Agency for Fundamental Rights and the European Labour Authority, ESMA shall issue guidelines in accordance with Article 16 of Regulation (EU) No 1095/2010 on the supervision of sustainability reporting by national competent authorities within a reasonable timeframe.

Amendment  116

 

Proposal for a directive

Article 3 – paragraph 1 – point 3

Directive 2006/43/CE

Article 7 – paragraph 1

Text proposed by the Commission	Amendment
The examination of professional competence referred to in Article 6 shall guarantee the necessary level of theoretical knowledge of subjects relevant to statutory audit and assurance of sustainability reporting and the ability to apply such knowledge in practice. Part at least of that examination shall be written.’;	The examination of professional competence referred to in Article 6 shall guarantee the necessary level of theoretical knowledge of subjects relevant to statutory audit and assurance of sustainability reporting and the ability to apply such knowledge in practice, as well as theoretical knowledge of international development cooperation. Part at least of that examination shall be written.’;

Amendment  117

 

Proposal for a directive

Article 3 – paragraph 1 – point 4 – point d

Directive 2006/43/CE

Article 8 – paragraph 1 – point ff

Text proposed by the Commission	Amendment
(ff) due diligence processes with regard to sustainability matters;	(ff) due diligence processes with regard to sustainability matters and, where applicable, pursuant to Union and national legislation;

Amendment  118

 

Proposal for a directive

Article 3 – paragraph 1 – point 14 – point e

Directive 2006/43/CE

Article 28 – paragraph 4 – subparagraph 1

Text proposed by the Commission	Amendment
The audit report shall be signed and dated by the statutory auditor. Where an audit firm carries out the statutory audit and, where applicable, the assurance of sustainability reporting, the audit report shall bear the signature of at least the statutory auditor(s) carrying out the statutory audit and the assurance of sustainability reporting on behalf of the audit firm. Where more than one statutory auditor or audit firm have been simultaneously engaged, the audit report shall be signed by all statutory auditors or at least by the statutory auditors carrying out the statutory audit and the assurance of sustainability reporting on behalf of every audit firm. In exceptional circumstances Member States may provide that such signature(s) need not be disclosed to the public if such disclosure could lead to an imminent and significant threat to the personal security of any person.;	The audit report shall be signed and dated by the statutory auditor or by the audit firm carrying out the statutory audit. Where an audit firm carries out the statutory audit or, where applicable, the assurance of sustainability reporting, the audit report shall bear the signature of at least the statutory auditor(s) carrying out the statutory audit and that of the auditor who carried out the assurance of sustainability reporting on behalf of the audit firm. Where more than one statutory auditor or audit firm have been simultaneously engaged, the audit report shall be signed by all statutory auditors or at least by the statutory auditors carrying out the statutory audit and the assurance of sustainability reporting on behalf of every audit firm. In exceptional circumstances Member States may provide that such signature(s) need not be disclosed to the public if such disclosure could lead to an imminent and significant threat to the personal security of any person.

Amendment  119

 

Proposal for a directive

Article 4 – paragraph 1 – point 1 – point a – point i

Regulation (EU) No 537/2014

Article 5 – paragraph 1 – subparagraph 1 – introductory part

Text proposed by the Commission	Amendment
1. A statutory auditor or an audit firm carrying out the statutory audit and, where applicable, the assurance of sustainability reporting of a public-interest entity, or any member of the network to which the statutory auditor or the audit firm belongs, shall not directly or indirectly provide to the audited entity, to its parent undertaking or to its controlled undertakings within the Union any prohibited non-audit services in:	1. A statutory auditor or an audit firm carrying out the statutory audit or the assurance of sustainability reporting of a public-interest entity, or any member of the network to which the statutory auditor or the audit firm belongs, shall not directly or indirectly provide to the audited entity, to its parent undertaking or to its controlled undertakings within the Union any prohibited non-audit services in:

Amendment  120

Proposal for a directive

Article 5 – paragraph 1 – subparagraph 1

Text proposed by the Commission	Amendment
Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with Articles 1 to 3 of this Directive by 1 December 2022. They shall immediately inform the Commission thereof.	Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with Articles 1 to 3 of this Directive by 1 December 2023. They shall immediately inform the Commission thereof.

Justification

See justification for amendment 11.

Amendment  121

Proposal for a directive

Article 5 – paragraph 1 – subparagraph 2

Text proposed by the Commission	Amendment
Member States shall provide that the provisions referred to in the first subparagraph shall apply for financial years starting on or after 1 January 2023	Member States shall provide that the provisions referred to in the first subparagraph shall apply for financial years starting on or after 1 January 2024.

Amendment  122

Proposal for a directive

Article 6 – paragraph 1

Text proposed by the Commission	Amendment
Article 4 of this Directive shall apply to financial years starting on or after 1 January 2023.	Article 4 of this Directive shall apply to financial years starting on or after 1 January 2024.

Amendment  123

Proposal for a directive

Article 6 a (new)

Text proposed by the Commission	Amendment
	Article 6a
	Review Clause
	The Commission shall review the impact of the amendments made by this Directive by ... [five years from the date of entry into force]. This review shall examine, in particular, the impact of the sustainability reporting standards on sustainability reporting of financial and non-financial undertakings, its added value as well as the associated administrative burden and direct and indirect costs thereof.
	After a successful review, which has been confirmed by opinions of the European Parliament, the Council and the Regulatory Scrutiny Board of the European Commission, a further extension of the scope of this Directive may be taken into consideration.
	Voluntary standards for SMEs below the size criteria laid down in Article 3(4) of Directive 2013/34/EU may be developed corresponding to the process as well as reporting requirements of the already reporting companies in a simplified and proportionate form.

PROCEDURE – COMMITTEE ASKED FOR OPINION

Title	Amending Directive 2013/34/EU, Directive 2004/109/EC, Directive 2006/43/EC and Regulation (EU) No 537/2014, as regards corporate sustainability reporting
References	COM(2021)0189 – C9-0147/2021 – 2021/0104(COD)
Committee responsible  Date announced in plenary	JURI 23.6.2021
Opinion by  Date announced in plenary	ECON 23.6.2021
Associated committees - date announced in plenary	16.12.2021
Rapporteur for the opinion  Date appointed	Jessica Polfjärd 1.9.2021
Discussed in committee	6.12.2021	7.2.2022
Date adopted	28.2.2022
Result of final vote	+: –: 0:	29 25 4

 

 

FINAL VOTE BY ROLL CALL

IN COMMITTEE ASKED FOR OPINION

 

29	+
PPE	Frances Fitzgerald, Sirpa Pietikäinen
Renew	Gilles Boyer, Carlo Calenda, Luis Garicano, Billy Kelleher, Dragoş Pîslaru, Stéphanie Yon-Courtin
S&D	Marek Belka, Jonás Fernández, Eero Heinäluoma, Aurore Lalucq, Pedro Marques, Costas Mavrides, Csaba Molnár, Evelyn Regner, Alfred Sant, Joachim Schuster, Pedro Silva Pereira, Paul Tang, Irene Tinagli
The Left	Chris MacManus, Mick Wallace
Verts/ALE	Rasmus Andresen, Damien Carême, Claude Gruffat, Piernicola Pedicini, Kira Marie Peter-Hansen, Ernest Urtasun

 

25	-
ECR	Michiel Hoogeveen, Dorien Rookmaker, Johan Van Overtveldt, Roberts Zīle
ID	Gunnar Beck, Valentino Grant, Maximilian Krah, Antonio Maria Rinaldi, Marco Zanni
NI	Enikő Győri, Lefteris Nikolaou-Alavanos
PPE	Isabel Benjumea Benjumea, Stefan Berger, Markus Ferber, José Manuel García-Margallo y Marfil, Danuta Maria Hübner, Othmar Karas, Georgios Kyrtsos, Aušra Maldeikienė, Siegfried Mureşan, Lídia Pereira, Ralf Seekatz, Inese Vaidere
Renew	Engin Eroglu
Verts/ALE	Stasys Jakeliūnas

 

4	0
ID	France Jamet
PPE	Luděk Niedermayer
Renew	Ondřej Kovařík, Caroline Nagtegaal

 

Key:

+ : in favour

- : against

0 : abstentions

OPINION OF THE COMMITTEE ON EMPLOYMENT AND SOCIAL AFFAIRS (4.3.2022)

for the Committee on Legal Affairs

on the proposal for a directive of the European Parliament and of the Council amending Directive 2013/34/EU, Directive 2004/109/EC, Directive 2006/43/EC and Regulation (EU) No 537/2014, as regards corporate sustainability reporting

(COM(2021)0189 – C9‑0147/2021 – 2021/0104(COD))

Rapporteur for opinion: Kira Marie Peter‑Hansen

 

SHORT JUSTIFICATION

The pandemic has once again exposed the vulnerabilities of global supply chains highlighting the importance of embedding a sustainable, rather than short-term, approach in companies to safeguard the rights and interests of workers and society, in coherence and support of environmental needs.

Significant standards have been developed in this regard at the international level in order to promote sustainable corporate governance, such as the UN Guiding Principles on Business and Human Rights of 2011, the OECD Guidelines for Multinational Enterprises, the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy.

The EU has also already taken steps, particularly with regard to transparency. The adoption of the Non-Financial Reporting Directive in 2014 was a major step forward in promoting transparency in order to measure, monitor and manage undertakings’ performance and their long-term impact on society and the environment.

However, the shortcomings identified during its implementation show that there is a strong need to enhance transparency with a view to ensure accountability for company behaviour in the Union as one of the key instruments when it comes to sustainable corporate governance. 

Several resolutions of the European Parliament, such as its resolution on Sustainable Finance and its resolution on Sustainable Corporate Governance, called for the enlargement of the scope of application in order to enhance the number of companies that need to comply with obligation of reporting sustainability information. As emphasised in the resolution on Sustainable Corporate Governance, it is also important to identify and prioritise high-impact sectors.

SMEs represent over 99 per cent of undertakings at the EU level and employ 65 per cent of all employees in the EU. It is therefore critical that all employers, listed and unlisted, are reporting on environmental, social and governance aspects. These reporting standards are not only essential for creating an economy that works for the people, but will also constitute an opportunity for companies to gain a competitive advantage from their commitment to a just ecological and social transition.

This Directive should also be comprehensive and specific when it comes to workers and social aspects. Reporting on fundamental rights such as the right to freedom of association and collective bargaining and key aspects of democracy at work, in particular information, consultation and participation rights, should be mandatory. Furthermore, the social and environmental aspects of the transition should be clearly linked and the opportunities offered through social dialogue in paving the way for a just transition should be reflected.

Diversity and inclusiveness are integral to securing Democracy and equality in the world of work. This Directive should ensure gender equality, the inclusion of women in governance processes as well as the development and effective implementation of diversity policies. The rights and inclusion of persons with disabilities as reporting requirements should be clarified and amplified, in addition to ensuring their means of access to reports.

AMENDMENTS

The Committee on Employment and Social Affairs calls on the Committee on Legal Affairs, as the committee responsible, to take into account the following amendments:

Amendment  1

Proposal for a directive

Recital 1

Text proposed by the Commission	Amendment
(1) In its communication on the European Green Deal adopted on 11 December 201930 , the European Commission made a commitment to review the provisions concerning non-financial reporting of Directive 2013/34/EU of the European Parliament and of the Commission.31 The European Green Deal is the European Union’s new growth strategy. It aims to transform the Union into a modern, resource-efficient and competitive economy with no net emissions of greenhouse gases by 2050. It also aims to protect, conserve and enhance the Union's natural capital, and protect the health and well-being of citizens from environment-related risks and impacts. The European Green Deal aims at decoupling economic growth from resource use, and ensuring that all regions and citizens of the Union participate in a socially just transition to a sustainable economic system. It will contribute to the objective of building an economy that works for the people, strengthening the EU’s social market economy, helping to ensure that it is future-ready and that it delivers stability, jobs, growth and investment. These goals are especially important considering the socio-economic damage caused by the COVID-19 pandemic and the need for a sustainable, inclusive and fair recovery. In its proposal of 4 March 2020 for a European Climate Law, the European Commission proposed to make the objective of climate neutrality by 2050 binding in the Union.32	(1) In its communication on the European Green Deal adopted on 11 December 201930 , the European Commission made a commitment to review the provisions concerning non-financial reporting of Directive 2013/34/EU of the European Parliament and of the Commission.31 The European Green Deal is the European Union’s new growth strategy. It aims to transform the Union into a modern, resource-efficient and competitive economy with no net emissions of greenhouse gases by 2050. It also aims to protect, conserve and enhance the Union's natural capital, and protect the health and well-being of citizens from environment-related risks and impacts. The European Green Deal aims at decoupling economic growth from resource use, and ensuring that all regions and citizens of the Union participate in a socially just transition to a sustainable economic system. It will contribute to the objective of building an economy that works for the people, strengthening the EU’s social market economy, helping to ensure that it is future-ready and that it delivers stability, quality jobs, growth and investment. These goals are especially important considering the socio-economic damage caused by the COVID-19 pandemic and the need for a sustainable, inclusive and fair recovery. In its proposal of 4 March 2020 for a European Climate Law, the European Commission proposed to make the objective of climate neutrality by 2050 binding in the Union.32
_________________	_________________
30 COM(2019) 640 final.	30 COM(2019) 640 final.
31 Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19).	31 Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19).
32 Proposal for a Regulation of the European Parliament and of the Council establishing the framework for achieving climate neutrality and amending Regulation (EU) 2018/1999 (European Climate Law) [2020/0036 (COD)]	32 Proposal for a Regulation of the European Parliament and of the Council establishing the framework for achieving climate neutrality and amending Regulation (EU) 2018/1999 (European Climate Law) [2020/0036 (COD)]

Amendment  2

Proposal for a directive

Recital 2 a (new)

Text proposed by the Commission	Amendment
	(2a) Diversity on company boards contributes to better decision making, corporate governance and resilience in high-risk undertakings.1a Having workers’ representatives as well as more women on boards would promote the sustainable development of undertakings.
	_________________
	1a COM(2020) Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions A Union of Equality: Gender Equality: Strategy2020-2025, 5.3.2020.

Amendment  3

Proposal for a directive

Recital 7

Text proposed by the Commission	Amendment
(7) Many stakeholders consider the term ‘non-financial’ to be inaccurate, in particular because it implies that the information in question has no financial relevance. Increasingly, however, the information in question does have financial relevance. Many organisations, initiatives and practitioners in this field refer to ‘sustainability’ information. It is therefore preferable to use the term ‘sustainability information’ in place of ‘non-financial information’. Directive 2013/34/EU should therefore be amended to take account of this change in terminology.	(7) Many stakeholders consider the term ‘non-financial’ to be inaccurate, in particular because it implies that the information in question has no financial relevance. Increasingly, however, the information in question does have financial relevance. Many organisations, initiatives and practitioners in this field refer to ‘sustainability’ information. It is therefore preferable to use the term ‘sustainability information’ in place of ‘non-financial information’. Directive 2013/34/EU should therefore be amended to take account of this change in terminology and to align sustainability reporting standards with financial reporting standards.

Amendment  4

 

Proposal for a directive

Recital 8

Text proposed by the Commission	Amendment
(8) The ultimate beneficiaries of better sustainability reporting by undertakings are individual citizens and savers. Savers who want to invest sustainably will have the opportunity to do so, while all citizens should benefit from a stable, sustainable and inclusive economic system. To realise these benefits, the sustainability information disclosed in undertaking’s annual reports first has to reach two primary groups (‘users’). The first group of users consists of investors, including asset managers, who want to better understand the risks and opportunities that sustainability issues pose to their investments and the impacts of those investments on people and the environment. The second group of users consists of organisations, including non-governmental organisations and social partners, that wish to better hold undertakings to account for their impacts on people and the environment. Other stakeholders may also make use of sustainability information disclosed in annual reports. The business partners of undertakings, including customers, may rely on this information to understand, and where necessary report on, the sustainability risks and impacts through their own value chains. Policy makers and environmental agencies may use such information, in particular on an aggregate basis, to monitor environmental and social trends, to contribute to environmental accounts, and to inform public policy. Few individual citizens and consumers directly consult undertaking’s reports, but they may use such information indirectly such as when considering the advice or opinions of financial advisers or non-governmental organisations. Many investors and asset managers purchase sustainability information from third party data providers, who collect information from various sources, including public corporate reports.	(8) The ultimate beneficiaries of better sustainability reporting by undertakings are individual citizens, including workers, and savers, as well as the economy as a whole. With better sustainability reporting, public authorities and policy makers will have better information at their disposal in order to design and implement public policies. Better sustainability reporting would allow trade unions and workers’ representatives to be adequately informed, and thereby to better engage in social dialogue. Savers who want to invest sustainably will have the opportunity to do so, while all citizens should benefit from a stable, sustainable, transparent, and inclusive economic system. To realise these benefits, the sustainability information disclosed in undertaking’s annual reports first has to reach three primary groups (‘users’). The first group of users consists of public authorities; the second group of users consists of investors, including asset managers, who want to better understand the risks and opportunities that sustainability issues pose to their reputation and investments and the impacts of those investments on people, in particular workers, and the environment. The third group of users consists of organisations, including non-governmental organisations and social partners, that wish to better hold undertakings to account for their impacts on people and the environment. Other stakeholders may also make use of sustainability information disclosed in annual reports. The business partners of undertakings, including customers, may rely on this information to understand, and where necessary report on, the sustainability risks and impacts through their own value chains. Policy makers, social partners, non-governmental organisations and environmental agencies may use such information, in particular on an aggregate basis, to monitor environmental and social trends, to contribute to environmental accounts and social progress, and to inform public policy. However, this Directive should by no means be interpreted as relieving public authorities of their duties or social partners of their responsibilities beyond disclosed sustainability issues. Few individual citizens and consumers directly consult undertaking’s reports, but they may use such information indirectly such as when considering the advice or opinions of financial advisers or non-governmental organisations. Many investors and asset managers purchase sustainability information from third party data providers, who collect information from various sources, including public corporate reports.

Amendment  5

Proposal for a directive

Recital 8 a (new)

Text proposed by the Commission	Amendment
	(8a) The reporting by undertakings, should, however, in accordance with the principle of proportionality, not cause an excessive burden on companies or require efforts that are notproportionate to the size of the company, its staff and/or scope of its business activities, which would jeopardize the employment and/or incomes of management and personnel that are engaged in usual business activities, by imposing new structures, job titles and management positions on the company staff.

Amendment  6

Proposal for a directive

Recital 8 b (new)

Text proposed by the Commission	Amendment
	(8b) There should, furthermore, be no double reporting required and this Directive should not be interpreted as requiring any reporting, already mandatory under another Union or national legislative act, whereas a certain amount of adaptation of national legislation might be necessary in order to avoid double reporting.

Amendment  7

 

Proposal for a directive

Recital 9

Text proposed by the Commission	Amendment
(9) There has been a very significant increase in demand for corporate sustainability information in recent years, especially on the part of the investment community. That increase in demand is driven by the changing nature of risks to undertakings and growing investor awareness of the financial implications of these risks. That is especially the case for climate-related financial risks. Awareness of the risks to undertakings and to investments resulting from other environmental issues and from social issues, including health issues, is also growing. The increase in demand for sustainability information is also driven by the growth in investment products that explicitly seek to meet certain sustainability standards or achieve certain sustainability objectives. Part of that increase is the logical consequence of previously adopted Union legislation, notably Regulation (EU) 2019/2088 and Regulation (EU) 2020/852. Some of the increase would have happened in any case, due to fast-changing citizen awareness, consumer preferences and market practices. The COVID-19 pandemic will further accelerate the increase in users’ information needs, in particular as it has exposed the vulnerabilities of workers and of undertaking’s value chains. Information on environmental impacts is also relevant in the context of mitigating future pandemics with human disturbance of ecosystems increasingly linked to the occurrence and spread of diseases.	(9) There has been a very significant increase in demand for corporate sustainability information in recent years, especially on the part of the investment community and the Union institutions. That increase in demand is driven by the changing nature of risks to undertakings and growing investor awareness of the financial and reputational implications of these risks. That is especially the case for climate-related financial risks. Awareness of the risks to undertakings and to investments resulting from other environmental issues and from social issues, including child and forced labour, discrimination and health issues, is also growing. The increase in demand for sustainability information is also driven by the growth in investment products that explicitly seek to meet certain sustainability standards or achieve certain sustainability objectives. Part of that increase is the logical consequence of previously adopted Union legislation, notably Regulation (EU) 2019/2088 and Regulation (EU) 2020/852. Some of the increase would have happened in any case, due to fast-changing citizen awareness, consumer preferences and market practices. The COVID-19 pandemic will further accelerate the increase in users’ information needs, in particular as it has exposed and accelerated the vulnerabilities of workers, particularly women and undeclared workers, and of undertaking’s value chains. Information on environmental impacts is also relevant in the context of mitigating future pandemics with human disturbance of ecosystems increasingly linked to the occurrence and spread of diseases.

Amendment  8

 

Proposal for a directive

Recital 12

Text proposed by the Commission	Amendment
(12) In the absence of policy action, the gap between users’ information needs and the sustainability information reported by undertakings is expected to grow. This gap has significant negative consequences. Investors are unable to take sufficient account of sustainability-related risks and opportunities in their investment decisions. The aggregation of multiple investment decisions that do not take adequate account of sustainability-related risks has the potential to create systemic risks that threaten financial stability. The European Central Bank and international organisations such as the Financial Stability Board have drawn attention to those systemic risks, in particular in the case of climate. Investors are also less able to channel financial resources to undertakings and economic activities that address and do not exacerbate social and environmental problems, which undermines the objectives of the European Green Deal and the Action Plan on Financing Sustainable Growth. Non-governmental organisations, social partners, communities affected by undertakings’ activities, and other stakeholders are less able to hold undertakings accountable for their impacts on people and the environment. This creates an accountability deficit, and may contribute to lower levels of citizen trust in businesses, which in turn may have negative impacts on the efficient functioning of the social market economy. The lack of generally accepted metrics and methods for measuring, valuing, and managing sustainability-related risks is also an obstacle to the efforts of undertakings to ensure that their business models and activities are sustainable.	(12) In the absence of policy action, the gap between users’ information needs and the sustainability information reported by undertakings is expected to grow. This gap has significant negative consequences. Investors are unable to take sufficient account of sustainability-related risks and opportunities in their investment decisions. The aggregation of multiple investment decisions that do not take adequate account of sustainability-related risks has the potential to create systemic risks that threaten financial stability. The European Central Bank and international organisations such as the Financial Stability Board have drawn attention to those systemic risks, in particular in the case of climate. Investors are also less able to channel financial resources to undertakings and economic activities that address and do not exacerbate social and environmental problems, which undermines the objectives of the European Green Deal and the Action Plan on Financing Sustainable Growth. Non-governmental organisations, social partners, communities affected by undertakings’ activities, and other stakeholders are less able to hold undertakings accountable for their impacts on people and the environment. This creates an accountability deficit, and may contribute to lower levels of citizen trust in businesses, which in turn may have negative impacts on the efficient functioning of the social market economy. The lack of sustainability information could limit the ability of trade unions and workers’ representatives to enter into social dialogue with undertakings on sustainability matters. The lack of generally accepted metrics and methods for measuring, valuing, and managing sustainability-related risks is also an obstacle to the efforts of undertakings to ensure that their business models and activities are sustainable

Amendment  9

 

Proposal for a directive

Recital 16

Text proposed by the Commission	Amendment
(16) The requirement that also large non-listed undertakings should disclose information on sustainability matters is mainly driven by concerns about the impacts and accountability of such undertakings, including through their value chain. In this respect, all large undertakings should be subject to the same requirements to report sustainability information publicly. In addition, financial market participants also need information from those large non-listed undertakings.	(16) The requirement that also large non-listed undertakings should disclose information on sustainability matters is mainly driven by concerns about the impacts and accountability of such undertakings, including through their value chain. In this respect, all large undertakings should be subject to the same requirements to report sustainability information publicly to ensure a level playing field. In addition, financial market participants also need information from those large non-listed undertakings.

Amendment  10

 

Proposal for a directive

Recital 17 a (new)

Text proposed by the Commission	Amendment
	(17a) Account should be taken of the specific situation of undertakings, which although not having any legal establishment in the Union, regularly carry out a significant amount of economic activity in the Union. Such undertakings should be subject to the same obligations as those established in the territory of the Union.

Amendment  11

 

Proposal for a directive

Recital 18

Text proposed by the Commission	Amendment
(18) Considering the growing relevance of sustainability-related risks and taking into account that small and medium-sized enterprises (SMEs) listed on regulated markets comprise a significant proportion of all listed undertakings in the Union, in order to ensure investor protection it is appropriate to require that also those SMEs disclose information on sustainability matters. The introduction of this requirement will help to ensure that financial market participants can include smaller listed undertakings in investment portfolios on the basis that they report the sustainability information that financial market participants need. It will therefore help to protect and enhance the access of smaller listed undertakings to financial capital, and avoid discrimination against such undertakings on the part of financial market participants. The introduction of this requirement is also necessary to ensure that financial market participants have the information they need from investee undertakings to be able to comply with their own sustainability disclosure requirements laid down in Regulation (EU) 2019/2088. SMEs listed on regulated markets should, however, be provided with sufficient time to prepare for the application of the requirement to report sustainability information, due to their smaller size and more limited resources, and taking account of the difficult economic circumstances created by the COVID-19 pandemic. They should also be given the possibility to report according to standards that are proportionate to the capacities and resources of SMEs. Non-listed SMEs can also choose to use these proportionate standards on a voluntary basis. The SME standards will set a reference for undertakings that are within the scope of the Directive regarding the level of sustainability information that they could reasonably request from SME suppliers and clients in their value chains.	(18) Considering the growing relevance of sustainability-related risks and taking into account that small and medium-sized enterprises (SMEs) listed on regulated markets comprise a significant proportion of all listed undertakings and employ 65 per cent of all employees in the Union, in order to ensure investor protection and positive social and environmental impacts of their business operations, it is appropriate to require that also those SMEs as well as medium-sized undertakings in high-risk economic activity sectors disclose information on sustainability matters. The reporting standards are not only necessary but also useful and constitute an opportunity for companies to demonstrate their commitment to the ecological and social transition and the establishment of leading standards, and thereby feed into their competitive advantage. The introduction of this requirement will help to ensure that financial market participants can include smaller undertakings in investment portfolios on the basis that they report the sustainability information that financial market participants need. It will therefore help to protect and enhance the access of smaller listed undertakings and medium-sized undertakings in high-risk economic activity sectors to financial capital, and avoid discrimination against such undertakings on the part of financial market participants and will ensure a level playing field. The introduction of this requirement is also necessary to ensure that financial market participants have the information they need from investee undertakings to be able to comply with their own sustainability disclosure requirements laid down in Regulation (EU) 2019/2088. SMEs listed on regulated markets and medium-sized undertakings in high-risk economic activity sectors should, however, be provided with sufficient time to prepare for the application of the requirement to report sustainability information, due to their smaller size and more limited resources. They should also be given the possibility to report according to standards that are proportionate to the capacities and resources of SMEs without causing an excessive burden and requiring disproportionate efforts. Non-listed SMEs can also choose to use these proportionate standards on a voluntary basis. The SME standards will set a reference for undertakings that are within the scope of the Directive regarding the level of sustainability information that they could reasonably request from SME suppliers and clients in their value chains.

Amendment  12

 

Proposal for a directive

Recital 18 a (new)

Text proposed by the Commission	Amendment
	(18a) Medium-sized undertakings carrying out a high-risk economic activity should also be subject to sustainability reporting obligations. In order to ensure that this Directive can also apply to such high-risk economic activity sector, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of establishing a list of high-risk economic activity sectors. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making*. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States' experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts..

Amendment  13

 

Proposal for a directive

Recital 21

Text proposed by the Commission	Amendment
(21) Articles 19a(3) and 29a(3) of Directive 2013/34/EU currently exempt all subsidiary undertakings from the obligation to report non-financial information where such undertakings and their subsidiary undertakings are included in the consolidated management report of their parent undertaking, provided this includes the required non-financial information. It is necessary, however to ensure that sustainability information is easily accessible for users, and to bring transparency about which is the parent undertaking of the exempted subsidiary undertaking which is reporting at consolidated level. It is therefore necessary to require those subsidiary undertakings to publish the consolidated management report of their parent undertaking and to include a reference in their management report to the fact that they are exempted from reporting sustainability information. That exemption should also apply where the parent undertaking reporting at consolidated level is a third country undertaking reporting sustainability information in accordance with the requirements of this Directive or in a manner equivalent to EU sustainability reporting standards.	(21) Articles 19a(3) and 29a(3) of Directive 2013/34/EU currently exempt all subsidiary undertakings from the obligation to report non-financial information where such undertakings and their subsidiary undertakings are included in the consolidated management report of their parent undertaking, provided this includes the required non-financial information. It is necessary, however to ensure that sustainability information is easily accessible for users, including with regard to subsidiaries. The information provided by subsidiary undertakings should be included in the undertakings’ own report to generate an aggregate, public overview country-by-country, where relevant, similar to the transparency requirements set out in Directive (EU) 2021/21011 of the European Parliament and of the Council1 (the public-country-by-country Directive).
	__________
	1 Directive (EU) 2021/21011 of the European Parliament and of the Council of 24 November 2021 amending Directive 2013/34/EU as regards disclosure of income tax information by certain undertakings and branches (OJ L 429, 1.12.2021, p. 1.)

Amendment  14

Proposal for a directive

Recital 24

Text proposed by the Commission	Amendment
(24) The list of sustainability matters on which undertakings are required to report should be as coherent as possible with the definition of ‘sustainability factors’ laid down in Regulation (EU) 2019/2088. That list should also correspond to the needs and expectations of users and undertakings themselves, who often use the terms ‘environmental’, ‘social’ and ‘governance’ as a means to categorise the three main sustainability matters. The list of sustainability factors laid down in Regulation (EU) 2019/2088 does not explicitly include governance matters. The definition of sustainability matters in Directive 2013/34/EU should therefore be based on the definition of ‘sustainability factors’ laid down in Regulation (EU) 2019/2088, but with the addition of governance matters.	(24) The list of sustainability matters on which undertakings are required to report should be as coherent as possible with the definition of ‘sustainability factors’ laid down in Regulation (EU) 2019/2088 and the existing standards of the international Global Reporting Initiative (GRI). That list should also correspond to the needs and expectations of users and undertakings themselves, who often use the terms ‘environmental’, ‘social’ and ‘governance’ as a means to categorise the three main sustainability matters. The list of sustainability factors laid down in Regulation (EU) 2019/2088 does not explicitly include governance matters. The definition of sustainability matters in Directive 2013/34/EU should therefore be based on the definition of ‘sustainability factors’ laid down in Regulation (EU) 2019/2088, but with the addition of governance matters. The list is a minimum requirement, which will not lower existing national reporting requirements.

Amendment  15

Proposal for a directive

Recital 25

Text proposed by the Commission	Amendment
(25) Articles 19a and 29a of Directive 2013/34/EU require reporting not only on information ‘to the extent necessary for an understanding of the undertaking's development, performance, position’, but also on information necessary for an understanding of the impact of the undertaking’s activities on environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters. Those articles therefore require undertakings to report both on how various sustainability matters affect the undertaking, and on the impacts of the activities of the undertaking on people and the environment. That is referred to as the double-materiality perspective, in which the risks to the undertaking and the impacts of the undertaking each represent one materiality perspective. The fitness check on corporate reporting shows that those two perspectives are often not well understood or applied. It is therefore necessary to clarify that undertakings should consider each materiality perspective in its own right, and should disclose information that is material from both perspectives as well as information that is material from only one perspective.	(25) Articles 19a and 29a of Directive 2013/34/EU require reporting not only on information ‘to the extent necessary for an understanding of the undertaking's development, performance, position’, but also on information necessary for an understanding of the impact of the undertaking’s activities on environmental, workers' and social rights, respect for human rights, anti-corruption and bribery matters. Those articles therefore require undertakings to report both on how various sustainability matters affect the undertaking, and on the impacts of the activities of the undertaking on people and the environment. That is referred to as the double-materiality perspective, in which the risks to the undertaking and the impacts of the undertaking each represent one materiality perspective. The fitness check on corporate reporting shows that those two perspectives are often not well understood or applied. It is therefore necessary to clarify that undertakings should consider each materiality perspective in its own right, and should disclose information that is material from both perspectives as well as information that is material from only one perspective.

Amendment  16

 

Proposal for a directive

Recital 26

Text proposed by the Commission	Amendment
(26) Articles 19a(1) and 29a(1) of Directive 2013/34/EU require undertakings to disclose information about five reporting areas: business model, policies (including due diligence processes implemented), the outcome of those policies, risks and risk management, and key performance indicators relevant to the business. Article 19a(1) of Directive 2013/34/EU does not contain explicit references to other reporting areas that users of information consider relevant, some of which align with disclosures included in international frameworks, including the recommendations of the Task Force on Climate-related Financial Disclosures. Disclosure requirements should be specified in sufficient detail to ensure that undertakings report information on their resilience to risks related to sustainability matters. In addition to the reporting areas identified in Articles 19a(1) and 29a(1) of Directive 2013/34/EU, undertakings should therefore be required to disclose information about their business strategy and the resilience of the business model and strategy to risks related to sustainability matters, any plans they may have to ensure that their business model and strategy are compatible with the transition to a sustainable and climate-neutral economy; whether and how their business model and strategy take account of the interests of stakeholders; any opportunities for the undertaking arising from sustainability matters; the implementation of the aspects of the business strategy which affect, or are affected by sustainability matters; any sustainability targets set by the undertaking and the progress made towards achieving them; the role of the board and management with regard to sustainability matters; the principal actual and potential adverse impacts connected with the undertaking’s activities; and how the undertaking has identified the information that they report on. Once the disclosure of elements such as targets and the progress towards achieving them is required, the separate requirement to disclose the outcomes of policies is no longer necessary.	(26) Articles 19a(1) and 29a(1) of Directive 2013/34/EU require undertakings to disclose information about five reporting areas: business model, policies (including due diligence processes implemented), the outcome of those policies, risks and risk management, and key performance indicators relevant to the business. Article 19a(1) of Directive 2013/34/EU does not contain explicit references to other reporting areas that users of information consider relevant, some of which align with disclosures included in international frameworks, including the recommendations of the Task Force on Climate-related Financial Disclosures. Disclosure requirements should be specified in sufficient detail to ensure that undertakings report information on their resilience to risks related to sustainability matters. In addition to the reporting areas identified in Articles 19a(1) and 29a(1) of Directive 2013/34/EU, undertakings should therefore be required to disclose information about their business strategy and the resilience of the business model and strategy to risks related to sustainability matters, any plans they may have to ensure that their business model and strategy are compatible with the transition to a sustainable and climate-neutral economy; whether and how their business model and strategy ensure respect for decent work, fair wages, and safeguard the rights and interests of stakeholders, including trade unions, and workers’ representatives; any opportunities for the undertaking arising from sustainability matters; the implementation of the aspects of the business strategy which affect, or are affected by sustainability matters; any sustainability targets set by the undertaking and the progress made towards achieving them; the role of the board and management with regard to sustainability matters; the actual and potential adverse impacts connected with the undertaking’s activities; and how the undertaking has identified the information that they report on. Once the disclosure of elements such as targets and the progress towards achieving them is required, the separate requirement to disclose the outcomes of policies is no longer necessary.

Amendment  17

 

Proposal for a directive

Recital 27

Text proposed by the Commission	Amendment
(27) To ensure consistency with international instruments such as the UN Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance for Responsible Business Conduct, the due diligence disclosure requirements should be specified in greater detail than is the case in Article 19a(1), point (b), and Article 29a(1), point (b) of Directive 2013/34/EU. Due diligence is the process that undertakings carry out to identify, prevent, mitigate and remediate the principal actual and potential adverse impacts connected with their activities and identifies how they address those adverse impacts. Impacts connected with an undertaking’s activities include impacts directly caused by the undertaking, impacts to which the undertaking contributes, and impacts which are otherwise linked to the undertaking’s value chain. The due diligence process concerns the whole value chain of the undertaking including its own operations, its products and services, its business relationships and its supply chains. In alignment with the UN Guiding Principles on Business and Human Rights, an actual or potential adverse impact is to be considered principal where it measures among the greatest impacts connected with the undertaking’s activities based on: the gravity of the impact on people or the environment; the number of individuals that are or could be affected, or the scale of damage to the environment; and the ease with which the harm could be remediated, restoring the environment or affected people to their prior state.	(27) To ensure consistency with international instruments such as the UN Guiding Principles on Business and Human Rights, the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, and the OECD Due Diligence Guidance for Responsible Business Conduct, the due diligence disclosure requirements should be specified in greater detail than is the case in Article 19a(1), point (b), and Article 29a(1), point (b) of Directive 2013/34/EU. Due diligence is the process that undertakings carry out to identify, prevent, mitigate and remediate the actual and potential adverse impacts connected with their operations and activities and identifies how they address those adverse impacts. Impacts connected with an undertaking’s activities include impacts directly caused by the undertaking, impacts to which the undertaking contributes, and impacts which are otherwise linked to the undertaking’s value chain. The due diligence process, concerns the whole value chain of the undertaking including its own operations, its products and services, its business relationships and its supply chains. In alignment with the UN Guiding Principles on Business and Human Rights, an actual or potential adverse impact is to be considered severe where it measures among the greatest impacts connected with the undertaking’s activities based on: the gravity of the impact on people or the environment; the number of individuals that are or could be affected, or the scale of damage to the environment; and the ease with which the harm could be remediated, restoring the environment or affected people to their prior state.

Amendment  18

 

Proposal for a directive

Recital 29

Text proposed by the Commission	Amendment
(29) Articles 19a(1) and 29a(1) of Directive 2013/34/EU do not specify whether the information to be reported is to be forward looking or information about past performance. There is currently a lack of forward-looking disclosures, which users of sustainability information especially value. Articles 19a and 29a of Directive 2013/34/EU should therefore specify that the sustainability information reported shall include forward-looking and retrospective, and both qualitative and quantitative information. Reported sustainability information should also take into account short, medium and long-term time horizons and contain information about the undertaking’s whole value chain, including its own operations, its products and services, its business relationships, and its supply chain, as appropriate. Information about the undertaking’s whole value chain would include information related to its value chain within the EU and information that covers third countries if the undertaking’s value chain extends outside the EU.	(29) Articles 19a(1) and 29a(1) of Directive 2013/34/EU do not specify whether the information to be reported is to be forward looking or information about past performance. There is currently a lack of forward-looking disclosures, which users of sustainability information especially value. Articles 19a and 29a of Directive 2013/34/EU should therefore specify that the sustainability information reported shall include forward-looking and retrospective, and both qualitative and quantitative information. Reported sustainability information should also take into account short, medium and long-term time horizons and contain information about the undertaking’s whole value chain, including its own operations, its products and services, its business relationships, and its supply chain. Information about the undertaking’s whole value chain would include information related to its value chain within the EU and information that covers third countries if the undertaking’s value chain extends outside the EU. The level of detail provided in sustainability reports in relation to supply and value chains should depend on a risk analysis of potential impacts and could therefore vary between economic activities.

Amendment  19

Proposal for a directive

Recital 33

Text proposed by the Commission	Amendment
(33) No existing standard or framework satisfies the Union’s needs for detailed sustainability reporting by itself. Information required by Directive 2013/34/EU needs to cover information relevant from each of the materiality perspectives, needs to cover all sustainability matters and needs to be aligned, where appropriate, with other obligations under Union law to disclose sustainability information, including obligations laid down in Regulation (EU) 2020/852 and Regulation (EU) 2019/2088. In addition, mandatory sustainability reporting standards for Union undertakings must be commensurate with the level of ambition of the European Green Deal and the Union’s climate-neutrality objective for 2050. It is therefore necessary to empower the Commission to adopt Union sustainability reporting standards, enabling their rapid adoption and ensuring that the content of sustainability reporting standards are consistent with the Union’s needs.	(33) For the development of its own sustainability reporting standards, the Union should ensure that there is consistency with equivalent global standards. Information required by Directive 2013/34/EU needs to cover information relevant from each of the materiality perspectives, and needs to cover all sustainability matters. To avoid duplication of obligations and inconsistencies in definitions, scope and objectives of applicable requirements, sustainability information needs to be consistent, where appropriate, with other obligations under Union law to disclose sustainability information, including obligations laid down in Regulation (EU) 2020/852 and Regulation (EU) 2019/2088. In addition, mandatory sustainability reporting standards for Union undertakings must be commensurate with the Union's social-economic objectives under Article 3(3) of the Treaty on European Union and the level of ambition of the European Green Deal and the Union’s climate-neutrality objective for 2050. It is therefore necessary to empower the Commission to adopt Union sustainability reporting standards to take account of the development of international standards, enabling their rapid adoption and ensuring that the content of sustainability reporting standards are consistent with the Union’s needs.

Amendment  20

 

Proposal for a directive

Recital 34

Text proposed by the Commission	Amendment
(34) The European Financial Reporting Advisory Group (EFRAG) is a non-profit association established under Belgian law that serves the public interest by providing advice to the Commission on the endorsement of international financial reporting standards. EFRAG has established a reputation as a European centre of expertise on corporate reporting, and is well placed to foster coordination between European sustainability reporting standards and international initiatives that seek to develop standards that are consistent across the world. In March 2021, a multi-stakeholder task force set up by EFRAG published recommendations for the possible development of sustainability reporting standards for the European Union. Those recommendations contain proposals to develop a coherent and comprehensive set of reporting standards, covering all sustainability matters from a double-materiality perspective. Those recommendations also contain a detailed roadmap for developing such standards, and proposals for mutually reinforcing cooperation between global standard-setting initiatives and standard-setting initiatives of the European Union. In March 2021, the EFRAG President published recommendations for possible governance changes to EFRAG if it were to be asked to develop technical advice about sustainability reporting standards. These recommendations include offsetting up within EFRAG a new sustainability reporting pillar while not significantly modifying the existing financial reporting pillar. When adopting sustainability reporting standards, the Commission should take account of technical advice that EFRAG will develop. In order to ensure high-quality standards that contribute to the European public good and meet the needs of undertakings and of users of the information reported, EFRAG’s technical advice should be developed with proper due process, public oversight and transparency, accompanied by cost benefit analyses, and be developed with the expertise of relevant stakeholders. To ensure that Union sustainability reporting standards take account of the views of the Member States of the Union, before adopting the standards the Commission should consult the Member State Expert Group on Sustainable Finance referred to in Article 24 of Regulation (EU) 2020/852 on EFRAG’s technical advice. The European Securities and Markets Authority (ESMA) plays a role in drafting regulatory technical standards pursuant to Regulation (EU) 2019/2088 and there needs to be coherence between those regulatory technical standards and sustainability reporting standards. According to Regulation (EU) No 1095/2010 of the European Parliament and of the Council54 , ESMA also plays a role in promoting supervisory converge in the enforcement of corporate reporting by issuers whose securities are listed on EU regulated markets and who will be required to use these sustainability reporting standards. Therefore, ESMA should be required to provide an opinion on EFRAG’s technical advice. This opinion should be provided within two months from the date of receipt of the request from the Commission. In addition, the Commission should consult the European Banking Authority, the European Insurance and Occupational Pensions Authority, the European Environment Agency, the European Union Agency for Fundamental Rights, the European Central Bank, the Committee of European Auditing Oversight Bodies and the Platform on Sustainable Finance to ensure that the sustainability reporting standards are coherent with relevant Union policy and legislation. Where any of those bodies decide to submit an opinion, they shall do so within two months from the date of being consulted by the Commission.	(34) The European Financial Reporting Advisory Group (EFRAG) is a non-profit association established under Belgian law that serves the public interest by providing advice to the Commission on the endorsement of international financial reporting standards. EFRAG has established a reputation as a European centre of expertise on corporate reporting, and is well placed to foster coordination between European sustainability reporting standards and international initiatives that seek to develop standards that are consistent across the world. However, the current structure, governance and functioning of EFRAG does not provide for the involvement of workers’ representatives and civil society organisations. Important changes regarding the governance of EFRAG are necessary in order to prevent conflicts of interest and guarantee the inclusion of non-corporate stakeholders. In March 2021, a multi-stakeholder task force set up by EFRAG published recommendations for the possible development of sustainability reporting standards for the European Union. Those recommendations contain proposals to develop a coherent and comprehensive set of reporting standards, covering all sustainability matters from a double-materiality perspective. Those recommendations also contain a detailed roadmap for developing such standards, and proposals for mutually reinforcing cooperation between global standard-setting initiatives and standard-setting initiatives of the European Union. In March 2021, the EFRAG President published recommendations for possible governance changes to EFRAG if it were to be asked to develop technical advice about sustainability reporting standards. These recommendations include offsetting up within EFRAG a new sustainability reporting pillar while not significantly modifying the existing financial reporting pillar. When adopting sustainability reporting standards, the Commission should take account of technical advice that EFRAG will develop. In order to ensure high-quality standards that contribute to the European public good and meet the needs of undertakings and of users of the information reported, EFRAG’s technical advice should be developed with proper due process, public oversight and transparency, accompanied by cost benefit analyses, and be developed in consultation with relevant stakeholders, including the social partners, NGOs and consumer organisations, which should be able to participate in the standard-setting process on an equal footing and without having to pay fees. To ensure that Union sustainability reporting standards take account of the views of the Member States of the Union, before adopting the standards the Commission should consult the Member State Expert Group on Sustainable Finance referred to in Article 24 of Regulation (EU) 2020/852 on EFRAG’s technical advice. The European Securities and Markets Authority (ESMA) plays a role in drafting regulatory technical standards pursuant to Regulation (EU) 2019/2088 and there needs to be coherence between those regulatory technical standards and sustainability reporting standards. According to Regulation (EU) No 1095/2010of the European Parliament and of the Council54 , ESMA also plays a role in promoting supervisory converge in the enforcement of corporate reporting by issuers whose securities are listed on EU regulated markets and who will be required to use these sustainability reporting standards. Therefore, ESMA should be required to provide an opinion on EFRAG’s technical advice. This opinion should be provided within two months from the date of receipt of the request from the Commission. In addition, the Commission should consult the European Banking Authority, the European Insurance and Occupational Pensions Authority, the European Environment Agency, the European Union Agency for Fundamental Rights, European Foundation for the Improvement of Living and Working Conditions, the European Agency for Safety and Health at Work, the European Institute for Gender Equality, the European Central Bank, the Committee of European Auditing Oversight Bodies and the Platform on Sustainable Finance, as well as relevant stakeholders, in particular trade unions and civil society organisations, to ensure that the sustainability reporting standards are coherent with relevant Union policy and legislation. Where any of those bodies decide to submit an opinion, they shall do so within two months from the date of being consulted by the Commission.
__________________	__________________
54 Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, p. 84).	54 Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, p. 84).

Amendment  21

Proposal for a directive

Recital 36

Text proposed by the Commission	Amendment
(36) Sustainability reporting standards should take account of the Commission guidelines on non-financial reporting60 and the Commission guidelines on reporting climate-related information61 . They should also take account of other reporting requirements in Directive 2013/34/EU not directly related to sustainability, with the aim of providing the users of the reported information with a better understanding of the development, performance, position and impact of the undertaking, by maximising the links between the sustainability information and other information reported in accordance with Directive 2013/34/EU.	(36) Sustainability reporting standards should take account of the Commission guidelines on non-financial reporting60 and the Commission guidelines on reporting climate-related information61, including the KPIs already featured in the guidelines. They should also take account of other reporting requirements in Directive 2013/34/EU not directly related to sustainability, with the aim of providing the users of the reported information with a better understanding of the development, performance, position and impact of the undertaking, by maximising the links between the sustainability information and other information reported in accordance with Directive 2013/34/EU.
_________________	_________________
60 2017/C 215/01.	60 2017/C 215/01.
61 2019/C 209/01.	61 2019/C 209/01.

Amendment  22

Proposal for a directive

Recital 40

Text proposed by the Commission	Amendment
(40) It should be ensured that the information reported by undertakings in accordance with the sustainability reporting standards meet the needs of users. The reporting standards should therefore specify the information that undertakings are to disclose on all major environmental factors, including their impacts and dependencies on climate, air, land, water and biodiversity. Regulation (EU) 2020/852 provides a classification of the environmental objectives of the Union. For reasons of coherence, it is appropriate to use a similar classification to identify the environmental factors that should be addressed by sustainability reporting standards. The reporting standards should consider and specify any geographical or other contextual information that undertakings should disclose to provide an understanding of their principal impacts on sustainability matters and the principal risks to the undertaking arising from sustainability matters.	(40) It should be ensured that the information reported by undertakings in accordance with the sustainability reporting standards meet the needs of users. The reporting standards should therefore specify the information that undertakings are to disclose on all major environmental factors, including their impacts and dependencies on climate, air, land, water and biodiversity. Regulation (EU) 2020/852 provides a classification of the environmental objectives of the Union. For reasons of coherence, it is appropriate to use a similar classification to identify the environmental factors that should be addressed by sustainability reporting standards. The reporting standards should consider and specify any geographical or other contextual information that undertakings should disclose to provide an understanding of their principal impacts on sustainability matters and the principal risks to the undertaking arising from sustainability matters. Those reporting standards should take into account the size of the undertaking, so that they do not pose an excessive burden for small and medium-sized enterprises.

Amendment  23

 

Proposal for a directive

Recital 43

Text proposed by the Commission	Amendment
(43) Sustainability reporting standards should specify the information that undertakings should disclose on social factors, including employee factors and human rights. Such information should cover the impacts of undertakings on people, including on human health. The information that undertakings disclose about human rights should include information about forced labour in their value chains where relevant. Reporting standards that address social factors should specify the information that undertakings should disclose with regard to the principles of the European Pillar of Social Rights that are relevant to businesses, including equal opportunities for all and working conditions. The European Pillar of Social Rights Action Plan adopted in March 2021 calls for stronger requirements on undertakings to report on social issues. The reporting standards should also specify the information that undertakings should disclose with regard to the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the fundamental conventions of the International Labour Organisation, and the Charter of Fundamental Rights of the European Union.	(43) Sustainability reporting standards should specify the information that undertakings should disclose on social factors, including working conditions, workers' rights, social partner involvement, collective bargaining, equality, non-discrimination, prevention of workplace violence and harassment diversity and inclusion, and human rights. Such information should be disclosed country-by country, where relevant, in close consultation with trade unions and workers’ representatives and cover the impacts of undertakings on its workers, people and on human health. Where the administrative or management body of the undertaking receives an opinion on the sustainability report from the representatives of workers, it should append that opinion to the sustainability report, if that is provided for under national law and practices. The information that undertakings disclose about human rights should include information about forced labour and child labour in their value chains where relevant. Reporting requirements on forced labour should not replace the public authorities’ responsibility to address the import of goods, produced as a result of human rights abuses, including forced labour, through trade policy and diplomatic means. Undertakings should also be able to report on possible risks and negative trends regarding employment and incomes, due to the absence of a just transition process. Reporting standards that address social factors should specify the information that undertakings should disclose with regard to the 20 principles of the European Pillar of Social Rights, particularly equal opportunities for all and fair working conditions. The European Pillar of Social Rights Action Plan adopted in March 2021 calls for stronger requirements on undertakings to report on social issues. The reporting standards should also specify the information that undertakings should disclose with regard to the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, including the UN Convention on the Rights of Persons with Disabilities, the UN Declaration on the Rights of Indigenous Peoples, the UN Convention on the Rights of the Child, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the fundamental conventions of the International Labour Organisation, the International Labour Organization's Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, including the list of relevant standards under its Annex I, the European Convention of Human Rights, the (revised) European Social Charter, the Charter of Fundamental Rights of the European Union and the OECD Guidelines for Multinational Enterprises. Reporting carried out on social factors should be proportionate to the scope and the goals of this Directive.

Amendment  24

Proposal for a directive

Recital 44

Text proposed by the Commission	Amendment
(44) Users need information about governance factors, including information on the role of an undertaking’s administrative, management and supervisory bodies, including with regard to sustainability matters, the composition of such bodies, and an undertaking’s internal control and risk management systems, including in relation to the reporting process. Users also need information about undertakings’ corporate culture and approach to business ethics, including anti-corruption and anti-bribery, and about their political engagements, including lobbying activities. Information about the management of the undertaking and the quality of relationships with business partners, including payment practices relating to the date or period for payment, the rate of interest for late payment or the compensation for recovery costs referred to in Directive 2011/7/EU of the European Parliament and of the Council62 on late payment in commercial transactions, helps users to understand an undertaking’s risks as well as its impacts on sustainability matters. Every year, thousands of businesses, especially SMEs, suffer administrative and financial burdens because they are paid late, or not at all. Ultimately, late payments lead to insolvency and bankruptcy, with destructive effects on entire value chains. Increasing information about payment practices should empower other undertakings to identify prompt and reliable payers, detect unfair payment practices, access information about the businesses they trade with, and negotiate fairer payment terms.	(44) Users need information about governance factors, including information on the role of an undertaking’s administrative, management and supervisory bodies, including with regard to sustainability matters, the composition of such bodies, and an undertaking’s internal control and risk management systems, including in relation to the reporting process. Users also need information about undertakings’ corporate culture, notably equal opportunities, anti-discrimination and inclusive measures, prevention of work-place violence and harassment as well as the undertaking’s approach to business ethics, including anti-corruption and anti-bribery, and about their political engagements, including lobbying activities. Information about the management of the undertaking and the quality of relationships with business partners, including payment practices relating to the date or period for payment, the rate of interest for late payment or the compensation for recovery costs referred to in Directive 2011/7/EU of the European Parliament and of the Council62 on late payment in commercial transactions, helps users to understand an undertaking’s risks as well as its impacts on sustainability matters. Every year, thousands of businesses, especially SMEs, suffer administrative and financial burdens because they are paid late, or not at all. Ultimately, late payments lead to insolvency and bankruptcy, with destructive effects on entire value chains. Increasing information about payment practices should empower other undertakings to identify prompt and reliable payers, detect unfair payment practices, access information about the businesses they trade with, and negotiate fairer payment terms.
_________________	_________________
62 Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (OJ L 48, 23.2.2011, p. 1).	62 Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (OJ L 48, 23.2.2011, p. 1).

Amendment  25

Proposal for a directive

Recital 47

Text proposed by the Commission	Amendment
(47) To meet the information needs from users in a timely manner, and in particular given the urgency to meet the information needs of financial market participants subject to the requirements laid down in the delegated acts adopted pursuant to Article 4, paragraphs 6 and 7 of Regulation (EU) 2019/2088, the Commission should adopt a first set of reporting standards by 31 October 2022. That set of reporting standards should specify the information that undertakings should disclose with regard to all reporting areas and sustainability matters, and that financial market participants need to comply with the disclosure obligations laid down in Regulation (EU) 2019/2088. The Commission should adopt a second set of reporting standards at the latest by 31 October 2023, specifying complementary information that undertakings should disclose about sustainability matters and reporting areas where necessary, and information that is specific to the sector in which an undertaking operates. The Commission should review the standards every 3 years to take account of relevant developments, including the development of international standards.	(47) To meet the information needs from users in a timely manner, and in particular given the urgency to meet the information needs of financial market participants subject to the requirements laid down in the delegated acts adopted pursuant to Article 4, paragraphs 6 and 7 of Regulation (EU) 2019/2088, the Commission should adopt a first set of reporting standards by 31 October 2022. That set of reporting standards should specify the information that undertakings should disclose with regard to all reporting areas and sustainability matters, and that financial market participants need to comply with the disclosure obligations laid down in Regulation (EU) 2019/2088. The Commission should adopt a second set of reporting standards at the latest by 31 October 2023, specifying complementary information that undertakings should disclose about sustainability matters and reporting areas where necessary, and information that is specific to the sector in which an undertaking operates, particularly in high-risk sectors where standards should be developed as a priority. The Commission should review the standards every 3 years to take account of relevant developments, including the development of international standards.

Amendment  26

 

Proposal for a directive

Recital 48

Text proposed by the Commission	Amendment
(48) Directive 2013/34/EU does not require that the financial statements or the management report are provided in a digital format, which hinders the findability and usability of the reported information. Users of sustainability information increasingly expect such information to be findable and machine-readable in digital formats. Digitalisation creates opportunities to exploit information more efficiently and holds the potential for significant cost savings for both users and undertakings. Undertakings should therefore be required to prepare their financial statements and their management report in XHTML format in accordance with Article 3 of Commission Delegated Regulation (EU) 2019/815,63 and to mark-up sustainability information, including the disclosures required by Article 8 of Regulation (EU) 2020/852, in accordance with that Delegated Regulation. A digital taxonomy to the Union sustainability reporting standards will be necessary to allow for the information reported to be tagged in accordance with those standards. These requirements should feed into the work on digitalisation announced by the Commission in its Communication A European strategy for data64 and in the Digital Finance Strategy for the EU.65 These requirements also complement the creation of a European single access point for public corporate information as envisaged in the capital markets union action plan, which also considers the need for structured data.	(48) Directive 2013/34/EU does not require that the financial statements or the management report are provided in a digital format, which hinders the findability and usability of the reported information. Users of sustainability information increasingly expect such information to be findable and machine-readable in digital formats and fully accessible, including for persons with disabilities, in accordance with Directive (EU) 2019/882 on the accessibility requirements for products and services. Digitalisation creates opportunities to exploit information more efficiently and holds the potential for significant cost savings for both users and undertakings. Undertakings should therefore be required to prepare their financial statements and their management report in XHTML format in accordance with Article 3 of Commission Delegated Regulation (EU) 2019/815,63 and to mark-up sustainability information, including the disclosures required by Article 8 of Regulation (EU) 2020/852, in accordance with that Delegated Regulation. A digital taxonomy to the Union sustainability reporting standards will be necessary to allow for the information reported to be tagged in accordance with those standards. These requirements should feed into the work on digitalisation announced by the Commission in its Communication A European strategy for data64 and in the Digital Finance Strategy for the EU65. These requirements also complement the creation of a European single access point for public corporate information as envisaged in the capital markets union action plan, which also considers the need for structured data.
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63 Commission Delegated Regulation (EU) 2018/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (OJ L 143, 29.5.2019, p. 1).	63 Commission Delegated Regulation (EU) 2018/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (OJ L 143, 29.5.2019, p. 1).
64 https://ec.europa.eu/digital-single-market/en/european-strategy-data	64 https://ec.europa.eu/digital-single-market/en/european-strategy-data
65 https://ec.europa.eu/info/publications/200924-digital-finance-proposals_en	65 https://ec.europa.eu/info/publications/200924-digital-finance-proposals_en

Amendment  27

 

Proposal for a directive

Recital 51

Text proposed by the Commission	Amendment
(51) Article 20 of Directive 2013/34/EU requires undertakings with securities listed on regulated markets to include a corporate governance statement in their management report, which has to contain among other information a description of the diversity policy applied by the undertaking in relation to its administrative, management and supervisory bodies. Article 20 of Directive 2013/34/EU leaves flexibility to undertakings to decide what aspects of diversity they report on. It does not explicitly oblige undertakings to include information on any particular aspect of diversity. In order progress towards a more gender-balanced participation in economic decision-making, it is necessary to ensure that undertakings with securities listed on regulated markets always report on their gender diversity policies and the implementation thereof. However, to avoid unnecessary administrative burden, those undertakings should have the possibility to report some of the information required by Article 20 of Directive 2013/34/EU alongside other sustainability-related information.	(51) Article 20 of Directive 2013/34/EU requires undertakings with securities listed on regulated markets to include a corporate governance statement in their management report, which has to contain among other information a description of the diversity policy applied by the undertaking in relation to its administrative, management and supervisory bodies. Article 20 of Directive 2013/34/EU leaves flexibility to undertakings to decide what aspects of diversity they report on. It does not explicitly oblige undertakings to include information on any particular aspect of diversity. In order progress towards a more gender-balanced participation in economic decision-making and gender equality in general, it is necessary to ensure that undertakings with securities listed on regulated markets always report on their gender diversity policies and the implementation thereof, in particular with regard to reaching at least 40 per cent representation of women in company boards and their compliance with pay transparency requirements. However, to avoid unnecessary administrative burden, those undertakings should have the possibility to report some of the information required by Article 20 of Directive 2013/34/EU alongside other sustainability-related information.

Amendment  28

Proposal for a directive

Recital 69

Text proposed by the Commission	Amendment
(69) According to Article 51 of Directive 2013/34/EU, the enforcement of corporate reporting by undertakings the securities of which are not listed on regulated markets is carried out by Member States. The types of sanctions are, however, not specified, which means that sanctioning regimes can vary widely between Member States, so undermining the single market. To improve sustainability reporting in the internal market and to contribute to the transition towards a fully sustainable and inclusive economic and financial system in which the benefits of growth are broadly shared in accordance with the European Green Deal, Member States should provide for certain sanctions and administrative measures in the case of infringements of sustainability reporting requirements. The sanctioning regime of Directive 2013/34/EU should therefore be strengthened accordingly, whereby Member States are to provide for appropriate sanctions and administrative measures.	(69) According to Article 51 of Directive 2013/34/EU, the enforcement of corporate reporting by undertakings the securities of which are not listed on regulated markets is carried out by Member States. The types of sanctions are, however, not specified, which means that sanctioning regimes can vary widely between Member States, so undermining the single market. To improve sustainability reporting in the internal market and to contribute to the transition towards a fully sustainable and inclusive economic and financial system in which the benefits of growth are broadly shared in accordance with the European Green Deal and its just transition, Member States should provide for certain sanctions and administrative measures in the case of infringements of sustainability reporting requirements. The sanctioning regime of Directive 2013/34/EU should therefore be strengthened accordingly, whereby Member States are to provide for appropriate sanctions and administrative measures.

Amendment  29

 

Proposal for a directive

Recital 71

Text proposed by the Commission	Amendment
(71) Member States are invited to assess the impact of their transposition act on SMEs in order to ensure that they are not disproportionately affected, giving specific attention to micro-enterprises and to the administrative burden, and to publish the results of such assessments. Member States should consider introducing measures to support SMEs in applying the voluntary simplified reporting standards.	(71) Member States are invited to assess the impact of their transposition act on SMEs in order to ensure that they are not disproportionately affected, giving specific attention to micro-enterprises and to unreasonable administrative burden, and to publish the results of such assessments. Member States should introduce measures to support undertakings, in particular SMEs, in applying the reporting standards.

Amendment  30

 

Proposal for a directive

Article 1 – paragraph 1 – point 1

Directive 2013/34/EU

Article 1 – paragraph 3 – introductory part

Text proposed by the Commission	Amendment
3. The coordination measures prescribed by Articles 19a, 19d, 29a, 30 and 33, Article 34(1), second subparagraph, point (aa), paragraphs 2 and 3 of Article 34, and Article 51 of this Directive shall also apply to the laws, regulations and administrative provisions of the Member States relating to the following undertakings regardless of their legal form:	3. The coordination measures prescribed by Articles 19a, 19d, 29a, 30 and 33, Article 34(1), second subparagraph, point (aa), paragraphs 2 and 3 of Article 34, and Article 51 of this Directive shall also apply to the laws, regulations and administrative provisions of the Member States relating to the following undertakings, provided that they meet the criteria for the undertakings defined in Article 19a(1) regardless of their legal form:

Amendment  31

 

Proposal for a directive

Article 1 – paragraph 1 – point 1

Directive 2013/34/EU

Article 1 – paragraph 3 a (new)

Text proposed by the Commission	Amendment
	3a. The Commission shall be empowered to adopt delegated acts in accordance with Article 49 to establish and amend the list of high-risk economic activity sectors set out in Article 2, point (20a).
	The list shall take into account the work of the Platform on Sustainable Finance established in accordance with Article 20 of Regulation (EU) 2020/852, existing Union sector-specific legislation, sector-specific disclosures in recognised international reporting frameworks such as the GRI, the OECD Due Diligence Guidance for Responsible Business Conduct and research and data from relevant Union agencies, such as Eurofound and OSHA. The definitions of the list shall take into account the NACE classification.
	When establishing the list, the Commission shall take into consideration the following non-exhaustive list of high-risk economic activity sectors:
	• Minerals
	• Garments and footwear
	• Agriculture
	• Extractiveindustries
	• Financial1a
	The Commission shall ensure that there is a meaningful participation by stakeholders, including trade unions and civil society organisations, in the process of establishing and amending the list.
	__________________
	1a OECD.

Amendment  32

 

Proposal for a directive

Article 1 – paragraph 1 – point 2

Directive 2013/34/EU

Article 2 – point 20 a (new)

Text proposed by the Commission	Amendment
	(20a) ‘high-risk economic activity sector’ means activities that are associated with a high likelihood of actual or potential impacts on sustainability matters;

Amendment  33

 

Proposal for a directive

Article 1 – paragraph 1 – point 2

Directive 2013/34/EU

Article 2 – point 20 b (new)

Text proposed by the Commission	Amendment
	(20b) ‘severe impacts’ means adverse impacts on people and the environment linked to the undertaking’s own operations, its products and services, its business relationships and its subsidiaries, based on the gravity of the impact on the sustainability matter, the number of individuals that are or could be affected, or the scale of the damage to the environment; the ease with which the harm could be remediated, restoring the environment or affected people to their prior state; and which cause the greatest harm relative to other impacts the undertaking has identified5a;
	__________________
	5a The definition of ‘severe impacts’ is based on the UN Guiding Principles for Business and Human Rights (Principles 21, 24) and the OECD Guidance for Due Diligence(page 42).

Amendment  34

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 1

Text proposed by the Commission	Amendment
1. Large undertakings and, as of 1 January 2026, small and medium-sized undertakings which are undertakings referred to in Article 2, point (1), point (a), shall include in the management report information necessary to understand the undertaking’s impacts on sustainability matters, and information necessary to understand how sustainability matters affect the undertaking’s development, performance and position.	1. Large undertakings and, as of 1 January 2026, small and medium-sized undertakings which are undertakings referred to in Article 2, point (1), point (a), medium-sized undertakings operating in high-risk economic activity sectors , undertakings registered in a non-EU/EEA country with significant business in the Union and public interest entities shall include in the management report information necessary to understand the undertaking’s impacts on sustainability matters, and information necessary to understand how sustainability matters affect the undertaking’s development, performance and position.

Amendment  35

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 2 – subparagraph 1 – point a – point ii

Text proposed by the Commission	Amendment
(ii) the opportunities for the undertaking related to sustainability matters;	(ii) the opportunities, weaknesses and risks for the undertaking related to sustainability matters;

Amendment  36

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 2 – subparagraph 1 – point a – point ii a (new)

Text proposed by the Commission	Amendment
	(iia) the assessment by the undertaking of its impacts on sustainability matters;

Amendment  37

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 2 – subparagraph 1 – point a – point ii b (new)

Text proposed by the Commission	Amendment
	(iib) the plans of the undertaking to ensure that its business model and strategy are consistent with securing employment in the Union and promoting fair working conditions as defined in the European Pillar of Social Rights;

Amendment  38

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point a – point iii

Text proposed by the Commission	Amendment
(iii) the plans of the undertaking to ensure that its business model and strategy are compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement;	(iii) the plans of the undertaking to ensure that its business model and strategy are compatible with the just transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement;

Amendment  39

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point a – point iii a (new)

Text proposed by the Commission	Amendment
	(iiia) the plans of the undertaking to achieve diversity and gender equality, including pay transparency, equal pay for work or work of equal value, equal opportunities and diversity in its management;

Amendment  40

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point a – point iv

Text proposed by the Commission	Amendment
(iv) how the undertaking’s business model and strategy take account of the interests of the undertaking’s stakeholders and of the impacts of the undertaking on sustainability matters;	(iv) how the undertaking’s business model and strategy take account of the interests of the undertaking’s stakeholders, in particular trade unions and workers’ representatives, and of the impacts of the undertaking on sustainability matters;

Amendment  41

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point c

Text proposed by the Commission	Amendment
(c) a description of the role of the administrative, management and supervisory bodies with regard to sustainability matters;	(c) a description of the role of the administrative, management and supervisory bodies with regard to sustainability matters, including with regard to:
	(i) their engagement in the analysis of the main risks and opportunities for the undertaking;
	(ii) approval of the undertaking’s strategy and targets and the financial resources for their implementation;
	iii) specific oversight of the implementation of the undertaking’s strategy;
	(iv) expertise on sustainability matters;

Amendment  42

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point d

Text proposed by the Commission	Amendment
(d) a description of the undertaking’s policies in relation to sustainability matters;	(d) a description of the undertaking’s policies in relation to sustainability matters and in particular with respect to identified actual or potential severe impacts and opportunities;

Amendment  43

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point e – point i

Text proposed by the Commission	Amendment
(i) the due diligence process implemented with regard to sustainability matters;	(i) the due diligence process, as defined under Union and international standards, implemented with regard to sustainability matters as defined under Article 19b.

Amendment  44

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point e – point ii

Text proposed by the Commission	Amendment
(ii) the principal actual or potential adverse impacts connected with the undertaking’s value chain, including its own operations, its products and services, its business relationships and its supply chain;	(ii) the actual or potential adverse impacts connected with the undertaking’s value chain as identified through the due diligence process, including its own operations, its products and services, its business relationships and its supply chain;

Amendment  45

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point e – point iii a (new)

Text proposed by the Commission	Amendment
	(iiia) any measures providing for vocational training and upskilling in relation to restructuring, particularly in vulnerable regions and sectors;

Amendment  46

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 3 – subparagraph 2

Text proposed by the Commission	Amendment
Where appropriate, the information referred to in paragraphs 1 and 2 shall contain information about the undertaking’s value chain, including the undertaking’s own operations, products and services, its business relationships and its supply chain.	The information referred to in paragraphs 1 and 2 shall contain information about the undertaking’s value chain, including the undertaking’s own operations, workforce, products and services, its business relationships and its supply chain, and where relevant its investments and assets. The undertaking shall adjust reporting on its supply and value chain based on a risk analysis of potential impacts. The Commission shall be empowered to adopt delegated acts in accordance with Article 49 concerning the provision of criteria for establishing that risk analysis based on existing Union legislation and relevant international standards.

Amendment  47

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 3 – subparagraph 4

Text proposed by the Commission	Amendment
Member States may allow information relating to impending developments or matters in the course of negotiation to be omitted in exceptional cases where, in the duly justified opinion of the members of the administrative, management and supervisory bodies, acting within the competences assigned to them by national law and having collective responsibility for that opinion, the disclosure of such information would be seriously prejudicial to the commercial position of the undertaking, provided that such omission does not prevent a fair and balanced understanding of the undertaking's development, performance, position and impact of its activity.	Member States may allow limited information relating to impending developments or matters in the course of negotiation to be omitted in exceptional cases where, in the duly justified opinion of the members of the administrative, management and supervisory bodies, acting within the competences assigned to them by national law and having collective responsibility for that opinion, the public disclosure of such information would be seriously prejudicial to the commercial position of the undertaking, provided that such omission does not prevent a fair and balanced understanding of the undertaking's development, performance, position and impact of its activity and may be reviewed by competent national authorities as defined by national law.

Amendment  48

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 5

Text proposed by the Commission	Amendment
5. By way of derogation from Article 19a, paragraphs 1 to 4, small and medium sized undertakings referred to in Article 2, point (1), point (a), may report in accordance with the sustainability reporting standards for small and medium sized undertakings referred to in Article 19c.	5. Medium sized undertakings in high-risk economic activity sectors shall report in accordance with the sustainability reporting standards referred to in Article 19c. Small undertakings may report in accordance with the sustainability reporting standards referred to in Article 19c.

Amendment  49

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 7 – subparagraph 1

Text proposed by the Commission	Amendment
An undertaking which is a subsidiary undertaking shall be exempted from the obligations set out in paragraphs 1 to 4 if that undertaking and its subsidiary undertakings are included in the consolidated management report of a parent undertaking, drawn up in accordance with Articles 29 and 29a. An undertaking that is a subsidiary undertaking from a parent undertaking that is established in a third country shall also be exempted from the obligations set out in paragraphs 1 to 4 where that undertaking and its subsidiary undertakings are included in the consolidated management report of that parent undertaking and where the consolidated management report is drawn up in a manner that may be considered equivalent, in accordance with the relevant implementing measures adopted pursuant to Article 23(4), point (i), of Directive 2004/109/EC of the European Parliament and of the Council*6, to the manner required by the sustainability reporting standards referred to in Article 19b of this Directive.	deleted

Amendment  50

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 7 – subparagraph 2

Text proposed by the Commission	Amendment
The consolidated management report of the parent undertaking referred to in subparagraph 1 shall be published in accordance with Article 30, in the manner prescribed by the law of the Member State by which the undertaking that is exempted from the obligations set out in paragraphs 1 to 4 is governed.	The consolidated management report of the parent undertaking shall be published in accordance with Article 30, in the manner prescribed by the law of the Member State by which the parent undertaking which meets the requirements referred to in paragraphs 1 to 4 is governed.

Amendment  51

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 7 – subparagraph 3

Text proposed by the Commission	Amendment
The Member State by which the undertaking that is exempted from the obligations set out in paragraphs 1 to 4 is governed, may require that the consolidated management report referred to in the first subparagraph of this paragraph is published in an official language of the Member State or in a language customary in the sphere of international finance, and that any necessary translation into those languages is certified.	The Member State by which the parent undertaking which meets the requirements referred to in paragraphs 1 to 4 is governed may require that the consolidated management report is published in its official language or in a language customary in the sphere of international finance.

Amendment  52

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 7 – subparagraph 4

Text proposed by the Commission	Amendment
The management report of an undertaking that is exempted from the obligations set out in paragraphs 1 to 4 shall contain all of the following information:	The consolidated management report of a parent undertaking which meets the requirements referred to in paragraphs 1 to 4 shall contain all of the following information:
(a) the name and registered office of the parent undertaking that reports information at group level in accordance with Articles 29 and 29a, or in a manner that may be considered equivalent, in accordance with the implementing measures adopted pursuant to Article 23(4), point (i) of Directive 2004/109/EC, to the manner required by the sustainability reporting standards referred to in Article 19b;	(a) the name and registered office of the parent undertaking that reports information at group level in accordance with Articles 29 and this Article, or in a manner that may be considered equivalent, in accordance with the relevant implementing measures adopted pursuant to Article 23(4)(i) of Directive 2004/109/EC, to the manner required by the sustainability standards adopted pursuant to Article 19b;
(b) the fact that the undertaking is exempted from the obligations set out in paragraphs 1 to 4 of this Article.	(b) the fact that the undertaking is exempted from the obligations set out in paragraphs 2(c) and (d);
	(c) the name of each consolidated entity.

Amendment  53

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1 – subparagraph 1 – point b – point ii

Text proposed by the Commission	Amendment
(ii) information that undertakings shall report that is specific to the sector in which they operate.	(ii) information that undertakings shall report that is specific to the sector in which they operate, in particular the high-risk economic activity sectors.

Amendment  54

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 1 – subparagraph 1 – point b – point ii a (new)

Text proposed by the Commission	Amendment
	(ii ) the implementing rules for sustainability reporting for undertakings referred to in Article 3(7), which are governed by the law of a third country and are not established in the territory of the Union when they operate in the internal market selling goods or providing services.

Amendment  55

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Articel 19b – paragraph 1 – subparagraph 2

Text proposed by the Commission	Amendment
The Commission shall, at least every three years after its date of application, review any delegated act adopted pursuant to this Article, taking into consideration the technical advice of the European Financial Reporting Advisory Group (EFRAG), and where necessary shall amend such delegated act to take into account relevant developments, including developments with regard to international standards.	The Commission shall, at least every three years after its date of application, review any delegated act adopted pursuant to this Article, taking into consideration the technical advice of the European Financial Reporting Advisory Group (EFRAG), the Fundamental Rights Agency, the European Foundation for Living and Working Conditions, the European Agency for Safety and Health at Work, the European Institute for Gender Equality, and relevant stakeholders, including trade unions and civil society organisations at the Union and national level, and where necessary shall amend such delegated act to take into account relevant developments, including developments with regard to international standards.

Amendment  56

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 1

Text proposed by the Commission	Amendment
2. The sustainability reporting standards referred to in paragraph 1 shall require that the information to be reported is understandable, relevant, representative, verifiable, comparable, and is represented in a faithful manner.	2. The sustainability reporting standards referred to in paragraph 1 shall require that the information to be reported is understandable, accessible in particular for persons with disabilities, relevant, representative, verifiable, comparable, and is represented in a faithful manner.

Amendment  57

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point b – point i

Text proposed by the Commission	Amendment
(i) equal opportunities for all, including gender equality and equal pay for equal work, training and skills development, and employment and inclusion of people with disabilities;	(i) equal treatment and opportunities for all, including gender equality and equal pay for work of equal value, diversity at all levels, as defined under existing Union legislation, pay transparency, measures against violence and harassment, training and skills development, in particular the rate and breakdown of workers participating in training and employment and inclusion of people with disabilities, specifying information on accessibility measures on a country-by-country basis, where relevant;

Amendment  58

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 2 – subparagraph 2 – point b – point i a (new)

Text proposed by the Commission	Amendment
	(ia) the size of the workforce including through its operations and business activities, disaggregated by gender, on a country-by-country basis, where relevant;

Amendment  59

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19 b – paragraph 2 – subparagraph 2 – point b – point i b (new)

Text proposed by the Commission	Amendment
	(ib) the existence of collective agreements and the coverage of workers therein, and the existence of work councils, including international work councils, in accordance with applicable law and practice;

Amendment  60

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point b – point ii

Text proposed by the Commission	Amendment
(ii) working conditions, including secure and adaptable employment, wages, social dialogue, collective bargaining and the involvement of workers, work-life balance, and a healthy, safe and well-adapted work environment;	(ii) working conditions, including secure employment, adequate and fair wages, working time, social dialogue, freedom of association, collective bargaining and the information, consultation and participation rights of workers, including with regard to their participation in administrative and supervisory boards, work-life balance, maternity, paternity and parental leave, and health and safety, and the rate of workers injured and sick at work;
	In accordance with the Union labour law acquis and national law and practice, the central management shall consult with the trade unions and workers' representatives at the beginning of the reporting period on the design of the reporting system, including the indicators included and the means of obtaining and verifying sustainability information. Central management shall also consult trade unions and workers' representatives in the identification of risks and impacts of the undertaking on the environment and people.
	Workers' representatives shall be provided with the necessary resources to ensure the effective exercise of the rights arising from this Directive. This shall include the support of an expert, where this is in line with national law and practice.
	Member States shall ensure that workers' rights to information and consultation are respected in relation to sustainability reporting and are exercised in accordance with the existing Union legal framework, such as Directive 2002/14/EC, Directive 2009/38/EC, Directive 2001/86/ EC and 2003/ 72/ EC.

Amendment  61

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point b – point iii

Text proposed by the Commission	Amendment
(iii) respect for the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work and the ILO fundamental conventions and the Charter of Fundamental Rights of the European Union.	(iii) respect for the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights, the UN Guiding Principles on Business and Human Rights and other core UN human rights conventions, including the UN Convention on Persons with Disabilities, the UN Declaration on the Rights of Indigenous Peoples, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work and the ILO fundamental and governance conventions, the International Labour Organization's Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, the European Convention of Human Rights, the revised European Social Charter, the Charter of Fundamental Rights of the European Union, the OECD Guidelines on Multinational Enterprises and the Union labour law acquis.

Amendment  62

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point b – point iii a (new)

Text proposed by the Commission	Amendment
	(iiia) human rights impact assessments carried out by the relevant public authorities and the undertaking with regard to sustainability matters as defined under this Directive.

Amendment  63

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point c – point ii

Text proposed by the Commission	Amendment
(ii) business ethics and corporate culture, including anti-corruption and anti-bribery;	(ii) business ethics and corporate culture, including the assessment of corruption risks and anti-corruption and anti-bribery programmes, and whistleblowing procedures and results;

Amendment  64

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point c – point v a (new)

Text proposed by the Commission	Amendment
	(va) the undertaking’s engagement with relevant stakeholders1a,in particular civil society, on sustainability matters and the undertaking’s social purpose;
	__________________
	1a OECD Guidance Due Diligence for Responsible Business Conduct, p. 48.

Amendment  65

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19 b a (new)

Text proposed by the Commission	Amendment
	Article 19b a
	Sustainability reporting related to undertakings required to report on payments to governments
	Undertakings subject to an obligation to prepare and make public a report on payments made to governments pursuant to Article 42 shall disclose, at project level, all documents, data and other information, required to evaluate their sustainability reporting under Article 19a. Documents shall include, as a minimum, agreements that mandate social expenditure by companies and any environment and/or social impact assessments.

Amendment  66

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19c – paragraph 1

Text proposed by the Commission	Amendment
The Commission shall adopt delegated acts in accordance with Article 49 to provide for sustainability reporting standards proportionate to the capacities and characteristics of small and medium-sized undertakings. Those sustainability reporting standards shall specify which information referred to in Articles 19a and 29a small and medium-sized undertakings referred to in Article 2, point (1)(a) shall report. They shall take into account the criteria set out in Article 19b, paragraphs 2 and 3. They shall also, where relevant, specify the structure in which that information shall be reported.	The Commission shall adopt, by 31 October 2024, delegated acts in accordance with Article 49 to provide for sustainability reporting standards proportionate to the capacities and characteristics of small and medium-sized undertakings. Those sustainability reporting standards shall specify how SMEs shall report on information referred to in Articles 19a and 29a. They shall take into account the criteria set out in Article 19b, paragraphs 2 and 3. They shall also, where relevant, specify the structure in which that information shall be reported.

Amendment  67

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19d – paragraph 1

Text proposed by the Commission	Amendment
1. Undertakings subject to Article 19a shall prepare their financial statements and their management report in a single electronic reporting format in accordance with Article 3 of Commission Delegated Regulation (EU) 2019/815*15 and shall mark-up their sustainability reporting, including the disclosures laid down in Article 8 of Regulation (EU) 2020/852, in accordance with that Delegated Regulation.	1. Undertakings subject to Article 19a shall prepare their financial statements and their management report in a single electronic reporting format in accordance with Article 3 of Commission Delegated Regulation (EU) 2019/815*15, Directive (EU) 2019/882 and shall mark-up their sustainability reporting, including the disclosures laid down in Article 8 of Regulation (EU) 2020/852, in accordance with that Delegated Regulation.

Amendment  68

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19d – paragraph 1 a (new)

Text proposed by the Commission	Amendment
	1a. Electronic financial statements and management reports shall follow relevant access requirements laid down in Directive (EU) 2019/882 in order to become accessible for wider audiences.

Amendment  69

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19d – paragraph 2

Text proposed by the Commission	Amendment
2. Undertakings subject to Article 29a shall prepare their consolidated financial statements and their consolidated management report in a single electronic reporting format in accordance with Article 3 of Delegated Regulation (EU) 2019/815 and shall mark-up sustainability reporting, including the disclosures laid down in Article 8 of Regulation (EU) 2020/852.	2. Undertakings subject to Article 29a shall prepare their consolidated financial statements and their consolidated management report in a single electronic reporting format in accordance with Article 3 of Delegated Regulation (EU) 2019/815, Directive (EU) 2019/882 and shall mark-up sustainability reporting, including the disclosures laid down in Article 8 of Regulation (EU) 2020/852.

Amendment  70

 

Proposal for a directive

Article 1 – paragraph 1 – point 5 – point a

Directive 2013/34/EU

Article 20 – paragraph 1 – point g

Text proposed by the Commission	Amendment
(g) a description of the diversity policy applied in relation to the undertaking's administrative, management and supervisory bodies with regard to gender and other aspects such as, age, or educational and professional backgrounds, the objectives of that diversity policy, how it has been implemented and the results in the reporting period. If no such policy is applied, the statement shall contain an explanation as to why this is the case.;	(g) a description of the diversity and inclusion policy applied in relation to the undertaking's administrative, management and supervisory bodies with regard to gender equality, anti-discrimination, minority and vulnerable groups and other aspects such as, age, or educational and professional backgrounds or disabilities, the objectives of that diversity policy, how it has been established and implemented and the results in the reporting period. If no such policy is applied, the statement shall contain an explanation as to why this is the case;

Amendment  71

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 1

Text proposed by the Commission	Amendment
1. Parent undertakings of a large group shall include in the consolidated management report information necessary to understand the group's impacts on sustainability matters, and information necessary to understand how sustainability matters affect the group's development, performance and position.	1. Parent undertakings of a large group shall include in the consolidated management report information necessary to understand the group's impacts on sustainability matters, and information broken down by country, where relevant, necessary to understand how sustainability matters affect the group's development, performance and position.

Amendment  72

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point a – point iii a (new)

Text proposed by the Commission	Amendment
	(iii a) the policies of the undertaking on diversity and gender equality, especially pay transparency, equal pay for work or work of equal value, equal opportunities and diversity in its management;

Amendment  73

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point a – point iv

Text proposed by the Commission	Amendment
(iv) how the group’s business model and strategy take account of the interests of the group’s stakeholders and of the impacts of the group on sustainability matters;	(iv) how the group’s business model and strategy taking account of the interests of the group’s stakeholders, in particular trade unions and workers, and of the impacts of the group on sustainability matters;

Amendment  74

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point e – point i

Text proposed by the Commission	Amendment
(i) the due diligence process implemented with regard to sustainability matters;	(i) the due diligence process implemented with regard to sustainability matters, as defined under Article 19b;

Amendment  75

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point e – point iii a (new)

Text proposed by the Commission	Amendment
	(iii a) any measures providing for vocational training and upskilling in relation to restructuring, particularly in vulnerable regions and sectors;

Amendment  76

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 3 – subparagraph 4

Text proposed by the Commission	Amendment
Member States may allow information relating to impending devel­opments or matters in the course of negotiation to be omitted in excep­tional cases where, in the duly justified opinion of the members of the administrative, management and supervisory bodies, acting within the competences assigned to them by national law and having collective responsibility for that opinion, the disclosure of such information would be seriously prejudicial to the commercial position of the group, provided that such omission does not prevent a fair and balanced under­standing of the group's development, performance, position and impact of its activity.	Member States may allow limited information relating to impending developments or matters in the course of negotiation to be omitted in exceptional cases where, in the duly justified opinion of the members of the administrative, management and supervisory bodies, acting within the competences assigned to them by national law and having collective responsibility for that opinion, the public disclosure of such information would be seriously prejudicial to the commercial position of the undertaking, provided that such omission does not prevent a fair and balanced understanding of the undertaking's development, performance, position and impact of its activity and may be reviewed by competent national authorities as defined by national law.

Amendment  77

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 7

Text proposed by the Commission	Amendment
7. A parent undertaking which is also a subsidiary undertaking shall be exempted from the obligation set out in paragraphs 1 to 4 if that exempted parent undertaking and its subsidiaries are included in the consolidated management report of another undertaking, drawn up in accordance with Article 29 and this Article. A parent undertaking that is a subsidiary undertaking from a parent undertaking that is established in a third country shall also be exempted from the obligations set out in paragraphs 1 to 4 where that undertaking and its subsidiary undertakings are included in the consolidated management report of that parent undertaking and where the consolidated management report is drawn up in a manner that may be considered equivalent, in accordance with the relevant implementing measures adopted pursuant to Article 23(4)(i) of Directive 2004/109/EC, to the manner required by the sustainability reporting standards referred to in Article 19b of this Directive.	deleted
The consolidated management report of the parent undertaking referred to in subparagraph 1 shall be published in accordance with Article 30, in the manner prescribed by the law of the Member State by which the parent undertaking that is exempted from the obligations set out in paragraphs 1 to 4 is governed.	The consolidated management report of the parent undertaking referred to in subparagraph 1 shall be published in accordance with Article 30, in the manner prescribed by the law of the Member State by which the parent undertaking which meets the requirements referred to in paragraphs 1 to 4 is governed.
The Member State by which the parent undertaking that is exempted from the obligations set out in paragraphs 1 to 4 is governed may require that the consolidated management report referred to in in the first subparagraph of this paragraph is published in its official language or in a language customary in the sphere of international finance, and that any necessary translation into those languages is certified.	The Member State by which the parent undertaking which meets the requirements referred to in paragraphs 1 to 4 is governed may require that the consolidated management report is published in its official language or in a language customary in the sphere of international finance.
The consolidated management report of a parent undertaking that is exempted from the obligations set out in paragraphs 1 to 4 shall contain all of the following information:	The consolidated management report of a parent undertaking which meets the requirements referred to in paragraphs 1 to 4 shall contain all of the following information:
(a) the name and registered office of the parent undertaking that reports information at group level in accordance with Articles 29 and this Article, or in a manner that may be considered equivalent, in accordance with the relevant implementing measures adopted pursuant to Article 23(4)(i) of Directive 2004/109/EC, to the manner required by the sustainability standards adopted pursuant to Article 19b;
(b) the fact that the undertaking is exempted from the obligations set out in paragraphs 1 to 4 of this Article;	(b) the fact that the undertaking is exempted from the obligations set out in paragraph 2, points (c) and (d);
	(c) the name of each consolidated entity.

Amendment  78

Proposal for a directive

Article 1 – paragraph 1 – point 10 – point a – point ii

Directive 2013/34/EU

Article 34 – paragraph 1 – subparagraph 2 – point aa

Text proposed by the Commission	Amendment
(aa) where applicable, express an opinion based on a limited assurance engagement as regards the compliance of the sustainability reporting with the requirements of this Directive, including the compliance of the sustainability reporting with the reporting standards adopted pursuant to Article 19b, the process carried out by the undertaking to identify the information reported pursuant to those reporting standards, and the compliance with the requirement to mark-up sustainability reporting in accordance with Article 19d, and as regards the compliance with the reporting requirements of Article 8 of Regulation (EU) 2020/852.;	(aa) where applicable, express an opinion based on a limited assurance engagement as regards the compliance of the sustainability reporting with the requirements and scope of this Directive, including the compliance of the sustainability reporting with the reporting standards adopted pursuant to Article 19b, the process carried out by the undertaking to identify the information reported pursuant to those reporting standards, and the compliance with the requirement to mark-up sustainability reporting in accordance with Article 19d, and as regards the compliance with the reporting requirements of Article 8 of Regulation (EU) 2020/852.;

Amendment  79

Proposal for a directive

Article 1 – paragraph 1 – point 11– point a

Directive 2013/34/EU

Article 49 – paragraph 2

Text proposed by the Commission	Amendment
2. The power to adopt delegated acts referred to in Article 1(2), Article 3(13), Article 46(2), Article 19b and Article 19c shall be conferred on the Commission for an indeterminate period of time. 3. The delegation of power referred to in Article 1(2), Article 3(13), Article 46(2), Article 19b and Article 19c may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of that decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.	2. The power to adopt delegated acts referred to in Article 1(2), Article 1(3a), Article 3(13), Article 46(2), Article 19b and Article 19c shall be conferred on the Commission for a period of three years from … [date of entry into force of the basic legislative act or any other date set by the co-legislators]. The Commission shall draw up a report in respect of the delegation of power not later than nine months before the end of the three-year period. The delegation of power shall be tacitly extended for periods of an identical duration, unless the European Parliament or the Council opposes such extension not later than three months before the end of each period.

Amendment  80

Proposal for a directive

Article 1 – paragraph 1 – point 11 – point b

Directive 2013/34/EU

Article 49 – paragraph 3a

Text proposed by the Commission	Amendment
3a. When adopting delegated acts pursuant to Articles 19b and 19c, the Commission shall take into consideration technical advice from EFRAG, provided such advice has been developed with proper due process, public oversight and transparency and with the expertise of relevant stakeholders, and is accompanied by cost-benefit analyses that include analyses of the impacts of the technical advice on sustainability matters.	3a. When adopting delegated acts pursuant to Articles 19b and 19c, the Commission shall take into consideration technical advice from EFRAG, provided such advice has been developed with proper due process, public oversight and transparency and with the expertise of relevant stakeholders, notably social partners, consumer protection organisations and NGOs, and is accompanied by cost-benefit analyses that include analyses of the impacts of the technical advice on sustainability matters.

Amendment  81

Proposal for a directive

Article 2 – paragraph 1 – point 3

Directive 2004/109/EC

Article 23 – paragraph 4 – subparagraph 3

Text proposed by the Commission	Amendment
‘The Commission shall, in accordance with the procedure referred to in Article 27(2), take the necessary decisions on the equivalence of accounting standards and on the equivalence of sustainability reporting standards as referred to in Article 19b of Directive 2013/34/EU which are used by third-country issuers under the conditions set out in Article 30(3). If the Commission decides that the accounting standards or the sustainability reporting standards of a third country are not equivalent, it may allow the issuers concerned to continue using such accounting standards during an appropriate transitional period.	‘The Commission shall, in accordance with the procedure referred to in Article 27(2), take the necessary decisions on the equivalence of accounting standards and on the equivalence of sustainability reporting standards as referred to in Article 19b of Directive 2013/34/EU which are used by third-country issuers under the conditions set out in Article 30(3). If the Commission decides, having obtained an opinion from EFRAG, that the accounting standards or the sustainability reporting standards of a third country are not equivalent, it may allow the issuers concerned to continue using such accounting standards during an appropriate transitional period.

Amendment  82

Proposal for a directive

Article 2 – paragraph 1 – point 3

Directive 2004/109/EC

Article 23 – paragraph 4 – subparagraph 4

Text proposed by the Commission	Amendment
In the context of the third subparagraph, the Commission shall also adopt, by means of delegated acts adopted in accordance with paragraphs 2a, 2b and 2c of Article 27, and subject to the conditions laid down in Articles 27a and 27b, measures aimed at establishing general equivalence criteria regarding accounting standards and sustainability reporting standards relevant to issuers of more than one country.’;	In the context of the third subparagraph, the Commission shall also adopt, by means of delegated acts adopted in accordance with paragraphs 2a, 2b and 2c of Article 27, and subject to the conditions laid down in Articles 27a and 27b, measures aimed at establishing general equivalence criteria regarding accounting standards and sustainability reporting standards relevant to issuers of more than one country, having obtained an opinion from EFRAG.’;

Amendment  83

 

Proposal for a directive

Article 2 – paragraph 1 – point 4

Directive 2004/109/EC

Article 28d – paragraph 1

Text proposed by the Commission	Amendment
After consulting the European Environment Agency and the European Union Agency for Fundamental Rights, ESMA shall issue guidelines in accordance with Article 16 of Regulation 1095/2010 on the supervision of sustainability reporting by national competent authorities.	After consulting the relevant Union agencies, such as the European Environment Agency and the European Union Agency for Fundamental Rights, Eurofound, the European Institute for Gender Equality, EU-OSHA as well as relevant stakeholders, in particular trade unions and civil society organisations, ESMA shall issue guidelines in accordance with Article 16 of Regulation 1095/2010 on the supervision of sustainability reporting by national competent authorities.

Amendment  84

Proposal for a directive

Article 3 – paragraph 1 – point 12

Directive 2006/43/EC

Article 26a – paragraph 2 – subparagraph 1

Text proposed by the Commission	Amendment
2. The Commission shall be empowered to adopt, by means of delegated acts in accordance with Article 48a, the assurance standards referred to in paragraph 1 in order to set out the procedures that the auditor shall perform in order to draw its conclusions on the assurance of sustainability reporting, including engagement planning, risk consideration and response to risks and type of conclusions to be included in the audit report.	2. The Commission shall be empowered to adopt, by means of delegated acts in accordance with Article 48a and having obtained an opinion from EFRAG, the assurance standards referred to in paragraph 1 in order to set out the procedures that the auditor shall perform in order to draw its conclusions on the assurance of sustainability reporting, including engagement planning, risk consideration and response to risks and type of conclusions to be included in the audit report.

PROCEDURE – COMMITTEE ASKED FOR OPINION

Title	Amending Directive 2013/34/EU, Directive 2004/109/EC, Directive 2006/43/EC and Regulation (EU) No 537/2014, as regards corporate sustainability reporting
References	COM(2021)0189 – C9-0147/2021 – 2021/0104(COD)
Committee responsible  Date announced in plenary	JURI 23.6.2021
Opinion by  Date announced in plenary	EMPL 23.6.2021
Associated committees - date announced in plenary	16.12.2021
Rapporteur for the opinion  Date appointed	Kira Marie Peter-Hansen 19.10.2021
Discussed in committee	2.12.2021	13.1.2022
Date adopted	3.3.2022
Result of final vote	+: –: 0:	31 10 11
Members present for the final vote	Atidzhe Alieva-Veli, Dominique Bilde, Gabriele Bischoff, Vilija Blinkevičiūtė, Milan Brglez, Sylvie Brunet, Jordi Cañas, David Casa, Leila Chaibi, Ilan De Basso, Margarita de la Pisa Carrión, Özlem Demirel, Jarosław Duda, Estrella Durá Ferrandis, Lucia Ďuriš Nicholsonová, Rosa Estaràs Ferragut, Nicolaus Fest, Loucas Fourlas, Cindy Franssen, Helmut Geuking, Elisabetta Gualmini, Alicia Homs Ginel, France Jamet, Agnes Jongerius, Radan Kanev, Stelios Kympouropoulos, Katrin Langensiepen, Miriam Lexmann, Elena Lizzi, Giuseppe Milazzo, Kira Marie Peter-Hansen, Dragoş Pîslaru, Manuel Pizarro, Dennis Radtke, Elżbieta Rafalska, Guido Reil, Daniela Rondinelli, Mounir Satouri, Monica Semedo, Michal Šimečka, Beata Szydło, Eugen Tomac, Romana Tomc, Marie-Pierre Vedrenne, Nikolaj Villumsen, Marianne Vind, Maria Walsh, Stefania Zambelli, Tatjana Ždanoka
Substitutes present for the final vote	Evelyn Regner, Eugenia Rodríguez Palop, Sara Skyttedal

 

 

 

FINAL VOTE BY ROLL CALL IN COMMITTEE ASKED FOR OPINION

31	+
NI	Daniela Rondinelli
PPE	Loucas Fourlas, Cindy Franssen, Stelios Kympouropoulos
Renew	Atidzhe Alieva-Veli, Sylvie Brunet, Jordi Cañas, Lucia Ďuriš Nicholsonová, Dragoş Pîslaru, Monica Semedo, Michal Šimečka, Marie-Pierre Vedrenne
S&D	Gabriele Bischoff, Vilija Blinkevičiūtė, Milan Brglez, Ilan De Basso, Estrella Durá Ferrandis, Elisabetta Gualmini, Alicia Homs Ginel, Agnes Jongerius, Manuel Pizarro, Evelyn Regner, Marianne Vind
The Left	Leila Chaibi, Özlem Demirel, Eugenia Rodríguez Palop, Nikolaj Villumsen
Verts/ALE	Katrin Langensiepen, Kira Marie Peter-Hansen, Mounir Satouri, Tatjana Ždanoka

 

10	-
ECR	Giuseppe Milazzo, Margarita de la Pisa Carrión, Elżbieta Rafalska, Beata Szydło
ID	Dominique Bilde, Nicolaus Fest, France Jamet, Elena Lizzi, Guido Reil, Stefania Zambelli

 

11	0
PPE	David Casa, Jarosław Duda, Rosa Estaràs Ferragut, Helmut Geuking, Radan Kanev, Miriam Lexmann, Dennis Radtke, Sara Skyttedal, Eugen Tomac, Romana Tomc, Maria Walsh

 

Key to symbols:

+ : in favour

- : against

0 : abstention

 

OPINION OF THE COMMITTEE ON THE ENVIRONMENT, PUBLIC HEALTH AND FOOD SAFETY (4.3.2022)

for the Committee on Legal Affairs

on the proposal for a directive of the European Parliament and of the Council amending Directive 2013/34/EU, Directive 2004/109/EC, Directive 2006/43/EC and Regulation (EU) No 537/2014, as regards corporate sustainability reporting

(COM(2021)0189 – C9‑0147/2021 – 2021/0104(COD))

Rapporteur for opinion: Lídia Pereira

 

SHORT JUSTIFICATION

Better data from companies about the sustainability risks they are exposed to and their own impact on sustainability is essential for a successful implementation of the Green Deal as well as the Sustainable Finance Action Plan. The proposal is therefore an important pillar in transforming the European Green Deals political commitments to turn the EU into a modern, climate neutral, resource-efficient and competitive economy. It aims to ensure that reporting requirements for companies are consistent with the broader sustainable finance legal framework currently set out in the Non-Financial Reporting Directive, the Sustainable Finance Disclosure Regulation as well as the EU Taxonomy by the establishment of sustainability reporting standards.

The proposal amends four existing pieces of legislation: First - and from an environmental perspective - foremost, the Accounting Directive, inter alia by clarifying the principle of “double materiality” (that reporting should show how sustainability maters affect the company and how the company impacts sustainability); by extending the scope of the reporting requirements; by adding detail to the information to be disclosed; by specifying that companies should report on qualitative and quantitative information; by requiring that the reporting requirements apply to parent companies that report for the whole group and by empowering the Commission to adopt sustainability reporting standards and sets the requirements for their adoption, i.e. quality criteria, topics to be reported on and certain instruments to take into account.

In addition, the proposal amends the Audit Directive and the Audit Regulation, to cover the audit of sustainability information. Finally, it also amends the Transparency Directive to extend the scope of the sustainability reporting requirements to companies with securities listed on regulated markets, and to clarify the supervisory regime for sustainability reporting by these companies.

The rapporteur considers that the overall assessment on the need to expand the scope of reporting will facilitate the transparency of financial markets, provide clearer information for investors and other stakeholders. The proposal for a Directive on Corporate Sustainability Reporting Directive provides for undertakings to provide the necessary information for investors, the standards for reporting must be closely linked to other Union legislation and obligations that fall on companies, investors and other financial market participants, notably under the Taxonomy Regulation and the Sustainable Finance Disclosure Regulation.

While, your rapporteur duly considers that for those reasons, there is a need to adopt European reporting standards, these standards should be complementary to international standards, rather than overlapping.

For the environmental reporting obligations and reporting standards, your rapporteur considers that the alignment of these obligations and standards to the definitions and objectives of the Taxonomy Regulation is of large importance. Notably, there should be as little overlap to the obligations under Article 8 of the Taxonomy Regulation and this Directive as possible.

The rapporteur furthermore considers that alignment on reporting obligations as regards climate change towards overall Union policies to limit climate change, as underpinned by the European Climate Law is necessary. Reported targets of undertakings should therefore align to the Climate Law targets of reducing emissions of greenhouse gases by 2030, 2040 and 2050. When adopting standards, these should take into account the Climate Law.

The rapporteur considers it important to as closely as possible provide for reporting on a country-by country basis.

The extension of reporting obligations towards small and medium-sized undertakings risk posing a large administrative burden on smaller enterprises. The rapporteur, therefore considers that it will be necessary to limit these obligations to high-risk sectors and ensure proportional reporting standards for SMEs.

Finally, while the rapporteur sees the need for reporting to be comprehensive, the need to expand reporting obligation to intangibles provides unclarity and uncertainty for reporting companies to limited known value for investors and other stakeholders. These obligations should therefore be removed to streamline this process and reconsidered in the future.

AMENDMENTS

The Committee on the Environment, Public Health and Food Safety calls on the Committee on Legal Affairs, as the committee responsible, to take into account the following amendments:

Amendment  1

Proposal for a directive

Recital 2

Text proposed by the Commission	Amendment
(2) In its Action Plan: Financing Sustainable Growth the Commission set out measures to achieve the following objectives: reorient capital flows towards sustainable investment in order to achieve sustainable and inclusive growth, manage financial risks stemming from climate change, resource depletion, environmental degradation and social issues, and foster transparency and long-termism in financial and economic activity33 . The disclosure by undertakings of relevant, comparable and reliable sustainability information is a prerequisite for meeting those objectives. The European Parliament and the Council adopted a number of legislative acts as part of the implementation of the Action Plan on Financing Sustainable Growth. Regulation (EU) 2019/2088 of the European Parliament and of the Council34 governs how financial market participants and financial advisers are to disclose sustainability information to end investors and asset owners. Regulation (EU) 2020/852 of the European Parliament and of the Council35 creates a classification system of environmentally sustainable economic activities with the aim of scaling up sustainable investments and combatting greenwashing of financial products that unduly claim to be sustainable. Regulation (EU) 2019/2089 of the European Parliament and of the Council36 , complemented by Commission Delegated Regulations (EU) 2020/181637 , (EU) 2020/181738 and (EU) 2020/181839 , introduces environmental, social and governance (‘ESG’) disclosure requirements for benchmarks administrators and minimum standards for the construction of EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks. Regulation (EU) No 575/2013 of the European Parliament and of the Council40 requires large institutions which have issued securities that are admitted to trading on a regulated market to disclose information on ESG risks from 28 June 2022. The new prudential framework for investment firms set by Regulation (EU) 2019/2033 of the European Parliament and of the Council41 and Directive (EU) 2019/2034 of the European Parliament and of the Council42 contains provisions concerning the introduction of an ESG risk dimension in the supervisory review and evaluation process (SREP) by competent authorities, and contains ESG risks disclosure requirements for investment firms, applicable from 26 December 2022. The Commission has also announced a proposal on a European Green Bond Standard in its Work Programme for 2021, following up on the Action Plan on Financing Sustainable Growth.	(2) In its Action Plan: Financing Sustainable Growth the Commission set out measures to achieve the following objectives: reorient capital flows towards sustainable investment in order to achieve sustainable and inclusive growth, manage financial risks stemming from climate change, resource depletion, environmental degradation and social issues, and foster transparency and long-termism in financial and economic activity33 . The disclosure by undertakings of relevant, comparable and reliable sustainability information is a prerequisite for meeting those objectives. In its guidelines on reporting climate-related information, the Commission highlighted the benefits for companies to report on climate-related information, particularly by increasing awareness and understanding of climate-related risks and opportunities within the company, diversifying the investor base, creating a lower cost of capital and improving constructive dialogue with all stakeholders. The European Parliament and the Council adopted a number of legislative acts as part of the implementation of the Action Plan on Financing Sustainable Growth. Regulation (EU) 2019/2088 of the European Parliament and of the Council34 governs how financial market participants and financial advisers are to disclose sustainability information to end investors and asset owners. Regulation (EU) 2020/852 of the European Parliament and of the Council35 creates a classification system of environmentally sustainable economic activities with the aim of scaling up sustainable investments and combatting greenwashing of financial products that unduly claim to be sustainable. Regulation (EU) 2019/2089 of the European Parliament and of the Council36 , complemented by Commission Delegated Regulations (EU) 2020/181637 , (EU) 2020/181738 and (EU) 2020/181839 , introduces environmental, social and governance (‘ESG’) disclosure requirements for benchmarks administrators and minimum standards for the construction of EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks. Regulation (EU) No 575/2013 of the European Parliament and of the Council40 requires large institutions which have issued securities that are admitted to trading on a regulated market to disclose information on ESG risks from 28 June 2022. The new prudential framework for investment firms set by Regulation (EU) 2019/2033 of the European Parliament and of the Council41 and Directive (EU) 2019/2034 of the European Parliament and of the Council42 contains provisions concerning the introduction of an ESG risk dimension in the supervisory review and evaluation process (SREP) by competent authorities, and contains ESG risks disclosure requirements for investment firms, applicable from 26 December 2022. The Commission has also announced a proposal on a European Green Bond Standard in its Work Programme for 2021, following up on the Action Plan on Financing Sustainable Growth.
__________________	__________________
33 COM(2018) 97 final.	33 COM(2018) 97 final.
34 Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (OJ L 317, 9.12.2019, p. 1).	34 Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (OJ L 317, 9.12.2019, p. 1).
35 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13).	35 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13).
36 Regulation (EU) 2019/2089 of the European Parliament and of the Council of 27 November 2019 amending Regulation (EU) 2016/1011 as regards EU Climate Transition Benchmarks, EU Paris-aligned Benchmarks and sustainability-related disclosures for benchmarks (OJ L 317, 9.12.2019, p. 17).	36 Regulation (EU) 2019/2089 of the European Parliament and of the Council of 27 November 2019 amending Regulation (EU) 2016/1011 as regards EU Climate Transition Benchmarks, EU Paris-aligned Benchmarks and sustainability-related disclosures for benchmarks (OJ L 317, 9.12.2019, p. 17).
37 Commission Delegated Regulation (EU) 2020/1816 of 17 July 2020 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards the explanation in the benchmark statement of how environmental, social and governance factors are reflected in each benchmark provided and published (OJ L 406, 3.12.2020, p. 1).	37 Commission Delegated Regulation (EU) 2020/1816 of 17 July 2020 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards the explanation in the benchmark statement of how environmental, social and governance factors are reflected in each benchmark provided and published (OJ L 406, 3.12.2020, p. 1).
38 Commission Delegated Regulation (EU) 2020/1817 of 17 July 2020 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards the minimum content of the explanation on how environmental, social and governance factors are reflected in the benchmark methodology (OJ L 406, 3.12.2020, p. 12).	38 Commission Delegated Regulation (EU) 2020/1817 of 17 July 2020 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards the minimum content of the explanation on how environmental, social and governance factors are reflected in the benchmark methodology (OJ L 406, 3.12.2020, p. 12).
39 Commission Delegated Regulation (EU) 2020/1818 of 17 July 2020 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards minimum standards for EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks (OJ L 406, 3.12.2020, p. 17).	39 Commission Delegated Regulation (EU) 2020/1818 of 17 July 2020 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards minimum standards for EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks (OJ L 406, 3.12.2020, p. 17).
40 Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).	40 Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).
41 Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014 (OJ L 314, 5.12.2019, p. 1).	41 Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014 (OJ L 314, 5.12.2019, p. 1).
42 Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms and amending Directives 2002/87/EC, 2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU and 2014/65/EU (OJ L 314, 5.12.2019, p. 64).	42 Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms and amending Directives 2002/87/EC, 2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU and 2014/65/EU (OJ L 314, 5.12.2019, p. 64).

Amendment  2

Proposal for a directive

Recital 8

Text proposed by the Commission	Amendment
(8) The ultimate beneficiaries of better sustainability reporting by undertakings are individual citizens and savers. Savers who want to invest sustainably will have the opportunity to do so, while all citizens should benefit from a stable, sustainable and inclusive economic system. To realise these benefits, the sustainability information disclosed in undertaking’s annual reports first has to reach two primary groups (‘users’). The first group of users consists of investors, including asset managers, who want to better understand the risks and opportunities that sustainability issues pose to their investments and the impacts of those investments on people and the environment. The second group of users consists of organisations, including non-governmental organisations and social partners, that wish to better hold undertakings to account for their impacts on people and the environment. Other stakeholders may also make use of sustainability information disclosed in annual reports. The business partners of undertakings, including customers, may rely on this information to understand, and where necessary report on, the sustainability risks and impacts through their own value chains. Policy makers and environmental agencies may use such information, in particular on an aggregate basis, to monitor environmental and social trends, to contribute to environmental accounts, and to inform public policy. Few individual citizens and consumers directly consult undertaking’s reports, but they may use such information indirectly such as when considering the advice or opinions of financial advisers or non-governmental organisations. Many investors and asset managers purchase sustainability information from third party data providers, who collect information from various sources, including public corporate reports.	(8) The ultimate beneficiaries of better sustainability reporting by undertakings must be individual citizens and savers. Savers who want to invest sustainably must have the opportunity to do so, while all citizens will benefit from a stable, sustainable and inclusive economic system. To realise these benefits, the sustainability information disclosed in undertaking’s annual reports first has to reach two primary groups (‘users’). The first group of users consists of investors, including asset managers, who want to better understand the risks and opportunities that sustainability issues pose to their investments and the impacts of those investments on people and the environment. The second group of users consists of organisations, including non-governmental organisations and social partners, that wish to better hold undertakings to account for their impacts on people and the environment. Other stakeholders may also make use of sustainability information disclosed in annual reports, including to foster the comparability across market sectors on the basis of environmental merits. Corporate entities should disclose the degree to which they contribute to economic activities that qualify as environmentally sustainable and respect the ‘do no significant harm principle’ pursuant to Articles 3 and 17 of Regulation (EU) 2020/852, respectively.. The business partners of undertakings, including customers, may rely on this information to understand, and where necessary report on, the sustainability risks and impacts through their own value chains. Policy makers and environmental agencies may use such information, in particular on an aggregate basis, to monitor environmental and social trends, to contribute to environmental accounts, and to inform public policy. Few individual citizens and consumers directly consult undertaking’s reports, but they may use such information indirectly such as when considering the advice or opinions of financial advisers or non-governmental organisations. Many investors and asset managers purchase sustainability information from third party data providers, who collect information from various sources, including public corporate reports.

Amendment  3

Proposal for a directive

Recital 9

Text proposed by the Commission	Amendment
(9) There has been a very significant increase in demand for corporate sustainability information in recent years, especially on the part of the investment community. That increase in demand is driven by the changing nature of risks to undertakings and growing investor awareness of the financial implications of these risks. That is especially the case for climate-related financial risks. Awareness of the risks to undertakings and to investments resulting from other environmental issues and from social issues, including health issues, is also growing. The increase in demand for sustainability information is also driven by the growth in investment products that explicitly seek to meet certain sustainability standards or achieve certain sustainability objectives. Part of that increase is the logical consequence of previously adopted Union legislation, notably Regulation (EU) 2019/2088 and Regulation (EU) 2020/852. Some of the increase would have happened in any case, due to fast-changing citizen awareness, consumer preferences and market practices. The COVID-19 pandemic will further accelerate the increase in users’ information needs, in particular as it has exposed the vulnerabilities of workers and of undertaking’s value chains. Information on environmental impacts is also relevant in the context of mitigating future pandemics with human disturbance of ecosystems increasingly linked to the occurrence and spread of diseases.	(9) There has been a very significant increase in demand for corporate sustainability information in recent years, especially on the part of the investment community and other stakeholders, notably civil society. That increase in demand is driven by the changing nature of risks to undertakings and growing investor awareness of the financial implications of these risks. That is especially the case for climate-related financial risks. Awareness of the risks and opportunities for undertakings and to investments resulting from other environmental and climate issues and from social issues, including health issues, is also growing. The increase in demand for sustainability information is also driven by the growth in investment products that explicitly seek to meet ethical sustainability standards or achieve certain sustainability objectives and to ensure coherence with the ambition of the Paris Agreement and Union policies, as well as achieving a balance between the three pillars of sustainability, including the environment, climate, biodiversity, public health and the economy. Part of that increase is the logical consequence of previously adopted Union legislation, notably Regulation (EU) 2019/2088 and Regulation (EU) 2020/852. Therefore, the revision of this Directive will simplify and standardise the reporting obligations provided for in other pieces of legislation. Some of the increase would have happened in any case, due to fast-changing citizen awareness, consumer preferences and market practices. The COVID-19 pandemic will further accelerate the increase in users’ information needs, in particular as it has exposed the vulnerabilities of workers and of undertaking’s value chains. Information on environmental impacts is also relevant in the context of mitigating future pandemics with human disturbance of ecosystems increasingly linked to the occurrence and spread of diseases.

Amendment  4

Proposal for a directive

Recital 11

Text proposed by the Commission	Amendment
(11) The report on the review clause of the Non-Financial Reporting Directive (Directive 2014/95/EU), and its accompanying fitness check on corporate reporting, identified problems as to the effectiveness of that Directive48 . There is significant evidence that many undertakings do not disclose material information on all major sustainability-related topics. The report also identified as significant problems the limited comparability and reliability of sustainability information. Additionally, many undertakings from which users need sustainability information are not obliged to report such information.	(11) The report on the review clause of the Non-Financial Reporting Directive (Directive 2014/95/EU), and its accompanying fitness check on corporate reporting, identified problems as to the effectiveness of that Directive. There is significant evidence that many undertakings do not disclose material information on all major sustainability-related topics especially climate-related information, including all greenhouse gas emissions and factors that affect biodiversity. The report also identified as significant problems the limited comparability and reliability of sustainability information. Additionally, many undertakings from which users need sustainability information are not obliged to report such information, which underlines the need for a robust and affordable monitoring, reporting and verification framework, and effective auditing within corporate sustainability reporting, to ensure that data are reliable and avoid greenwashing.
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48 Publication office: please insert reference to Report from the Commission to the European Parliament, the Council and the European Economic and Social Committee on the review clauses in Directives 2013/34/EU, 2014/95/EU, and 2013/50/EU, and accompanying SWD- Fitness Check.	48 Publication office: please insert reference to Report from the Commission to the European Parliament, the Council and the European Economic and Social Committee on the review clauses in Directives 2013/34/EU, 2014/95/EU, and 2013/50/EU, and accompanying SWD- Fitness Check.

Amendment  5

Proposal for a directive

Recital 12

Text proposed by the Commission	Amendment
(12) In the absence of policy action, the gap between users’ information needs and the sustainability information reported by undertakings is expected to grow. This gap has significant negative consequences. Investors are unable to take sufficient account of sustainability-related risks and opportunities in their investment decisions. The aggregation of multiple investment decisions that do not take adequate account of sustainability-related risks has the potential to create systemic risks that threaten financial stability. The European Central Bank and international organisations such as the Financial Stability Board have drawn attention to those systemic risks, in particular in the case of climate. Investors are also less able to channel financial resources to undertakings and economic activities that address and do not exacerbate social and environmental problems, which undermines the objectives of the European Green Deal and the Action Plan on Financing Sustainable Growth. Non-governmental organisations, social partners, communities affected by undertakings’ activities, and other stakeholders are less able to hold undertakings accountable for their impacts on people and the environment. This creates an accountability deficit, and may contribute to lower levels of citizen trust in businesses, which in turn may have negative impacts on the efficient functioning of the social market economy. The lack of generally accepted metrics and methods for measuring, valuing, and managing sustainability-related risks is also an obstacle to the efforts of undertakings to ensure that their business models and activities are sustainable.	(12) In the absence of policy action, the gap between users’ information needs and the sustainability information reported by undertakings is expected to grow. This gap has significant negative consequences. Investors are unable to take sufficient account of sustainability-related risks and opportunities in their investment decisions. The aggregation of multiple investment decisions that do not take adequate account of sustainability-related risks has the potential to create systemic risks that threaten financial stability. The European Central Bank and international organisations such as the Financial Stability Board have drawn attention to those systemic risks, in particular in the case of climate. Investors are also less able to channel financial resources to undertakings and economic activities that address and do not exacerbate social and environmental problems, which undermines the objectives of the European Green Deal and the Action Plan on Financing Sustainable Growth and the objectives of the Paris Agreement. Non-governmental organisations, social partners, communities affected by undertakings’ activities, and other stakeholders are less able to hold undertakings accountable for their impacts on people and the environment. This creates an accountability deficit, and may contribute to lower levels of citizen trust in businesses, which in turn may have negative impacts on the efficient functioning of the social market economy. The lack of comparable sustainability information also limits the ability of stakeholders to enter into dialogue with undertakings on sustainability matters. The lack of generally accepted metrics and methods for measuring, valuing, and managing sustainability-related risks is also an obstacle to the efforts of undertakings to ensure that their business models and activities are sustainable.

Amendment  6

Proposal for a directive

Recital 15

Text proposed by the Commission	Amendment
(15) Articles 19a and 29a of Directive 2013/34/EU apply to large undertakings that are public-interest entities with an average number of employees in excess of 500, and to public-interest entities that are parent undertakings of a large group with an average number of employees in excess of 500 on a consolidated basis, respectively. In view of the growth of users’ needs for sustainability information, additional categories of undertakings should be required to report such information. It is therefore appropriate to require all large undertakings and all undertakings listed on regulated markets, except micro undertakings, to report detailed sustainability information. In addition, all undertakings that are parent undertakings of large groups should prepare sustainability reporting at group level.	(15) Articles 19a and 29a of Directive 2013/34/EU apply to large undertakings that are public-interest entities with an average number of employees in excess of 500, and to public-interest entities that are parent undertakings of a large group with an average number of employees in excess of 500 on a consolidated basis, respectively. In view of the growth of users’ needs for sustainability information, additional categories of undertakings should be required to report such information. It is therefore appropriate to require all large undertakings and all undertakings listed on regulated markets, except micro undertakings as well as small and medium-sized undertakings operating in high-risk sectors, to report detailed sustainability information. In addition, all undertakings that are parent undertakings of large groups should prepare sustainability reporting at group level. Undertakings that are not established in the Union but fulfil those criteria and operate in the internal market should be subject to the same requirements in order to account for their sustainability impacts and to provide a level playing field for undertakings established in the Union.

Amendment  7

Proposal for a directive

Recital 16

Text proposed by the Commission	Amendment
(16) The requirement that also large non-listed undertakings should disclose information on sustainability matters is mainly driven by concerns about the impacts and accountability of such undertakings, including through their value chain. In this respect, all large undertakings should be subject to the same requirements to report sustainability information publicly. In addition, financial market participants also need information from those large non-listed undertakings.	(16) The requirement that also non-listed undertakings should disclose information on sustainability matters is mainly driven by concerns about the impacts and accountability of undertakings, including through their supply and value chain. In this respect, all large undertakings should be subject to the same requirements to report sustainability information publicly. In addition, financial market participants also need information from those large non-listed undertakings.

Amendment  8

Proposal for a directive

Recital 17

Text proposed by the Commission	Amendment
(17) The requirement that undertakings not established in the Union but with securities listed on regulated markets should also disclose information on sustainability matters responds to the needs of financial market participants for information from such undertakings in order to understand the risks and impacts of their investments, and to comply with the disclosure requirements laid down in Regulation (EU) 2019/2088.	(17) The requirement that undertakings not established in the Union but with securities listed on regulated markets or undertakings that are established in the Union but listed on markets outside the Union should also disclose information on sustainability matters responds to the needs of financial market participants for information from such undertakings in order to understand the risks and impacts of their investments, and to comply with the disclosure requirements laid down in Regulation (EU) 2019/2088.

Amendment  9

Proposal for a directive

Recital 18

Text proposed by the Commission	Amendment
(18) Considering the growing relevance of sustainability-related risks and taking into account that small and medium-sized enterprises (SMEs) listed on regulated markets comprise a significant proportion of all listed undertakings in the Union, in order to ensure investor protection it is appropriate to require that also those SMEs disclose information on sustainability matters. The introduction of this requirement will help to ensure that financial market participants can include smaller listed undertakings in investment portfolios on the basis that they report the sustainability information that financial market participants need. It will therefore help to protect and enhance the access of smaller listed undertakings to financial capital, and avoid discrimination against such undertakings on the part of financial market participants. The introduction of this requirement is also necessary to ensure that financial market participants have the information they need from investee undertakings to be able to comply with their own sustainability disclosure requirements laid down in Regulation (EU) 2019/2088. SMEs listed on regulated markets should, however, be provided with sufficient time to prepare for the application of the requirement to report sustainability information, due to their smaller size and more limited resources, and taking account of the difficult economic circumstances created by the COVID-19 pandemic. They should also be given the possibility to report according to standards that are proportionate to the capacities and resources of SMEs. Non-listed SMEs can also choose to use these proportionate standards on a voluntary basis. The SME standards will set a reference for undertakings that are within the scope of the Directive regarding the level of sustainability information that they could reasonably request from SME suppliers and clients in their value chains.	(18) Considering the growing relevance of sustainability-related risks and taking into account that small and medium-sized enterprises (SMEs) listed on regulated markets comprise a significant proportion of all listed undertakings in the Union, in order to ensure investor protection it is appropriate to require that also those SMEs and SMEs in high-risk sectors disclose information on sustainability matters. The reporting standards are not only necessary but also useful and constitute an opportunity for companies to demonstrate their commitment to sustainability matters, climate and ecological transition and to establish leading standards and thereby feed into their competitive advantage. The introduction of this requirement will help to ensure that financial market participants can include smaller listed undertakings in investment portfolios on the basis that they report the sustainability information that financial market participants need. It will therefore help to protect and enhance the access of smaller listed undertakings to financial capital, and avoid discrimination against such undertakings on the part of financial market participants. The introduction of this requirement is also necessary to ensure that financial market participants have the information they need from investee undertakings to be able to comply with their own sustainability disclosure requirements laid down in Regulation (EU) 2019/2088. SMEs listed on regulated markets and SMEs in high-risk sectors should, however, be provided with sufficient time to prepare for the application of the requirement to report sustainability information, due to their smaller size and more limited resources, and taking account of the difficult economic circumstances created by the COVID-19 pandemic. They should also be given the possibility to report according to standards that are proportionate to the capacities and resources of SMEs. Non-listed SMEs can also choose to use these proportionate standards on a voluntary basis. The SME standards will set a reference for undertakings that are within the scope of the Directive regarding the level of sustainability information that they could reasonably request from SME suppliers and clients in their value chains.

Amendment  10

Proposal for a directive

Recital 24

Text proposed by the Commission	Amendment
(24) The list of sustainability matters on which undertakings are required to report should be as coherent as possible with the definition of ‘sustainability factors’ laid down in Regulation (EU) 2019/2088. That list should also correspond to the needs and expectations of users and undertakings themselves, who often use the terms ‘environmental’, ‘social’ and ‘governance’ as a means to categorise the three main sustainability matters. The list of sustainability factors laid down in Regulation (EU) 2019/2088 does not explicitly include governance matters. The definition of sustainability matters in Directive 2013/34/EU should therefore be based on the definition of ‘sustainability factors’ laid down in Regulation (EU) 2019/2088, but with the addition of governance matters.	(24) The list of sustainability matters on which undertakings are required to report should be as coherent as possible with the definition of ‘sustainability factors’ laid down in Regulation (EU) 2019/2088. That list should also correspond to the needs and expectations of users and undertakings themselves, who often use the terms ‘environmental’, ‘social’ and ‘governance’ as a means to categorise the three main sustainability matters. The list of sustainability factors laid down in Regulation (EU) 2019/2088 does not explicitly include governance matters. The definition of sustainability matters in Directive 2013/34/EU should therefore be based on the definition of ‘sustainability factors’ laid down in Regulation(EU) 2019/2088, but with the addition of governance matters. The list of environmentally sustainable matters should be based on, and take account of, underlying indicators and methodologies set out in Regulation (EU) 2020/852 and in various delegated acts adopted pursuant to it, as they jointly create a classification system for environmentally sustainable economic activities.

Amendment  11

Proposal for a directive

Recital 26

Text proposed by the Commission	Amendment
(26) Articles 19a(1) and 29a(1) of Directive 2013/34/EU require undertakings to disclose information about five reporting areas: business model, policies (including due diligence processes implemented), the outcome of those policies, risks and risk management, and key performance indicators relevant to the business. Article 19a(1) of Directive 2013/34/EU does not contain explicit references to other reporting areas that users of information consider relevant, some of which align with disclosures included in international frameworks, including the recommendations of the Task Force on Climate-related Financial Disclosures. Disclosure requirements should be specified in sufficient detail to ensure that undertakings report information on their resilience to risks related to sustainability matters. In addition to the reporting areas identified in Articles 19a(1) and 29a(1) of Directive 2013/34/EU, undertakings should therefore be required to disclose information about their business strategy and the resilience of the business model and strategy to risks related to sustainability matters, any plans they may have to ensure that their business model and strategy are compatible with the transition to a sustainable and climate-neutral economy; whether and how their business model and strategy take account of the interests of stakeholders; any opportunities for the undertaking arising from sustainability matters; the implementation of the aspects of the business strategy which affect, or are affected by sustainability matters; any sustainability targets set by the undertaking and the progress made towards achieving them; the role of the board and management with regard to sustainability matters; the principal actual and potential adverse impacts connected with the undertaking’s activities; and how the undertaking has identified the information that they report on. Once the disclosure of elements such as targets and the progress towards achieving them is required, the separate requirement to disclose the outcomes of policies is no longer necessary.	(26) Articles 19a(1) and 29a(1) of Directive 2013/34/EU require undertakings to disclose information about five reporting areas: business model, policies (including due diligence processes implemented), the outcome of those policies, risks and risk management, and key performance indicators relevant to the business. Article 19a(1) of Directive 2013/34/EU does not contain explicit references to other reporting areas that users of information consider relevant, some of which align with disclosures included in international frameworks, including the recommendations of the Task Force on Climate-related Financial Disclosures. Disclosure requirements must be specified in sufficient detail to ensure that undertakings report information on their resilience to risks related to sustainability matters. In addition to the reporting areas identified in Articles 19a(1) and 29a(1) of Directive 2013/34/EU, undertakings should therefore be required to disclose information about their business strategy and the resilience of the business model and strategy to risks related to sustainability matters, any plans they may have to ensure that their business model and strategy are compatible with the transition to a sustainable and climate-neutral economy and should include information on, as appropriate, climate change mitigation and adaptation; the sustainable use and protection of water, marine and soil resources; the transition to a circular economy, including resource use; pollution prevention and control; and protection and restoration of biodiversity and ecosystems; whether and how their business model and strategy take account of the interests of stakeholders; any opportunities for the undertaking arising from sustainability matters; the implementation of the aspects of the business strategy which affect, or are affected by sustainability matters; any science-based and time-bound short-term, mid-term and long-term sustainability targets set by the undertaking and the progress made towards achieving them; the role of the board and management with regard to sustainability matters; the actual and potential adverse impacts connected with the undertaking’s activities; and how the undertaking has identified the information that they report on. Once the disclosure of elements such as targets and the progress towards achieving them is required, the separate requirement to disclose the outcomes of policies is no longer necessary.

Amendment  12

Proposal for a directive

Recital 27

Text proposed by the Commission	Amendment
(27) To ensure consistency with international instruments such as the UN Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance for Responsible Business Conduct, the due diligence disclosure requirements should be specified in greater detail than is the case in Article 19a(1), point (b), and Article 29a(1), point (b) of Directive 2013/34/EU. Due diligence is the process that undertakings carry out to identify, prevent, mitigate and remediate the principal actual and potential adverse impacts connected with their activities and identifies how they address those adverse impacts. Impacts connected with an undertaking’s activities include impacts directly caused by the undertaking, impacts to which the undertaking contributes, and impacts which are otherwise linked to the undertaking’s value chain. The due diligence process concerns the whole value chain of the undertaking including its own operations, its products and services, its business relationships and its supply chains. In alignment with the UN Guiding Principles on Business and Human Rights, an actual or potential adverse impact is to be considered principal where it measures among the greatest impacts connected with the undertaking’s activities based on: the gravity of the impact on people or the environment; the number of individuals that are or could be affected, or the scale of damage to the environment; and the ease with which the harm could be remediated, restoring the environment or affected people to their prior state.	(27) To ensure consistency with international instruments such as the UN Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance for Responsible Business Conduct, the due diligence disclosure requirements should be specified in greater detail than is the case in Article 19a(1), point (b), and Article 29a(1), point (b) of Directive 2013/34/EU. Due diligence is the process that undertakings carry out to identify, prevent, mitigate and remediate the principal actual and potential adverse impacts connected with their activities and identifies how they address those adverse impacts. Impacts connected with an undertaking’s activities include impacts directly caused by the undertaking, impacts to which the undertaking contributes, and impacts which are otherwise linked to the undertaking’s value chain. The due diligence process concerns the whole value chain of the undertaking including its own operations, its products and services, its business relationships and its supply chains. The definition of severe impacts should be based on the UN Guiding Principles on Business and Human Rights whereby the severity of impacts is to be judged by their scale, scope and irremediable character.

Amendment  13

Proposal for a directive

Recital 29

Text proposed by the Commission	Amendment
(29) Articles 19a(1) and 29a(1) of Directive 2013/34/EU do not specify whether the information to be reported is to be forward looking or information about past performance. There is currently a lack of forward-looking disclosures, which users of sustainability information especially value. Articles 19a and 29a of Directive 2013/34/EU should therefore specify that the sustainability information reported shall include forward-looking and retrospective, and both qualitative and quantitative information. Reported sustainability information should also take into account short, medium and long-term time horizons and contain information about the undertaking’s whole value chain, including its own operations, its products and services, its business relationships, and its supply chain, as appropriate. Information about the undertaking’s whole value chain would include information related to its value chain within the EU and information that covers third countries if the undertaking’s value chain extends outside the EU.	(29) Articles 19a(1) and 29a(1) of Directive 2013/34/EU do not specify whether the information to be reported is to be forward looking or retrospective information. There is currently a lack of forward-looking disclosures, which users of sustainability information especially value. Articles 19a and 29a of Directive 2013/34/EU should therefore specify that the sustainability information reported shall include forward-looking and retrospective, and both qualitative and quantitative information that is based on science-based, harmonised, comparable and uniform indicators, while not endangering the commercial position of the undertaking. Reported sustainability information should also take into account short, medium and long-term time horizons and contain information about the undertaking’s whole value chain, including its own operations, its products and services, its business relationships, and its supply chain, as appropriate. Information about the undertaking’s whole value chain would include information related to its value chain within the EU with reliable and sincere information that covers third countries if the undertaking’s value chain extends outside the EU.

Amendment  14

Proposal for a directive

Recital 32

Text proposed by the Commission	Amendment
(32) Undertakings under the scope of Articles 19a(1) and 29a(1) of Directive 2013/34/EU may rely on national, Union-based or international reporting frameworks, and where they do so, they have to specify which frameworks they relied upon. However, Directive 2013/34/EU does not require undertakings to use a common reporting framework or standard, and it does not prevent undertakings from choosing not to use any reporting framework or standards at all. As required by Article 2 of Directive 2014/95/EU, the Commission published in 2017 non-binding guidelines for undertakings under the scope of that Directive52 . In 2019, the Commission published additional guidelines, specifically on reporting climate-related information53 . The climate reporting guidelines explicitly incorporated the recommendations of the Task Force on Climate-related Financial Disclosures. Available evidence indicates that those non-binding guidelines did not have a significant impact on the quality of non-financial reporting by undertakings under the scope of Articles 19a and 29a of Directive 2013/34/EU. The voluntary nature of the guidelines means that undertakings are free to apply them or not. The guidelines can therefore not ensure on their own the comparability of information disclosed by different undertakings or the disclosure of all information that users consider relevant. That is why there is a need for mandatory common reporting standards to ensure that information is comparable and that all relevant information is disclosed. Building on the double-materiality principle, standards should cover all information that is material to users. Common reporting standards are also necessary to enable the audit and digitalisation of sustainability reporting and to facilitate its supervision and enforcement. The development of mandatory common sustainability reporting standards is necessary to progress to a situation in which sustainability information has a status comparable to that of financial information.	(32) Undertakings under the scope of Articles 19a(1) and 29a(1) of Directive 2013/34/EU may rely on national, Union-based or international reporting frameworks, and where they do so, they have to specify which frameworks they relied upon. However, Directive 2013/34/EU does not require undertakings to use a common reporting framework or standard, and it does not prevent undertakings from choosing not to use any reporting framework or standards at all. As required by Article 2 of Directive 2014/95/EU, the Commission published in 2017 non-binding guidelines for undertakings under the scope of that Directive52 . In 2019, the Commission published additional guidelines, specifically on reporting climate-related information53 . The climate reporting guidelines explicitly incorporated the recommendations of the Task Force on Climate-related Financial Disclosures. Available evidence indicates that those non-binding guidelines did not have a significant impact on the quality of non-financial reporting by undertakings under the scope of Articles 19a and 29a of Directive 2013/34/EU. The voluntary nature of the guidelines means that undertakings are free to apply them or not. The guidelines can therefore not ensure on their own the comparability, reliability and sincerity of the information disclosed by different undertakings or the disclosure of all information that users consider relevant. That is why there is a need for mandatory common reporting standards to ensure that information is comparable, reliable and sincere and that all relevant information is disclosed. Building on the double-materiality principle, standards should cover all information that is material to users. Common reporting standards are also necessary to enable the audit and digitalisation of sustainability reporting and to facilitate its supervision and enforcement. The development of mandatory common sustainability reporting standards is necessary to progress to a situation in which sustainability information has a status comparable to that of financial information.
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52 Communication from the Commission Guidelines on non-financial reporting (methodology for reporting non-financial information) (C/2017/4234).	52 Communication from the Commission Guidelines on non-financial reporting (methodology for reporting non-financial information) (C/2017/4234).
53 Communication from the Commission Guidelines on non-financial reporting: Supplement on reporting climate-related information (C/2019/4490).	53 Communication from the Commission Guidelines on non-financial reporting: Supplement on reporting climate-related information (C/2019/4490).

Amendment  15

Proposal for a directive

Recital 33

Text proposed by the Commission	Amendment
(33) No existing standard or framework satisfies the Union’s needs for detailed sustainability reporting by itself. Information required by Directive 2013/34/EU needs to cover information relevant from each of the materiality perspectives, needs to cover all sustainability matters and needs to be aligned, where appropriate, with other obligations under Union law to disclose sustainability information, including obligations laid down in Regulation (EU) 2020/852 and Regulation (EU) 2019/2088. In addition, mandatory sustainability reporting standards for Union undertakings must be commensurate with the level of ambition of the European Green Deal and the Union’s climate-neutrality objective for 2050. It is therefore necessary to empower the Commission to adopt Union sustainability reporting standards, enabling their rapid adoption and ensuring that the content of sustainability reporting standards are consistent with the Union’s needs.	(33) No existing standard or framework satisfies the Union’s needs for detailed sustainability reporting by itself. Nevertheless, there is an interest in ensuring that there is coherence and synergy between Union and global standards. Information required by Directive 2013/34/EU needs to cover information relevant from each of the materiality perspectives, needs to cover all sustainability matters and needs to be consistent and aligned, where appropriate, with other obligations under Union law to disclose sustainability information, including obligations laid down in Regulation (EU) 2020/852 and Regulation (EU) 2019/2088. That information should be based on science-based, harmonised, comparable and uniform indicators. In addition, mandatory sustainability reporting standards for Union undertakings must be commensurate with the level of ambition of the European Green Deal and the Union’s climate-neutrality objective for 2050 as well as intermediate targets under Regulation (EU) 2021/1119. It is therefore necessary to empower the Commission to adopt Union sustainability reporting standards, enabling their rapid adoption and ensuring that the content of sustainability reporting standards are consistent with the Union’s needs.

Amendment  16

Proposal for a directive

Recital 37

Text proposed by the Commission	Amendment
(37) Sustainability reporting standards should be proportionate, and should not impose unnecessary administrative burden on companies that are required to use them. In order to minimise disruption for undertakings that already report sustainability information, sustainability reporting standards should take account of existing standards and frameworks for sustainability reporting and accounting where appropriate. Those include the Global Reporting Initiative, the Sustainability Accounting Standards Board, the International Integrated Reporting Council, the International Accounting Standards Board, the Task Force on Climate-related Financial Disclosures, the Carbon Disclosure Standards Board, and CDP (formerly the Carbon Disclosure Project). Standards of the European Union should take account of any sustainability reporting standards developed under the auspices of International Financial Reporting Standards Foundation. To avoid unnecessary regulatory fragmentation that may have negative consequences for undertakings operating globally, European standards should contribute to the process of convergence of sustainability reporting standards at global level.	(37) Sustainability reporting standards should be proportionate, and should not impose unnecessary administrative burden on companies that are required to use them. In order to minimise disruption for undertakings that already report sustainability information, sustainability reporting standards should take account of existing standards and frameworks for sustainability reporting and accounting where appropriate. Those include the Global Reporting Initiative, the Sustainability Accounting Standards Board, the International Integrated Reporting Council, the International Accounting Standards Board, the Task Force on Climate-related Financial Disclosures, the Carbon Disclosure Standards Board, and CDP (formerly the Carbon Disclosure Project) and the Greenhouse Gas Protocol in the calculation of greenhouse gas emissions, including scope 1, 2 and 3 from undertakings from all sectors. Standards of the European Union should take account of any sustainability reporting standards developed under the auspices of International Financial Reporting Standards Foundation, in particular of the International Sustainability Standards Board (ISSB). To avoid unnecessary regulatory fragmentation that may have negative consequences for undertakings operating globally, European standards should contribute to the process of convergence of sustainability reporting standards at global level by supporting the work of the International Sustainability Standards Board.

Amendment  17

Proposal for a directive

Recital 40

Text proposed by the Commission	Amendment
(40) It should be ensured that the information reported by undertakings in accordance with the sustainability reporting standards meet the needs of users. The reporting standards should therefore specify the information that undertakings are to disclose on all major environmental factors, including their impacts and dependencies on climate, air, land, water and biodiversity. Regulation (EU) 2020/852 provides a classification of the environmental objectives of the Union. For reasons of coherence, it is appropriate to use a similar classification to identify the environmental factors that should be addressed by sustainability reporting standards. The reporting standards should consider and specify any geographical or other contextual information that undertakings should disclose to provide an understanding of their principal impacts on sustainability matters and the principal risks to the undertaking arising from sustainability matters.	(40) It should be ensured that the information reported by undertakings in accordance with the sustainability reporting standards meet the needs of users. The reporting standards should therefore specify the information that undertakings are to disclose on all major environmental factors, including their impacts and dependencies on climate, air, land, water and biodiversity specifying, if any of its activities cause significant harm to those environmental factors. Regulation (EU) 2020/852 provides a classification of the environmental objectives of the Union. For reasons of coherence, it is necessary to use a similar classification to identify the environmental factors that should be addressed by sustainability reporting standards, that closely align to that Regulation. The reporting standards should consider and specify any geographical or other contextual information that undertakings should disclose to provide an understanding of their impacts on sustainability matters and the risks to the undertaking arising from sustainability matters, including from the implementation of Union policies on climate change and the energy transition.

Amendment  18

Proposal for a directive

Recital 41

Text proposed by the Commission	Amendment
(41) With regard to climate-related information, users are interested in knowing about undertakings’ physical and transition risks, and about their resilience to different climate scenarios. They are also interested in the level and scope of greenhouse gas emissions and removals attributed to the undertaking, including the extent to which the undertaking uses offsets and the source of those offsets. Achieving a climate neutral economy requires the alignment of greenhouse gas accounting and offset standards. Users need reliable information regarding offsets that addresses concerns regarding possible double-counting and overestimations, given the risks to the achievement of climate-related targets that double-counting and overestimations can create. The reporting standards should therefore specify the information undertakings should report with regard to those matters.	(41) With regard to climate-related information, users are interested in knowing about undertakings’ physical and transitional risks and opportunities, and about their resilience to different climate and climate transition scenarios. They are also interested in the level and scope of greenhouse gas emissions and removals attributed to the undertaking, including the extent to which the undertaking uses offsets and the source of those offsets. Achieving a climate neutral economy requires the alignment of greenhouse gas accounting and offset standards. Users need reliable information regarding offsets that addresses concerns regarding actual carbon removal, possible double-counting and overestimations, given the risks to the achievement of climate-related targets that double-counting and overestimations can create. Those parties are also interested in knowing the efforts made by undertakings to effectively reduce absolute greenhouse gas emissions. The reporting standards should therefore specify the information undertakings should report with regard to those matters.

Amendment  19

Proposal for a directive

Recital 42

Text proposed by the Commission	Amendment
(42) Achieving a climate neutral and circular economy and a toxic-free environment requires the full mobilisation of all economic sectors. Reducing energy use and increasing energy efficiency is key in this respect as energy is used across supply chains. Energy aspects should therefore be duly considered in sustainability reporting standards, in particular in relation to environmental matters.	(42) Achieving a climate neutral and circular economy and a toxic-free environment, without any diffuse pollution requires the full mobilisation of all economic sectors. Reducing energy use and increasing energy efficiency is key in this respect as energy is used across supply chains. Energy aspects should therefore be duly considered in sustainability reporting standards, in particular in relation to environmental and climate-related matters.

Amendment  20

Proposal for a directive

Recital 43

Text proposed by the Commission	Amendment
(43) Sustainability reporting standards should specify the information that undertakings should disclose on social factors, including employee factors and human rights. Such information should cover the impacts of undertakings on people, including on human health. The information that undertakings disclose about human rights should include information about forced labour in their value chains where relevant. Reporting standards that address social factors should specify the information that undertakings should disclose with regard to the principles of the European Pillar of Social Rights that are relevant to businesses, including equal opportunities for all and working conditions. The European Pillar of Social Rights Action Plan adopted in March 2021 calls for stronger requirements on undertakings to report on social issues. The reporting standards should also specify the information that undertakings should disclose with regard to the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the fundamental conventions of the International Labour Organisation, and the Charter of Fundamental Rights of the European Union.	(43) Sustainability reporting standards should specify the information that undertakings should disclose on social factors, including employee factors and human rights. Such information should cover the impacts of undertakings on people, including work-related conditions and their impact on human health. The information that undertakings disclose about human rights should include information about forced labour in their value chains where relevant but in no way should such reports replace the public authorities’ responsibility to address importation of goods produced as a result of human rights abuses, including forced labour, by trade policy and diplomacy means. Reporting standards that address social factors should specify the information that undertakings should disclose with regard to the principles of the European Pillar of Social Rights that are relevant to businesses, including equal opportunities for all and working conditions. The European Pillar of Social Rights Action Plan adopted in March 2021 calls for stronger requirements on undertakings to report on social issues. The reporting standards should also specify the information that undertakings should disclose with regard to the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the fundamental conventions of the International Labour Organisation, the European Social Charter, the European Convention on Human Rights and its additional protocols, the Charter of Fundamental Rights of the European Union as well as the United Nations Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises and the UNECE Convention on access to information, public participation in decision making and access to justice in environmental matters (‘Aarhus Convention’).

Amendment  21

Proposal for a directive

Recital 47

Text proposed by the Commission	Amendment
(47) To meet the information needs from users in a timely manner, and in particular given the urgency to meet the information needs of financial market participants subject to the requirements laid down in the delegated acts adopted pursuant to Article 4, paragraphs 6 and 7 of Regulation (EU) 2019/2088, the Commission should adopt a first set of reporting standards by 31 October 2022. That set of reporting standards should specify the information that undertakings should disclose with regard to all reporting areas and sustainability matters, and that financial market participants need to comply with the disclosure obligations laid down in Regulation (EU) 2019/2088. The Commission should adopt a second set of reporting standards at the latest by 31 October 2023, specifying complementary information that undertakings should disclose about sustainability matters and reporting areas where necessary, and information that is specific to the sector in which an undertaking operates. The Commission should review the standards every 3 years to take account of relevant developments, including the development of international standards.	(47) To meet the information needs from users in a timely manner, and in particular given the urgency to meet the information needs of financial market participants subject to the requirements laid down in the delegated acts adopted pursuant to Article 4, paragraphs 6 and 7 of Regulation (EU) 2019/2088, the Commission should adopt a first set of reporting standards by 31 October 2022. That set of reporting standards should specify the information that undertakings should disclose with regard to all reporting areas and sustainability matters, and that financial market participants need to comply with the disclosure obligations laid down in Regulation (EU) 2019/2088. The Commission should adopt a second set of reporting standards at the latest by 1 April 2023, specifying complementary information that undertakings should disclose about sustainability matters and reporting areas where necessary, and information that is specific to the sector in which an undertaking operates. The Commission should prioritise the adoption of standards specific to undertakings operating in high-risk sectors. The Commission should review the standards every three years to take account of relevant developments, including the development of international standards.

Amendment  22

Proposal for a directive

Recital 47 a (new)

Text proposed by the Commission	Amendment
	(47 a) Undertakings in certain high emitting sectors such as the extractive and fossil fuel industries, should take into account the relevant sectoral guidance from the IPCC and the International Energy Agency. Undertakings active in the extractive industry as defined in Article 41(1) of Directive 2013/34/EU should be subject to additional sustainability disclosure, as they have high sustainability risks and impacts in terms of greenhouse gas emissions, pollution, biodiversity and human health, thereby bringing particular exposure to the climate and energy transformation in terms of their risks and opportunities.

Amendment  23

Proposal for a directive

Recital 49

Text proposed by the Commission	Amendment
(49) To allow for the inclusion of the reported sustainability information in the European single access point, Member States should ensure that undertakings publish the duly approved annual financial statements and the management report in the prescribed electronic format, and ensure that management reports containing sustainability reporting are made available, without delay following their publication, to the relevant officially appointed mechanism referred to in Article 21(2) of Directive 2004/109/EC.	(49) To allow for and ensure the inclusion of the reported sustainability information in the European single access point, Member States should ensure that undertakings publish the duly approved annual financial statements and the management report in the prescribed electronic format, and ensure that management reports containing sustainability reporting are made available, without delay following their publication, to the relevant officially appointed mechanism referred to in Article 21(2) of Directive 2004/109/EC.

Amendment  24

Proposal for a directive

Recital 71

Text proposed by the Commission	Amendment
(71) Member States are invited to assess the impact of their transposition act on SMEs in order to ensure that they are not disproportionately affected, giving specific attention to micro-enterprises and to the administrative burden, and to publish the results of such assessments. Member States should consider introducing measures to support SMEs in applying the voluntary simplified reporting standards.	(71) The Commission should assess the impact of the transposition act on SMEs in order to ensure that they are not disproportionately affected, giving specific attention to micro-enterprises and to the administrative burden, and to publish the results of such assessments. To support SMEs in applying the voluntary simplified reporting standards, the Commission should create an online tool to facilitate reporting by small and medium-sized undertakings. In order to avoid an excessive administrative burden for SMEs under 250 employees, this should be done through a free of charge, easy to use and accessible online tool.

Amendment  25

Proposal for a directive

Article 1 – paragraph 1 – point 2

Directive 2013/34/EU

Article 2 – paragraph 1 – point 18

Text proposed by the Commission	Amendment
(18) ‘sustainability reporting’ means reporting information related to sustainability matters in accordance with Articles 19a, 19d and 29a of this Directive;	(18) ‘sustainability reporting’ means reporting information related to sustainability matters in accordance with Articles 19a, 19d and 29a of this Directive, where the environmental matters are based on, and take account of, underlying indicators and methodologies set out in Regulation (EU) 2020/852 and the delegated acts adopted pursuant to it.

Amendment  26

Proposal for a directive

Article 1 – paragraph 1 – point 2

Directive 2013/34/EU

Article 2 – paragraph 1 – point 20 a (new)

Text proposed by the Commission	Amendment
	(20 a) 'high-risk sector' means a sector that is associated, as a result of its size, business and value or supply chain characteristics, with a high likelihood of actual or potential severe impacts on sustainability matters.

Amendment  27

Proposal for a directive

Article 1 – paragraph 1 – point 2

Directive 2013/34/EU

Article 2 – paragraph 1 – point 20 b (new)

Text proposed by the Commission	Amendment
	(20 b) ‘science-based target’ means a target defined on the basis of conclusive scientific environmental evidence and with independent scientific validation, that when achieved by the undertaking, ensures that the undertaking’s impacts, as specified in Article 19a, are aligned with the sustainability goals and criteria of the Union for the specific environmental issue. In the specific case of climate change mitigation, this means a target enabling alignment of the undertaking’s impacts on climate change with the European Climate Law objectives, in particular of climate neutrality by2050 at the latest, and with a 1,5°C climate scenario with no or limited overshoot as defined by the IPCC.

Amendment  28

Proposal for a directive

Article 1 – paragraph 1 – point 2

Directive 2013/34/EU

Article 2 – paragraph 1 – point 20 c (new)

Text proposed by the Commission	Amendment
	(20 c) ‘severe impacts’ means adverse impacts on people, climate and the environment connected to the undertaking’s operations and value chain that, based on the gravity of the impact on the sustainability matter, including its scale, scope and irremediable character, cause the greatest harm relative to other impacts identified by the undertaking.

Amendment  29

Proposal for a directive

Article 1 – paragraph 1 – point 2

Directive 2013/34/EU

Article 2 – paragraph 1 – point 20 d (new)

Text proposed by the Commission	Amendment
	(20 d) “climate neutrality” and “net-zero” shall be read in accordance with the Article 2 of the Regulation (EU) 2021/1119 (“European Climate Law”).

Amendment  30

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 1

Text proposed by the Commission	Amendment
1. Large undertakings and, as of 1 January 2026, small and medium-sized undertakings which are undertakings referred to in Article 2, point (1), point (a), shall include in the management report information necessary to understand the undertaking’s impacts on sustainability matters, and information necessary to understand how sustainability matters affect the undertaking’s development, performance and position.	1. Large undertakings and, as of 1 January 2026, small and medium-sized undertakings which are undertakings referred to in Article 2, point (1), point (a), and medium-sized undertakings which are operating in high-risk sectors and undertakings registered in a non-EU/EEA country with significant business in the Union, shall include in the management report information necessary to understand the undertaking’s impacts on sustainability matters, and information necessary to understand how sustainability matters affect the undertaking’s development, performance and position.

Amendment  31

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 1 a (new)

Text proposed by the Commission	Amendment
	1 a. By 30 June 2023, the Commission shall adopt a delegated act in accordance with Article 49 to supplement this Directive as regards which sectors are to be considered high-risk sectors according to second level of NACE Rev. 2 as referred to in Article 2, paragraph 1, point (b), of Regulation (EC) No1893/2006. The delegated act shall take into account the work of the Platform on Sustainable Finance established in accordance with Article 20 of Regulation (EU) 2020/852 and the OECD Due Diligence Guidance for Responsible Business Conduct, including for mining, extractive industries, management of nuclear and radioactive waste, agriculture and food production, fertilizers, pesticides and antibiotics, fisheries and forestry, clothing and footwear, plastic production, finance and international shipping. When preparing such delegated act, the Commission shall consider whether mandatory reporting would particularly facilitate the access to financial capital for the small and medium sized-undertakings concerned or if the disclosure of information would have a particular benefit for other stakeholders.

Amendment  32

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 2 – subparagraph 1 – point a – point i

Text proposed by the Commission	Amendment
(i) the resilience of the undertaking's business model and strategy to risks related to sustainability matters;	(i) the resilience of the undertaking's business model and strategy to risks related to sustainability matters, in particular short, medium and long-term risks associated with climate change and the transition to a climate-neutral economy, including from physical impacts of climate change, economic disruptions, transitional impacts and regulatory impacts that affect the undertaking, including whether the resilience of the business model has been verified by using a range of climate scenarios;

Amendment  33

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 2 – subparagraph 1 – point a – point ii

Text proposed by the Commission	Amendment
(ii) the opportunities for the undertaking related to sustainability matters;	(ii) the opportunities for the undertaking related to sustainability matters, in particular opportunities related to reductions in greenhouse gas emissions and the transition to a climate-neutral and circular economy;

Amendment  34

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 2 – subparagraph 1 – point a – point iii

Text proposed by the Commission	Amendment
(iii) the plans of the undertaking to ensure that its business model and strategy are compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement;	(iii) the plans of the undertaking, taking into account the entire value chain, including transition plans with implementing actions and related financial and investment plans, and short-term and medium-term absolute emission reduction targets for 2025 and 2030, reviewed every five years up to 2050, to ensure that its overall business model and strategy are compatible with the transition to a sustainable economy and with the limiting of global warming to 1,5 °C in line with the Paris Agreement, with no or limited overshoot and pursuant to the latest recommendations of the IPCC and the European Scientific Advisory Board on Climate Change, and that the undertaking´s operations within the Union are aligned with the objective to achieve climate neutrality by 2050 at the latest, set out in the European Climate Law; and
	- where relevant, the degree of exposure of the undertaking to sectors listed in Divisions 05, 06,09, 19, 35, 46.71, 73.1 of Annex I to Regulation (EC) No1893/2006, insofar as they relate to coal, oil, gas-related activities;
	- where relevant, undertakings the activities of which particularly impact natural resources and/or that operate in sectors particularly relying on natural resources, shall disclose the nature-related impacts on and risks for biodiversity and ecosystems that are associated with the undertaking's business model, and plans by the undertaking to mitigate the loss of nature and restore nature in line with the latest science;

Amendment  35

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 2 – subparagraph 1 – point a – point v

Text proposed by the Commission	Amendment
(v) how the undertaking’s strategy has been implemented with regard to sustainability matters;	(v) how sustainability matters and related science-based targets have been integrated into the undertaking’s strategy, and how the undertaking’s strategy has been implemented with regard to sustainability matters;

Amendment  36

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 2 – subparagraph 1 – point b

Text proposed by the Commission	Amendment
(b) a description of the targets related to sustainability matters set by the undertaking and of the progress the undertaking has made towards achieving those targets;	(b) a description of the time-bound short-term, mid-term and long-term targets related to sustainability matters set by the undertaking with regard to the undertaking’s principal risks and opportunities and severe impacts on sustainability matters, whether such targets are science-based and of the progress the undertaking has made towards achieving those targets, including a clearly defined path and implementing actions to reach the targets;

Amendment  37

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 2 – subparagraph 1 – point c

Text proposed by the Commission	Amendment
(c) a description of the role of the administrative, management and supervisory bodies with regard to sustainability matters;	(c) a description of the role of the administrative, management and supervisory bodies with regard to sustainability matters, including:
	(i) their role in the discussions related to the results of any due diligence process implemented with regard to sustainability matters to identify adverse environmental, climate or public health impacts,
	(ii) their role in the discussions regarding the principal risks and opportunities for the undertaking related to sustainability matters;
	(iii) their role in the approval, implementation and monitoring of the undertaking’s strategy and targets related to sustainability matters;
	(iv) the expertise on sustainability matters of the members of the administrative, management and supervisory bodies;

Amendment  38

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 2 – subparagraph 1 – point d

Text proposed by the Commission	Amendment
(d) a description of the undertaking’s policies in relation to sustainability matters;	(d) a description of the undertaking’s policies in relation to sustainability matters, including, at minimum, with regard to identified severe impacts, risks and opportunities;

Amendment  39

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 2 – subparagraph 1 – point e – point i

Text proposed by the Commission	Amendment
(i) the due diligence process implemented with regard to sustainability matters;	(i) the due diligence process implemented with regard to sustainability matters in line with applicable legislation at Union level on due diligence, including information on:
	- identification, assessment and prioritisation of actual and potential severe impacts throughout the undertaking’s value chain;
	- cessation, prevention and mitigation of such impacts;

Amendment  40

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 2 – subparagraph 1 – point e – point ii

Text proposed by the Commission	Amendment
(ii) the principal actual or potential adverse impacts connected with the undertaking’s value chain, including its own operations, its products and services, its business relationships and its supply chain;	(ii) the actual or potential severe impacts and the significant harm in any of the environmental categories, related to the six environmental objectives of Regulation (EU) 2020/852, connected with the undertaking’s value chain, including its own operations, its products and services, its business relationships and its supply chain;

Amendment  41

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 2 – subparagraph 1 – point e – point iii

Text proposed by the Commission	Amendment
(iii) any actions taken, and the result of such actions, to prevent, mitigate or remediate actual or potential adverse impacts;	(iii) any actions taken, and the result of such actions, to prevent, mitigate or remediate actual or potential severe impacts and the effectiveness of their results;

Amendment  42

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 2 – subparagraph 1 – point f a (new)

Text proposed by the Commission	Amendment
	(f a) the sustainability risks relevant to the undertaking as defined in Article 2 of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector, enabling financial market participants to meet their sustainability risk disclosure and mitigation obligations under that Regulation;

Amendment  43

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 2 – subparagraph 1 – point g

Text proposed by the Commission	Amendment
(g) indicators relevant to the disclosures referred to in points (a) to (f).	(g) indicators relevant to the disclosures referred to in points (a) to (f), including key performance indicators set out in the delegated act supplementing Article 8 of the Regulation (EU) 2020/852.

Amendment  44

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 2 – subparagraph 3

Text proposed by the Commission	Amendment
Undertakings shall report the process carried out to identify the information that they have included in the management report in accordance with paragraph 1 and in this process they shall take account of short, medium and long-term horizons.	Undertakings shall report the process carried out to identify the information that they have included in the management report in accordance with paragraph 1, including how it is informed by any due diligence process carried out by the undertaking, and in this process they shall take account of short, medium and long-term horizons.

Amendment  45

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 3 – subparagraph 2

Text proposed by the Commission	Amendment
Where appropriate, the information referred to in paragraphs 1 and 2 shall contain information about the undertaking’s value chain, including the undertaking’s own operations, products and services, its business relationships and its supply chain.	Where necessary for the understanding of the undertaking’s principal impacts or risks, the information referred to in paragraphs 1 and 2 shall contain information about the undertaking’s value chain, including the undertaking’s own operations, products and services, its business relationships and its supply chain.

Amendment  46

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 3 – subparagraph 3

Text proposed by the Commission	Amendment
Where appropriate, the information referred to in paragraphs 1 and 2 shall also contain references to, and additional explanations of, other information included in the management report in accordance with Article 19 and amounts reported in the annual financial statements.	Where necessary for the understanding of the undertaking’s impacts or risks, the information referred to in paragraphs 1 and 2 shall also contain references to, and additional explanations of, other information included in the management report in accordance with Article 19 and amounts reported in the annual financial statements.

Amendment  47

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 3 – subparagraph 4

Text proposed by the Commission	Amendment
Member States may allow information relating to impending developments or matters in the course of negotiation to be omitted in exceptional cases where, in the duly justified opinion of the members of the administrative, management and supervisory bodies, acting within the competences assigned to them by national law and having collective responsibility for that opinion, the disclosure of such information would be seriously prejudicial to the commercial position of the undertaking, provided that such omission does not prevent a fair and balanced under­standing of the undertaking's development, performance, position and impact of its activity.	Member States may allow information relating to impending developments or matters in the course of negotiation to be omitted in exceptional cases where, in the duly justified opinion of the members of the administrative, management and supervisory bodies, acting within the competences assigned to them by national law and having collective responsibility for that opinion, the disclosure of such information would be seriously prejudicial to the commercial position of the undertaking, provided that such omission does not prevent a fair and balanced under­standing of the undertaking's development, performance, position, risks and impact of its activity.

Amendment  48

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19 a – paragraph 3 – subparagraph 4 a (new)

Text proposed by the Commission	Amendment
	The Commission shall prepare non-binding guidelines, taking into consideration technical advice from the European Financial Reporting Advisory Group (EFRAG) and other relevant expertise, on appropriate and user-friendly methodology to generate the forward-looking information to be provided in the reporting.

Amendment  49

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 7 – subparagraph 3

Text proposed by the Commission	Amendment
The Member State by which the undertaking that is exempted from the obligations set out in paragraphs 1 to 4 is governed, may require that the consolidated management report referred to in the first subparagraph of this paragraph is published in an official language of the Member State or in a language customary in the sphere of international finance, and that any necessary translation into those languages is certified.	deleted

Amendment  50

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1 – subparagraph 1 – introductory part

Text proposed by the Commission	Amendment
1. The Commission shall adopt delegated acts in accordance with Article 49 to provide for sustainability reporting standards. Those sustainability reporting standards shall specify the information that undertakings are to report in accordance with Articles 19a and 29a and, where relevant, shall specify the structure in which that information shall be reported. In particular:	1. The Commission shall adopt delegated acts in accordance with Article 49 to provide for sustainability reporting standards. European standards shall support and contribute to the process to develop standards by the International Sustainability Standards Board (ISSB). Synergies shall be sought between European standards and international standards. The sustainability reporting standards shall ensure proportionality and simplicity and that stakeholders receive relevant and material information. Those sustainability reporting standards shall specify the information that undertakings are to report in accordance with Articles 19a and 29a and, where relevant, shall specify the structure in which that information shall be reported. In particular:

Amendment  51

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1 – subparagraph 1 – point a

Text proposed by the Commission	Amendment
(a) by 31 October 2022, the Commission shall adopt delegated acts specifying the information that undertakings are to report in accordance with paragraphs 1 and 2 of Article 19a, and at least specifying information corresponding to the needs of financial market participants subject to the disclosure obligations of Regulation (EU) 2019/2088.	(a) by 1 April 2023, the Commission shall adopt delegated acts specifying the information that undertakings are to report in accordance with paragraphs 1 and 2 of Article 19a, and at least specifying information corresponding to the needs of financial market participants subject to the disclosure obligations of Regulation (EU) 2019/2088.

Amendment  52

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1 – subparagraph 1 – point b – point ii

Text proposed by the Commission	Amendment
(ii) information that undertakings shall report that is specific to the sector in which they operate.	(ii) information that undertakings shall report that is specific to the sector in which they operate, prioritizing high-risk sectors as defined in the delegated act adopted pursuant to Article 19a (1a).

Amendment  53

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 1

Text proposed by the Commission	Amendment
2. The sustainability reporting standards referred to in paragraph 1 shall require that the information to be reported is understandable, relevant, representative, verifiable, comparable, and is represented in a faithful manner.	2. The sustainability reporting standards referred to in paragraph 1 shall require that the information to be reported is understandable, relevant, representative, verifiable, comparable, and is represented in a faithful manner. They shall therefore integrate disclosures on both risks and opportunities related to sustainability, be comprehensive by taking into account the entire scope of responsibility regarding the value chain of the company, including suppliers and sub-contractors, provide both quantitative and qualitative information, apply a sector-specific approach, and provide information with time and sector comparisons. Where relevant and possible, the standards shall be science-based and measurable.

Amendment  54

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point a – point i

Text proposed by the Commission	Amendment
(i) climate change mitigation;	(i) climate change mitigation, including:
	- emissions on all scopes of greenhouse gas emissions, including scope 1, 2 and 3 greenhouse gas emissions, and other relevant indicators, as appropriate;
	- transition, financial and investment plans related to greenhouse gas emissions and any emission reduction targets of the undertaking and any targeted date to achieve climate neutrality; and
	- the alignment of the undertaking’s business model and strategy with the goal of limiting of global warming to 1,5 °C with no or limited overshoot;

Amendment  55

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point a – point iii

Text proposed by the Commission	Amendment
(iii) water and marine resources;	(iii) the sustainable use and protection of water, marine and soil resources;

Amendment  56

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point a – point iv

Text proposed by the Commission	Amendment
(iv) resource use and circular economy;	(iv) the transition to a circular economy, including resource use;

Amendment  57

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point a – point v

Text proposed by the Commission	Amendment
(v) pollution;	(v) pollution prevention and control;

Amendment  58

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point a – point vi

Text proposed by the Commission	Amendment
(vi) biodiversity and ecosystems;	(vi) protection and restoration of biodiversity and ecosystems;

Amendment  59

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point a – subparagraph 2 a (new)

Text proposed by the Commission	Amendment
	When specifying the information about environmental factors that undertakings are to disclose, coherence shall be ensured with the definitions in Article 2 and the reporting requirements of Article 8 of Regulation (EU) 2020/852 and the delegated acts adopted pursuant to that Regulation.

Amendment  60

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 3 – point g

Text proposed by the Commission	Amendment
(g) Directive 2003/87/EC of the European Parliament and of the Council*13;	(g) Regulation (EU) 2021/1119 of the European Parliament and of the Council*13;
________	______
*13 Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32).	*13 Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European Climate Law’) OJ L 243, 9.7.2021, p. 1–17.

Amendment  61

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 3 – point g a (new)

Text proposed by the Commission	Amendment
	(g a) Directive 2003/87/EC of the European Parliament and of the Council*13a
	__________________
	*13a Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32).

Amendment  62

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19c – paragraph 2 a (new)

Text proposed by the Commission	Amendment
	The Commission shall create an online tool to facilitate reporting by small and medium-sized undertakings.

Amendment  63

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point a – point i

Text proposed by the Commission	Amendment
(i) the resilience of the group's business model and strategy to risks related to sustainability matters;	(i) the resilience of the group's business model and strategy to risks related to sustainability matters, in particular short, medium, and long-term risks associated with climate change and the transition to a climate-neutral economy, including from physical impacts of climate change, economic disruptions, and transitional and regulatory impacts that affect the group, including whether the resilience of the business model has been verified by using a range of climate scenarios;

Amendment  64

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point a – point ii

Text proposed by the Commission	Amendment
(ii) the opportunities for the group related to sustainability matters;	(ii) the opportunities for the group related to sustainability matters, in particular opportunities related to reductions in greenhouse gas emissions and the transition to a climate-neutral and circular economy;

Amendment  65

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point a – point iii

Text proposed by the Commission	Amendment
(iii) the plans of the group to ensure that the group’s business model and strategy compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement;	(iii) the plans of the group, taking into account the entire value chain, including transition plans with implementing actions and related financial and investment plans and short-term and medium-term absolute emission reduction targets for 2025 and 2030, reviewed every five years up to 2050, to ensure that its overall business model and strategy are compatible with the transition to a sustainable economy and with the limiting of global warming to 1,5 °C in line with the Paris Agreement, with no or limited overshoot and pursuant to the latest recommendations of the IPCC and the European Scientific Advisory Board on Climate Change, and that the group´s operations within the Union are aligned with the objective to achieve climate neutrality by 2050 at the latest, set out in the European Climate Law; and
	- where relevant, the degree of exposure of the group to sectors listed in Divisions 05, 06, 09, 19, 35, 46.71, 73.1 of Annex I to Regulation (EC) No 1893/2006 insofar as they relate to coal, oil, gas-related activities;
	- where relevant, groups, the activities of which particularly impact natural resources and/or that operate in sectors particularly reliant on natural resources, shall disclose the nature-related impacts and risks on biodiversity and ecosystems that are associated with the groups’ business model, and the groups’ plans to mitigate the loss of nature and to restore nature in line with the latest science;

Amendment  66

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point a – point v

Text proposed by the Commission	Amendment
(v) how the group’s strategy has been implemented with regard to sustainability matters;	(v) how sustainability matters and related science-based targets have been integrated into the group’s strategy, and how the group’s strategy has been implemented with regard to sustainability matters

Amendment  67

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point b

Text proposed by the Commission	Amendment
(b) a description of the targets related to sustainability matters set by the group and of the progress of the undertaking towards achieving them;	(b) a description of the time-bound short-term, mid-term and long-term targets related to sustainability matters set by the group with regard to the group’s principal risks, opportunities and severe impacts as regards sustainability matters, whether such targets are science-based and of the progress the group has made towards achieving those targets, including a clearly defined path and implementing actions to reach the targets;

Amendment  68

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point c

Text proposed by the Commission	Amendment
(c) a description of the role of the administrative, management and supervisory bodies with regard to sustainability matters;	(c) a description of the role of the administrative, management and supervisory bodies with regard to sustainability matters, including:
	(i) their role in the discussions related to the results of any due diligence process implemented with regard to sustainability matters to identify adverse environmental, climate or public health impacts,
	(ii) their role in the discussions regarding the principal risks to the undertaking and opportunities for the undertaking related to sustainability matters;
	(iii) their role in the approval, implementation and monitoring of the undertaking’s strategy and targets related to sustainability matters;
	(iv) the expertise on sustainability matters of the members of the administrative, management and supervisory bodies;

Amendment  69

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point d

Text proposed by the Commission	Amendment
(d) a description of the group’s policies in relation to sustainability matters;	(d) a description of the group’s policies in relation to sustainability matters, including, at minimum, with regard to identified severe impacts and risks and opportunities;

Amendment  70

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point e – point i

Text proposed by the Commission	Amendment
(i) the due diligence process implemented with regard to sustainability matters;	(i) the due diligence process implemented with regard to sustainability matters, in accordance with applicable legislation at Union level on due diligence, including information on:
	- identification, assessment and prioritisation of actual and potential severe impacts;
	- cessation, prevention and mitigation of such impacts;

Amendment  71

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point e – point ii

Text proposed by the Commission	Amendment
(ii) the principal actual or potential adverse impacts connected with the group’s value chain, including its own operations, its products and services, its business relationships and its supply chain;	(ii) the actual or potential severe impacts and the significant harm in any of the environmental categories, related to the six environmental objectives of the Regulation (EU) 2020/852, connected with the group’s value chain, including its own operations, its products and services, its business relationships and its supply chain;

Amendment  72

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point e – point iii

Text proposed by the Commission	Amendment
(iii) any actions taken, and the result of such actions, to prevent, mitigate or remediate actual or potential adverse impacts;	(iii) any actions taken, and the result of such actions, to prevent, mitigate or remediate actual or potential severe impacts and the effectiveness of those actions;

Amendment  73

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point f a (new)

Text proposed by the Commission	Amendment
	(f a) the sustainability risks relevant to the group as defined in Article 2 of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector, enabling financial market participants to meet their sustainability risk disclosure and mitigation obligations under that Regulation;

Amendment  74

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point g

Text proposed by the Commission	Amendment
(g) indicators relevant to the relevant to the disclosures referred to in points (a) to (f).	(g) indicators relevant to the relevant to the disclosures referred to in points (a) to (f) including key performance indicators set out in the delegated act supplementing Article 8 of the Regulation (EU) 2020/852.

Amendment  75

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 3 a (new)

Text proposed by the Commission	Amendment
	For a parent undertaking that publicly pledges to align its business model, strategy and operations to a transition towards an economy compatible with the Paris Agreement, or to the objective of the Union’s “climate neutrality” or " net-zero", the information referred to in paragraph 2, point (a) (iii) shall contain a detailed description of the following elements:
	(i) the climate scenario of 1,5 °C used to assess the vulnerability to and the negative impacts on the climate of the group, and to calculate its transition pathway; where publicly available scenarios are not used, a robust justification shall be provided regarding the reasons they are deemed not adequate;
	(ii) short-term and mid-term targets based on the best scientific knowledge available, and on existing international initiatives, where relevant, including for at least the years 2030 and 2040;
	(iii) the strategy conceived by the group to achieve the long term and the interim targets defined in point (ii);
	(iv) periodic reports on the progress achieved towards the long term and the interim targets;
	(v) evidence of the coherence between the emission reduction strategy of the group and the sectoral emission reduction pathways; where publicly available pathways are not used, a robust justification shall be provided regarding the reasons they are deemed not adequate;
	(vi) the relevance and the role of offsets, natural and artificial sinks, carbon avoidance, capture and storage and carbon usage technologies, if deemed necessary by the undertaking, to achieve the long- and interim targets set by the group.

Amendment  76

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 3 – subparagraph 1

Text proposed by the Commission	Amendment
3. The information referred to in paragraphs 1 and 2 shall contain forward-looking information and information about past performance, and qualitative and quantitative information. This information shall take into account short, medium and long-term time horizons, where appropriate.	3. The information referred to in paragraphs 1 and 2 shall contain forward-looking information and information about past performance, and qualitative and quantitative information. This information shall take into account short, medium and long-term time horizons, where necessary for the understanding of the group’s principal impacts or risks.

Amendment  77

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 3 – subparagraph 2

Text proposed by the Commission	Amendment
The information referred to in paragraphs 1 and 2 shall include information about the group’s value chain, including its own operations, its products and services, its business relationships and its supply chain, where appropriate.	The information referred to in paragraphs 1 and 2 shall include information about the group’s value chain, including its own operations, its products and services, its business relationships and its supply chain, where necessary for understanding of the group’s principal impacts or risks.

Amendment  78

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 3 – subparagraph 4

Text proposed by the Commission	Amendment
Member States may allow information relating to impending developments or matters in the course of negotiation to be omitted in exceptional cases where, in the duly justified opinion of the members of the administrative, management and supervisory bodies, acting within the competences assigned to them by national law and having collective responsibility for that opinion, the disclosure of such information would be seriously prejudicial to the commercial position of the group, provided that such omission does not prevent a fair and balanced understanding of the group's development, performance, position and impact of its activity.	Member States may allow information relating to impending developments or matters in the course of negotiation to be omitted in exceptional cases where, in the duly justified opinion of the members of the administrative, management and supervisory bodies, acting within the competences assigned to them by national law and having collective responsibility for that opinion, the disclosure of such information would be seriously prejudicial to the commercial position of the group, provided that such omission does not prevent a fair and balanced understanding of the group's development, performance, position, risks and impact of its activity.

Amendment  79

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 3 – subparagraph 4 a (new)

Text proposed by the Commission	Amendment
	The Commission shall prepare non-binding guidelines, taking into consideration technical advice from EFRAG and other relevant expertise, on appropriate and user-friendly methodology to generate the forward-looking information to be provided in the reporting.

Amendment  80

Proposal for a directive

Article 1 – paragraph 1 – point 10 – point a – point ii

Directive 2013/34/EU

Article 34 – paragraph 1 – subparagraph 2 – point aa

Text proposed by the Commission	Amendment
(aa) where applicable, express an opinion based on a limited assurance engagement as regards the compliance of the sustainability reporting with the requirements of this Directive, including the compliance of the sustainability reporting with the reporting standards adopted pursuant to Article 19b, the process carried out by the undertaking to identify the information reported pursuant to those reporting standards, and the compliance with the requirement to mark-up sustainability reporting in accordance with Article 19d, and as regards the compliance with the reporting requirements of Article 8 of Regulation (EU) 2020/852.;	(aa) where applicable, express an opinion based on a limited assurance or, where applicable, reasonable assurance engagement, as well as external verifications of reported data for greenhouse gas emissions as regards the compliance of the sustainability reporting with the requirements of this Directive, including the compliance of the sustainability reporting with the reporting standards adopted pursuant to Article 19b, the process carried out by the undertaking to identify the information reported pursuant to those reporting standards, and the compliance with the requirement to mark-up sustainability reporting in accordance with Article 19d, and as regards the compliance with the reporting requirements of Article 8 of Regulation (EU) 2020/852.’;

 

 

PROCEDURE – COMMITTEE ASKED FOR OPINION

Title	Amending Directive 2013/34/EU, Directive 2004/109/EC, Directive 2006/43/EC and Regulation (EU) No 537/2014, as regards corporate sustainability reporting
References	COM(2021)0189 – C9-0147/2021 – 2021/0104(COD)
Committee responsible  Date announced in plenary	JURI 23.6.2021
Opinion by  Date announced in plenary	ENVI 23.6.2021
Associated committees - date announced in plenary	16.12.2021
Rapporteur for the opinion  Date appointed	Lídia Pereira 17.9.2021
Discussed in committee	6.12.2021
Date adopted	3.3.2022
Result of final vote	+: –: 0:	59 16 5
Members present for the final vote	Mathilde Androuët, Nikos Androulakis, Bartosz Arłukowicz, Margrete Auken, Simona Baldassarre, Marek Paweł Balt, Traian Băsescu, Aurélia Beigneux, Hildegard Bentele, Sergio Berlato, Alexander Bernhuber, Malin Björk, Simona Bonafè, Delara Burkhardt, Pascal Canfin, Sara Cerdas, Mohammed Chahim, Tudor Ciuhodaru, Nathalie Colin-Oesterlé, Esther de Lange, Christian Doleschal, Marco Dreosto, Cyrus Engerer, Cornelia Ernst, Eleonora Evi, Agnès Evren, Pietro Fiocchi, Raffaele Fitto, Malte Gallée, Andreas Glück, Catherine Griset, Jytte Guteland, Teuvo Hakkarainen, Martin Hojsík, Pär Holmgren, Jan Huitema, Yannick Jadot, Petros Kokkalis, Ewa Kopacz, Joanna Kopcińska, Peter Liese, Sylvia Limmer, Javi López, César Luena, Fulvio Martusciello, Liudas Mažylis, Joëlle Mélin, Tilly Metz, Silvia Modig, Dolors Montserrat, Alessandra Moretti, Dan-Ştefan Motreanu, Ville Niinistö, Ljudmila Novak, Grace O’Sullivan, Jutta Paulus, Jessica Polfjärd, Nicola Procaccini, Luisa Regimenti, Frédérique Ries, María Soraya Rodríguez Ramos, Sándor Rónai, Rob Rooken, Silvia Sardone, Christine Schneider, Günther Sidl, Ivan Vilibor Sinčić, Linea Søgaard-Lidell, Maria Spyraki, Nicolae Ştefănuță, Nils Torvalds, Edina Tóth, Véronique Trillet-Lenoir, Alexandr Vondra, Mick Wallace, Pernille Weiss, Emma Wiesner, Tiemo Wölken
Substitutes present for the final vote	Michael Bloss, Nicolás González Casares, Róża Thun und Hohenstein, Nikolaj Villumsen

 

FINAL VOTE BY ROLL CALL IN COMMITTEE ASKED FOR OPINION

59	+
PPE	Bartosz Arłukowicz, Traian Băsescu, Hildegard Bentele, Alexander Bernhuber, Nathalie Colin-Oesterlé, Christian Doleschal, Agnès Evren, Ewa Kopacz, Esther de Lange, Peter Liese, Fulvio Martusciello, Liudas Mažylis, Dolors Montserrat, Dan-Ştefan Motreanu, Ljudmila Novak, Luisa Regimenti, Christine Schneider, Maria Spyraki
Renew	Pascal Canfin, Martin Hojsík, Jan Huitema, Frédérique Ries, María Soraya Rodríguez Ramos, Nicolae Ştefănuță, Linea Søgaard-Lidell, Róża Thun und Hohenstein, Nils Torvalds, Véronique Trillet-Lenoir, Emma Wiesner
S&D	Marek Paweł Balt, Simona Bonafè, Delara Burkhardt, Sara Cerdas, Mohammed Chahim, Tudor Ciuhodaru, Nicolás González Casares, Jytte Guteland, Javi López, César Luena, Alessandra Moretti, Sándor Rónai, Günther Sidl, Tiemo Wölken
The Left	Malin Björk, Cornelia Ernst, Petros Kokkalis, Silvia Modig, Nikolaj Villumsen, Mick Wallace
Verts/ALE	Margrete Auken, Michael Bloss, Eleonora Evi, Malte Gallée, Pär Holmgren, Yannick Jadot, Tilly Metz, Ville Niinistö, Grace O'Sullivan, Jutta Paulus

 

16	-
ECR	Sergio Berlato, Pietro Fiocchi, Raffaele Fitto, Joanna Kopcińska, Nicola Procaccini, Rob Rooken, Alexandr Vondra
ID	Mathilde Androuët, Simona Baldassarre, Aurélia Beigneux, Marco Dreosto, Catherine Griset, Teuvo Hakkarainen, Sylvia Limmer, Joëlle Mélin, Silvia Sardone

 

5	0
NI	Ivan Vilibor Sinčić, Edina Tóth
PPE	Jessica Polfjärd, Pernille Weiss
Renew	Andreas Glück

 

Key to symbols:

+ : in favour

- : against

0 : abstention

 

OPINION OF THE COMMITTEE ON FOREIGN AFFAIRS (14.2.2022)

for the Committee on Legal Affairs

on the proposal for a directive of the European Parliament and of the Council amending Directive 2013/34/EU, Directive 2004/109/EC, Directive 2006/43/EC and Regulation (EU) No 537/2014, as regards corporate sustainability reporting

(COM(2021)189 – C9‑0147/2021 – 2021/0104(COD))

Rapporteur for opinion: Karin Karlsbro

 

SHORT JUSTIFICATION

The European Commission’s proposal for a Corporate Sustainability Reporting Directive (CSRD) forms part of its commitment to a European Green Deal and strengthening the foundations for sustainable investment. The proposal revises the Non-Financial Reporting Directive the Non-Financial Reporting Directive (NFRD).

The key elements of the new proposal are:

• extension of sustainability reporting requirements to all large companies and listed companies (except micro-enterprises), covering close to 50,000 companies and increase from the 11,000 currently covered by the NFRD;

• more detailed reporting requirements, particularly on areas relating to UN Guiding Principles on Business and Human rights, according to mandatory EU sustainability reporting standards

• introduction of audit of reported information

• requirement for companies to digitally tag the reported information, making it machine readable and feeding into the European Single Access Point.

At the heart of the proposal are the new mandatory EU sustainability standards, which would be developed by the European Financial Reporting Advisory Group (EFRAG). The Commission’s objective is that the standards would be tailored to EU policies, while building on and contributing to international standardisation initiatives.

The first set of standards would be already adopted by October 2022, provided that the base legislation enters into force.

The rapporteur welcomes the Commission’s proposal and considers it a step in the right direction. However, there are some issues, where improvements could be envisaged:

- Policy coherence and complementarity with other related initiatives, such as the upcoming proposal on corporate sustainability and due diligence (currently foreseen for early 2022) and the Taxonomy Regulation. It is crucial that the different reporting obligations form a meaningful ensemble and do not create an unnecessary extra burden on companies, in the form of box ticking exercises.

- Any standard setting should be proportional and based on thorough and independent risk assessments.

- While many companies have made headway in the area of reporting on environmental impacts, human rights reporting is very much an area in development and more guidance and clarity of process and definitions are needed.

- EU and non-EU companies active on the internal market, either as one company or as a company group, should face the same sustainability reporting requirements. There should be a legal obligation to conduct sustainability reporting for all large companies, listed small and medium sized companies (SMEs), as well as non-listed SMEs in high-risk sectors.

- Voluntary standards should be developed for ad hoc reporting for companies when faced with significant events, which fundamentally change the risks related to sustainability, including large natural disasters or political disruptions. Such a report could indicate how the company deals with this new sustainability circumstance and what new sustainability risks it gave rise to. As well as a new indication on the resilience of the company’s business model to these new circumstances.

AMENDMENTS

The Committee on Foreign Affairs calls on the Committee on Legal Affairs, as the committee responsible, to take into account the following amendments:

Amendment  1

 

Proposal for a directive

Recital 15

Text proposed by the Commission	Amendment
(15) Articles 19a and 29a of Directive 2013/34/EU apply to large undertakings that are public-interest entities with an average number of employees in excess of 500, and to public-interest entities that are parent undertakings of a large group with an average number of employees in excess of 500 on a consolidated basis, respectively. In view of the growth of users’ needs for sustainability information, additional categories of undertakings should be required to report such information. It is therefore appropriate to require all large undertakings and all undertakings listed on regulated markets, except micro undertakings, to report detailed sustainability information. In addition, all undertakings that are parent undertakings of large groups should prepare sustainability reporting at group level.	(15) Articles 19a and 29a of Directive 2013/34/EU apply to large undertakings that are public-interest entities with an average number of employees in excess of 500, and to public-interest entities that are parent undertakings of a large group with an average number of employees in excess of 500 on a consolidated basis, respectively. In view of the growth of users’ needs for sustainability information, additional categories of undertakings should be required to report such information. It is therefore appropriate to require all publicly listed undertakings as well as small and medium-sized undertakings operating in high-risk economic sectors, to report detailed sustainability information.

Amendment  2

 

Proposal for a directive

Recital 16

Text proposed by the Commission	Amendment
(16) The requirement that also large non-listed undertakings should disclose information on sustainability matters is mainly driven by concerns about the impacts and accountability of such undertakings, including through their value chain. In this respect, all large undertakings should be subject to the same requirements to report sustainability information publicly. In addition, financial market participants also need information from those large non-listed undertakings.	(16) The requirement that all undertakings covered by this legislation should disclose information on sustainability matters is mainly driven by concerns about the impacts and accountability of such undertakings, including through their value chain. Since environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters are not contingent on the size of an undertaking all publicly listed undertakings and small and medium-sized undertakings operating in high-risk economic sectors should be subject to the same requirements to report sustainability information publicly. In addition, financial market participants also need information from those large non-listed.

Amendment  3

 

Proposal for a directive

Recital 25

Text proposed by the Commission	Amendment
(25) Articles 19a and 29a of Directive 2013/34/EU require reporting not only on information ‘to the extent necessary for an understanding of the undertaking's development, performance, position’, but also on information necessary for an understanding of the impact of the undertaking’s activities on environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters. Those articles therefore require undertakings to report both on how various sustainability matters affect the undertaking, and on the impacts of the activities of the undertaking on people and the environment. That is referred to as the double-materiality perspective, in which the risks to the undertaking and the impacts of the undertaking each represent one materiality perspective. The fitness check on corporate reporting shows that those two perspectives are often not well understood or applied. It is therefore necessary to clarify that undertakings should consider each materiality perspective in its own right, and should disclose information that is material from both perspectives as well as information that is material from only one perspective.	(25) Articles 19a and 29a of Directive 2013/34/EU require reporting not only on information ‘to the extent necessary for an understanding of the undertaking's development, performance, position’, but also on information necessary for an understanding of the impact of the undertaking’s activities on environmental, climate, social and workers' rights, gender equality, respect for human rights, anti-corruption and bribery matters. Those articles therefore require undertakings to report both on how various sustainability matters affect the undertaking, and on the impacts of the activities of the undertaking on people and the environment. That is referred to as the double-materiality perspective, in which the risks to the undertaking and the impacts of the undertaking each represent one materiality perspective. The fitness check on corporate reporting shows that those two perspectives are often not well understood or applied. It is therefore necessary to clarify that undertakings should consider each materiality perspective in its own right, and should disclose information that is material from both perspectives as well as information that is material from only one perspective.

Amendment  4

 

Proposal for a directive

Recital 26

Text proposed by the Commission	Amendment
(26) Articles 19a(1) and 29a(1) of Directive 2013/34/EU require undertakings to disclose information about five reporting areas: business model, policies (including due diligence processes implemented), the outcome of those policies, risks and risk management, and key performance indicators relevant to the business. Article 19a(1) of Directive 2013/34/EU does not contain explicit references to other reporting areas that users of information consider relevant, some of which align with disclosures included in international frameworks, including the recommendations of the Task Force on Climate-related Financial Disclosures. Disclosure requirements should be specified in sufficient detail to ensure that undertakings report information on their resilience to risks related to sustainability matters. In addition to the reporting areas identified in Articles 19a(1) and 29a(1) of Directive 2013/34/EU, undertakings should therefore be required to disclose information about their business strategy and the resilience of the business model and strategy to risks related to sustainability matters, any plans they may have to ensure that their business model and strategy are compatible with the transition to a sustainable and climate-neutral economy; whether and how their business model and strategy take account of the interests of stakeholders; any opportunities for the undertaking arising from sustainability matters; the implementation of the aspects of the business strategy which affect, or are affected by sustainability matters; any sustainability targets set by the undertaking and the progress made towards achieving them; the role of the board and management with regard to sustainability matters; the principal actual and potential adverse impacts connected with the undertaking’s activities; and how the undertaking has identified the information that they report on. Once the disclosure of elements such as targets and the progress towards achieving them is required, the separate requirement to disclose the outcomes of policies is no longer necessary.	(26) Articles 19a(1) and 29a(1) of Directive 2013/34/EU require undertakings to disclose information about five reporting areas: business model, policies (including due diligence processes implemented), the outcome of those policies, risks and risk management, and key performance indicators relevant to the business. Article 19a(1) of Directive 2013/34/EU does not contain explicit references to other reporting areas that users of information consider relevant, some of which align with disclosures included in international frameworks, including the recommendations of the Task Force on Climate-related Financial Disclosures. Disclosure requirements should be specified in sufficient detail to ensure that undertakings report information on their resilience to risks related to sustainability matters. In addition to the reporting areas identified in Articles 19a(1) and 29a(1) of Directive 2013/34/EU, undertakings should therefore be required to disclose information about their business strategy and the resilience of the business model and strategy to risks related to sustainability matters, any plans they may have to ensure that their business model and strategy are compatible with the transition to a sustainable and climate-neutral economy; whether and how their business model and strategy respect and safeguard the rights and interests of stakeholders, including workers and communities; any opportunities for the undertaking arising from sustainability matters; the implementation of the aspects of the business strategy which affect, or are affected by sustainability matters; any sustainability targets set by the undertaking and the progress made towards achieving them; the role of the board and management with regard to sustainability matters; the principal actual and potential adverse impacts connected with the undertaking’s activities; and how the undertaking has identified the information that they report on. Once the disclosure of elements such as targets and the progress towards achieving them is required, the separate requirement to disclose the outcomes of policies is no longer necessary.

Amendment  5

 

Proposal for a directive

Recital 27

Text proposed by the Commission	Amendment
(27) To ensure consistency with international instruments such as the UN Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance for Responsible Business Conduct, the due diligence disclosure requirements should be specified in greater detail than is the case in Article 19a(1), point (b), and Article 29a(1), point (b) of Directive 2013/34/EU. Due diligence is the process that undertakings carry out to identify, prevent, mitigate and remediate the principal actual and potential adverse impacts connected with their activities and identifies how they address those adverse impacts. Impacts connected with an undertaking’s activities include impacts directly caused by the undertaking, impacts to which the undertaking contributes, and impacts which are otherwise linked to the undertaking’s value chain. The due diligence process concerns the whole value chain of the undertaking including its own operations, its products and services, its business relationships and its supply chains. In alignment with the UN Guiding Principles on Business and Human Rights, an actual or potential adverse impact is to be considered principal where it measures among the greatest impacts connected with the undertaking’s activities based on: the gravity of the impact on people or the environment; the number of individuals that are or could be affected, or the scale of damage to the environment; and the ease with which the harm could be remediated, restoring the environment or affected people to their prior state.	(27) To ensure consistency with international instruments such as the UN Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance for Responsible Business Conduct, the due diligence disclosure requirements should be specified in greater detail than is the case in Article 19a(1), point (b), and Article 29a(1), point (b) of Directive 2013/34/EU. The disclosure requirements related to the due diligence requirements in this Directive will need to be adapted once the upcoming directive on sustainable corporate governance and due diligence has been adopted so that the requirements in this Directive are aligned with those in the upcoming directive. Due diligence is the process that undertakings carry out to identify, prevent, mitigate and remediate the actual and potential adverse impacts connected with their activities and identifies how they address those adverse impacts. Impacts connected with an undertaking’s activities include impacts directly caused by the undertaking, impacts to which the undertaking contributes, and impacts which are otherwise linked to the undertaking’s value chain. The due diligence process concerns the whole value chain of the undertaking including its own operations, its products and services, its business relationships and its supply chains. (In alignment with the UN Guiding Principles on Business and Human Rights, an actual or potential adverse impact is to be considered principal where it measures among the greatest impacts connected with the undertaking’s activities based on: the gravity of the impact on people or the environment; the number of individuals that are or could be affected, or the scale of damage to the environment; and the ease with which the harm could be remediated, restoring the environment or affected people to their prior state.

Amendment  6

 

Proposal for a directive

Recital 27 a (new)

Text proposed by the Commission	Amendment
	(27 a) Human rights defenders are vital to ensuring corporate respect for human rights and the healthy environment that many rights rely on. They document the negative human rights and environmental impacts of business activities; bring such impacts to the attention of States and the private actors involved and identify factors, which may contribute to such impacts; propose solutions to these contributing factors and support affected communities seeking remedy and justice in cases where negative human rights and environmental impacts have occurred along company value chains. Human rights defenders are an important stakeholder group the consultation of which may significantly help and benefit undertakings in the exercise of their sustainability reporting and due diligence duty. Therefore, information on intangibles disclosed according to Article 19a, paragraphs 1 and 2, shall contain information on the undertaking's liaison with individuals and groups that identify as human rights defenders as recognized in the UN Declaration on human rights defenders.

Amendment  7

 

Proposal for a directive

Recital 33

Text proposed by the Commission	Amendment
(33) No existing standard or framework satisfies the Union’s needs for detailed sustainability reporting by itself. Information required by Directive 2013/34/EU needs to cover information relevant from each of the materiality perspectives, needs to cover all sustainability matters and needs to be aligned, where appropriate, with other obligations under Union law to disclose sustainability information, including obligations laid down in Regulation (EU) 2020/852 and Regulation (EU) 2019/2088. In addition, mandatory sustainability reporting standards for Union undertakings must be commensurate with the level of ambition of the European Green Deal and the Union’s climate-neutrality objective for 2050. It is therefore necessary to empower the Commission to adopt Union sustainability reporting standards, enabling their rapid adoption and ensuring that the content of sustainability reporting standards are consistent with the Union’s needs.	(33) No existing standard or framework satisfies the Union’s needs for detailed sustainability reporting by itself Information required by Directive 2013/34/EU needs to cover information relevant from each of the materiality perspectives, and needs to cover all sustainability matters. To avoid duplication of obligations and inconsistencies in definitions, scope and objectives of applicable requirements sustainability information need to be consistent, where appropriate, with other obligations under Union law to disclose sustainability information, including obligations laid down in Regulation (EU) 2020/852 and Regulation (EU) 2019/2088. In addition, mandatory sustainability reporting standards for Union undertakings must be commensurate with the level of ambition of the European Green Deal and the Union’s climate-neutrality objective for 2050. It is therefore necessary to empower the Commission to adopt Union sustainability reporting standards, in light of the development of international standards enabling their rapid adoption and ensuring that the content of sustainability reporting standards are consistent with the Union’s needs.

Amendment  8

 

Proposal for a directive

Recital 37 a (new)

Text proposed by the Commission	Amendment
	(37 a) The Commission should be empowered to adopt delegated acts in accordance with Article 49 to establish and amend the list of high-risk sectors of economic activity set out in Article 2, point 20a. That list should take into account the work of the Platform on Sustainable Finance established in accordance with Article 20 of Regulation (EU) 2020/852 and the OECD Due Diligence Guidance for Responsible Business Conduct, among others for mining, quarrying, extractive industries, agriculture, forestry, construction, transportation, electricity, gas, steam and air conditioning supply, clothing and footwear, finance and international shipping, and health, social, elderly care. The list of sectors taken into account in this definition should take account of correspondence with the NACE classification1a .

Amendment  9

 

Proposal for a directive

Recital 40

Text proposed by the Commission	Amendment
(40) It should be ensured that the information reported by undertakings in accordance with the sustainability reporting standards meet the needs of users. The reporting standards should therefore specify the information that undertakings are to disclose on all major environmental factors, including their impacts and dependencies on climate, air, land, water and biodiversity. Regulation (EU) 2020/852 provides a classification of the environmental objectives of the Union. For reasons of coherence, it is appropriate to use a similar classification to identify the environmental factors that should be addressed by sustainability reporting standards. The reporting standards should consider and specify any geographical or other contextual information that undertakings should disclose to provide an understanding of their principal impacts on sustainability matters and the principal risks to the undertaking arising from sustainability matters.	(40) It should be ensured that the information reported by undertakings in accordance with the sustainability reporting standards meet the needs of users. The reporting standards should therefore specify the information that undertakings are to disclose on all major environmental factors, including their impacts and dependencies on climate, air, land, water and biodiversity, deforestation and forest degradation. Regulation (EU) 2020/852 provides a classification of the environmental objectives of the Union. For reasons of coherence, it is appropriate to use a similar classification to identify the environmental factors that should be addressed by sustainability reporting standards. The reporting standards should consider and specify any geographical or other contextual information that undertakings should disclose to provide an understanding of their principal impacts on sustainability matters and the principal risks to the undertaking arising from sustainability matters.

Amendment  10

 

Proposal for a directive

Recital 43

Text proposed by the Commission	Amendment
(43) Sustainability reporting standards should specify the information that undertakings should disclose on social factors, including employee factors and human rights. Such information should cover the impacts of undertakings on people, including on human health. The information that undertakings disclose about human rights should include information about forced labour in their value chains where relevant. Reporting standards that address social factors should specify the information that undertakings should disclose with regard to the principles of the European Pillar of Social Rights that are relevant to businesses, including equal opportunities for all and working conditions. The European Pillar of Social Rights Action Plan adopted in March 2021 calls for stronger requirements on undertakings to report on social issues. The reporting standards should also specify the information that undertakings should disclose with regard to the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the fundamental conventions of the International Labour Organisation, and the Charter of Fundamental Rights of the European Union.	(43) Sustainability reporting standards should specify the information that undertakings should disclose on social factors, measures for inclusion including employee factors and human rights. Such information should cover the impacts of undertakings on people, including on human health. The information that undertakings disclose about human rights should include information about forced labour in their value chains where relevant. Reporting standards that address social factors should specify the information that undertakings should disclose with regard to the principles of the European Pillar of Social Rights that are relevant to businesses, including equal opportunities for all - regardless among others of gender, racial or ethnic origin, religion or belief, disability, age or sexual orientation - and working conditions. The European Pillar of Social Rights Action Plan adopted in March 2021 calls for stronger requirements on undertakings to report on social issues. The reporting standards should specify the information that undertakings should disclose with regard to the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, such as the UN Convention on the Rights of Persons with Disabilities, the United Nation Guiding Principles on Business and Human Rights, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the fundamental conventions of the International Labour Organisation, particularly on child and forced labour, and freedom of association and collective bargaining, the European Convention on Human Rights (ECHR), the OECD Guidelines for multinational enterprises, and the Charter of Fundamental Rights of the European Union.

Amendment  11

 

Proposal for a directive

Recital 44

Text proposed by the Commission	Amendment
(44) Users need information about governance factors, including information on the role of an undertaking’s administrative, management and supervisory bodies, including with regard to sustainability matters, the composition of such bodies, and an undertaking’s internal control and risk management systems, including in relation to the reporting process. Users also need information about undertakings’ corporate culture and approach to business ethics, including anti-corruption and anti-bribery, and about their political engagements, including lobbying activities. Information about the management of the undertaking and the quality of relationships with business partners, including payment practices relating to the date or period for payment, the rate of interest for late payment or the compensation for recovery costs referred to in Directive 2011/7/EU of the European Parliament and of the Council62 on late payment in commercial transactions, helps users to understand an undertaking’s risks as well as its impacts on sustainability matters. Every year, thousands of businesses, especially SMEs, suffer administrative and financial burdens because they are paid late, or not at all. Ultimately, late payments lead to insolvency and bankruptcy, with destructive effects on entire value chains. Increasing information about payment practices should empower other undertakings to identify prompt and reliable payers, detect unfair payment practices, access information about the businesses they trade with, and negotiate fairer payment terms.	(44) Users need information about governance factors, including information on the role of an undertaking’s administrative, management and supervisory bodies, including with regard to sustainability matters, the composition of such bodies, and an undertaking’s internal control and risk management systems, including in relation to the reporting process. Users also need information about undertakings’ corporate culture and approach to business ethics, including anti-corruption and anti-bribery, and about their political engagements, including lobbying activities and on how an undertaking manages communication and contacts with individuals and organisations such as whistle-blowers, journalists, trade unions, civil society organisations and human rights defenders that raise concerns related to the identification, assessment, prevention and/or mitigation of environmental, social or governance risks in the undertaking's operations, products and services, its business relationships and its supply chain. Information about the management of the undertaking and the quality of relationships with business partners, including payment practices relating to the date or period for payment, the rate of interest for late payment or the compensation for recovery costs referred to in Directive 2011/7/EU of the European Parliament and of the Council62 on late payment in commercial transactions, helps users to understand an undertaking’s risks as well as its impacts on sustainability matters. Every year, thousands of businesses, especially SMEs, suffer administrative and financial burdens because they are paid late, or not at all. Ultimately, late payments lead to insolvency and bankruptcy, with destructive effects on entire value chains. Increasing information about payment practices should empower other undertakings to identify prompt and reliable payers, detect unfair payment practices, access information about the businesses they trade with, and negotiate fairer payment terms.
__________________	__________________
62 Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (OJ L 48, 23.2.2011, p. 1).	62 Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (OJ L 48, 23.2.2011, p. 1).

Amendment  12

 

Proposal for a directive

Recital 48

Text proposed by the Commission	Amendment
(48) Directive 2013/34/EU does not require that the financial statements or the management report are provided in a digital format, which hinders the findability and usability of the reported information. Users of sustainability information increasingly expect such information to be findable and machine-readable in digital formats. Digitalisation creates opportunities to exploit information more efficiently and holds the potential for significant cost savings for both users and undertakings. Undertakings should therefore be required to prepare their financial statements and their management report in XHTML format in accordance with Article 3 of Commission Delegated Regulation (EU) 2019/815,63 and to mark-up sustainability information, including the disclosures required by Article 8 of Regulation (EU) 2020/852, in accordance with that Delegated Regulation. A digital taxonomy to the Union sustainability reporting standards will be necessary to allow for the information reported to be tagged in accordance with those standards. These requirements should feed into the work on digitalisation announced by the Commission in its Communication A European strategy for data64 and in the Digital Finance Strategy for the EU.65 These requirements also complement the creation of a European single access point for public corporate information as envisaged in the capital markets union action plan, which also considers the need for structured data.	(48) Directive 2013/34/EU does not require that the financial statements or the management report are provided in a digital format, which hinders the findability, accessibility and usability of the reported information. Users of sustainability information increasingly expect such information to be findable and machine-readable in digital formats fully accessible, in accordance with the internationally recognised standards and published under open data principles. Digitalisation creates opportunities to exploit information more efficiently and holds the potential for significant cost savings for both users and undertakings. Undertakings should therefore be required to prepare their financial statements and their management report make publicly available in XHTML format in accordance with Article 3 of Commission Delegated Regulation (EU) 2019/815,63 and to mark-up sustainability information, including the disclosures required by Article 8 of Regulation (EU) 2020/852, in accordance with that Delegated Regulation. A digital taxonomy to the Union sustainability reporting standards will be necessary to allow for the information reported to be tagged in accordance with those standards. These requirements should feed into the work on digitalisation announced by the Commission in its Communication A European strategy for data64 and in the Digital Finance Strategy for the EU.65 These requirements also complement the creation of a European single access point for public corporate information as envisaged in the capital markets union action plan, which also considers the need for structured data.
__________________	__________________
63 Commission Delegated Regulation (EU) 2018/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (OJ L 143, 29.5.2019, p. 1).	63 Commission Delegated Regulation (EU) 2018/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (OJ L 143, 29.5.2019, p. 1).
64 https://ec.europa.eu/digital-single-market/en/european-strategy-data	64 https://ec.europa.eu/digital-single-market/en/european-strategy-data
65 https://ec.europa.eu/info/publications/200924-digital-finance-proposals_en	65 https://ec.europa.eu/info/publications/200924-digital-finance-proposals_en

Amendment  13

 

Proposal for a directive

Recital 71

Text proposed by the Commission	Amendment
(71) Member States are invited to assess the impact of their transposition act on SMEs in order to ensure that they are not disproportionately affected, giving specific attention to micro-enterprises and to the administrative burden, and to publish the results of such assessments. Member States should consider introducing measures to support SMEs in applying the voluntary simplified reporting standards.	(71) Member States are invited to assess the impact of their transposition act on SMEs in order to ensure that they are not disproportionately affected, giving specific attention to micro-enterprises and to the financial and administrative burden, and to publish the results of such assessments. Member States should consider introducing measures to support SMEs in applying the voluntary simplified reporting standards.

Amendment  14

 

Proposal for a directive

Article 1 – paragraph 1 – point 2 – introductory part

Directive 2013/34/EU

Article 2

Text proposed by the Commission	Amendment
(2) in Article 2, the following points (17) to (20) are added:	(2) in Article 2, the following points (17) to (20b) are added:

Amendment  15

 

Proposal for a directive

Article 1 – paragraph 1 – point 2

Directive 2013/34/EU

Article 2 – point 17

Text proposed by the Commission	Amendment
(17) ‘sustainability matters’ means sustainability factors as defined in Article 2, point (24) of Regulation (EU) 2019/2088 of the European Parliament and of the Council*4, and governance factors;	(17) ‘sustainability matters’ refers to environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters (sustainability factors), as well as proportionate and commensurate due diligence by undertakings to identify, prevent, mitigate, remediate and communicate on adverse impacts on human rights, labour rights, including trade union rights, the environment and good governance in relation to their own activities, their value chains and business relationships, with reference to applicable legal duties, standards and guidance;

Amendment  16

 

Proposal for a directive

Article 1 – paragraph 1 – point 2

Directive 2013/34/EU

Article 2 – point 18

Text proposed by the Commission	Amendment
(18) ‘sustainability reporting’ means reporting information related to sustainability matters in accordance with Articles 19a, 19d and 29a of this Directive;	(18) ‘sustainability reporting’ means reporting on sustainability factors and due diligence as described in point 17;

Amendment  17

 

Proposal for a directive

Article 1 – paragraph 1 – point 2

Directive 2013/34/EU

Article 2 – point 20 a (new)

Text proposed by the Commission	Amendment
	(20 a) ‘high-risk economic activity sector’ means economic activities that are assessed to, as a result of its business and supply chain characteristics, have a higher risk of having serious impacts on sustainability factors;

Amendment  18

 

Proposal for a directive

Article 1 – paragraph 1 – point 2

Directive 2013/34/EU

Article 2 – point 20 b (new)

Text proposed by the Commission	Amendment
	(20 b) ‘high-impact undertakings’ means undertakings active in high-risk economic activity sectors. The list should take account of correspondence with the NACE classification and are view should take place every 3 years and take into account existing EU sector-specific legislation and sector-specific disclosures in recognized international reporting frameworks such as Global Reporting Initiative standards, which address sector-specific environmental and social negative impacts.

Amendment  19

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 1

Text proposed by the Commission	Amendment
1. Large undertakings and, as of 1 January 2026, small and medium-sized undertakings which are undertakings referred to in Article 2, point (1), point (a), shall include in the management report information necessary to understand the undertaking’s impacts on sustainability matters, and information necessary to understand how sustainability matters affect the undertaking’s development, performance and position.	1. All large undertakings governed by the law of a Member State or established in the territory of the Union, and, as of 1 January 2026, all publicly listed small and medium-sized undertakings, as well as high-impact non-listed small and medium-sized undertakings, undertakings registered in a non-EU/EEA country with significant business in the EU, and undertakings organised as franchises meeting the size criteria for large undertakings in Directive 2013/34/EU shall include in the management report information necessary to understand the undertaking’s impacts on sustainability factors, due diligence, and information necessary to understand how sustainability matters, as defined in art 19a (17), affect the undertaking’s development, performance and position.

Amendment  20

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point a – point i

Text proposed by the Commission	Amendment
(i) the resilience of the undertaking's business model and strategy to risks related to sustainability matters;	(i) the undertaking’s business model and strategy on sustainability matters and how it has been implemented;

Amendment  21

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point a – point i a (new)

Text proposed by the Commission	Amendment
	(i a) how the undertaking’s business model and strategy take account of the interests of the underaking’s stakeholders and of the impacts of the undertaking on sustainability factors;

Amendment  22

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point a – point i b (new)

Text proposed by the Commission	Amendment
	(i b) how the undertaking ensures that its business model and strategy are contributing to the UN Sustainable Development Goals;

Amendment  23

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point a – point ii

Text proposed by the Commission	Amendment
(ii) the opportunities for the undertaking related to sustainability matters;	(ii) the opportunities for and resilience of the undertaking related to sustainability matters;

Amendment  24

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point b

Text proposed by the Commission	Amendment
(b) a description of the targets related to sustainability matters set by the undertaking and of the progress the undertaking has made towards achieving those targets;	(b) a description of the targets related to each of the sustainability factors referred to in Article 2(17) set by the undertaking and of the progress the undertaking has made towards achieving those targets;

Amendment  25

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point c

Text proposed by the Commission	Amendment
(c) a description of the role of the administrative, management and supervisory bodies with regard to sustainability matters;	(c) a description of the role of the administrative, management and supervisory bodies with regard to each of the sustainability factors referred to in Article 2(17);

Amendment  26

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point d

Text proposed by the Commission	Amendment
(d) a description of the undertaking’s policies in relation to sustainability matters;	(d) a description of the undertaking’s policies in relation to each of the sustainability factors referred to in Article 2(17);

Amendment  27

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point e – point i

Text proposed by the Commission	Amendment
(i) the due diligence process implemented with regard to sustainability matters;	(i) the due diligence process implemented with regard to each of the sustainability factors referred to in Article 2(17), in line with the EU Directive on Sustainable Corporate Governance, national legislation, and the UN Guiding Principles for Business and Human Rights and the OECD Due Diligence Guidance for Responsible Business Conduct;

Amendment  28

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point e – point ii

Text proposed by the Commission	Amendment
(ii) the principal actual or potential adverse impacts connected with the undertaking’s value chain, including its own operations, its products and services, its business relationships and its supply chain;	(ii) the actual or potential adverse impacts on each of the sustainability factors referred to in Article 2(17) connected with the undertaking’s value chain, including its own operations, its products and services, its business relationships and its supply chain;

Amendment  29

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point e – point iii

Text proposed by the Commission	Amendment
(iii) any actions taken, and the result of such actions, to prevent, mitigate or remediate actual or potential adverse impacts;	(iii) all actions taken, and the result of such actions, to prevent, mitigate or remediate such actual or potential adverse impacts and the effectiveness of their results;

Amendment  30

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point e – point iii a (new)

Text proposed by the Commission	Amendment
	(iii a) the structure of the undertaking’s value chain including through a disaggregated mapping of its own operations, subsidiaries, suppliers and business relationships;

Amendment  31

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point e – point iii b (new)

Text proposed by the Commission	Amendment
	(iii b) the above disclosure requirement does not exclude any additional communication as required in line with EU Directive on Sustainable Corporate Governance;

Amendment  32

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point f

Text proposed by the Commission	Amendment
(f) a description of the principal risks to the undertaking related to sustainability matters, including the undertaking’s principal dependencies on such matters, and how the undertaking manages those risks;	(f) a description of the principal risks to the undertaking related to each of the sustainability factors referred to in Article 2(17), including the undertaking’s principal dependencies on such matters, and how the undertaking manages those risks;

Amendment  33

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point f a (new)

Text proposed by the Commission	Amendment
	(f a) a description of processes established in order to identify stakeholders and to involve them in the development, implementation, monitoring and evaluation of the undertaking's strategy and policies;

Amendment  34

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 3 – subparagraph 2

Text proposed by the Commission	Amendment
Where appropriate, the information referred to in paragraphs 1 and 2 shall contain information about the undertaking’s value chain, including the undertaking’s own operations, products and services, its business relationships and its supply chain.	Where appropriate, the information referred to in paragraphs 1 and 2 shall contain information about the undertaking’s value chain, including the undertaking’s own operations, products and services, its business relationships and its supply chain, in particular in high-risk economic activity sectors.

Amendment  35

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 3 – subparagraph 4

Text proposed by the Commission	Amendment
Member States may allow information relating to impending devel­opments or matters in the course of negotiation to be omitted in excep­tional cases where, in the duly justified opinion of the members of the administrative, management and supervisory bodies, acting within the competences assigned to them by national law and having collective responsibility for that opinion, the disclosure of such information would be seriously prejudicial to the commercial position of the undertaking, provided that such omission does not prevent a fair and balanced under­standing of the undertaking's development, performance, position and impact of its activity.	Member States may allow information relating to impending developments or matters in the course of negotiation to be omitted in exceptional cases where, in the duly justified opinion of the members of the administrative, management and supervisory bodies, acting within the competences assigned to them by national law and having collective responsibility for that opinion, the disclosure of such information would be seriously prejudicial to the commercial position of the undertaking, provided that such omission does not prevent a fair and balanced understanding of the undertaking's development, performance, position and impact of its activity. This provision shall not apply to disclosure obligations on significant events such as grave human rights abuses or environmental disasters.

Amendment  36

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 7 – subparagraph 1

Text proposed by the Commission	Amendment
7. An undertaking which is a subsidiary undertaking shall be exempted from the obligations set out in paragraphs 1 to 4 if that undertaking and its subsidiary undertakings are included in the consolidated management report of a parent undertaking, drawn up in accordance with Articles 29 and 29a. An undertaking that is a subsidiary undertaking from a parent undertaking that is established in a third country shall also be exempted from the obligations set out in paragraphs 1 to 4 where that undertaking and its subsidiary undertakings are included in the consolidated management report of that parent undertaking and where the consolidated management report is drawn up in a manner that may be considered equivalent, in accordance with the relevant implementing measures adopted pursuant to Article 23(4), point (i), of Directive 2004/109/EC of the European Parliament and of the Council*6, to the manner required by the sustainability reporting standards referred to in Article 19b of this Directive.	7. An undertaking which is a subsidiary undertaking shall be exempted from the obligations set out in paragraphs 1 to 4 if that undertaking and its subsidiary undertakings are included in the consolidated management report of a parent undertaking, provided that this report is drawn up in accordance with Articles 29 and 29a and that information required by Article 19b is reported on country-by-country basis. An undertaking that is a subsidiary undertaking from a parent undertaking that is established in a third country shall also be exempted from the obligations set out in paragraphs 1 to 4 where that undertaking and its subsidiary undertakings are included in the consolidated management report of that parent undertaking and where the consolidated management report is drawn up in a manner that may be considered equivalent, in accordance with the relevant implementing measures adopted pursuant to Article 23(4), point (i), of Directive 2004/109/EC of the European Parliament and of the Council*6, to the manner required by the sustainability reporting standards referred to in Article 19b of this Directive.

Amendment  37

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 7 a (new)

Text proposed by the Commission	Amendment
	7 a. The Commission shall be empowered to adopt delegated acts in accordance with Article 49 to establish and amend the list of high-risk sectors of economic activity set out in Article 2, point (20a).That list shall take into account the work of the Platform on Sustainable Finance established in accordance with Article 20 of Regulation (EU) 2020/852 and the OECD Due Diligence Guidance for Responsible Business Conduct. The list of sectors taken into account in this definition shall take account of correspondence with the NACE classification1a.
	__________________
	1a Statistical classification of economic activities in the European Union, NACE Rev. 2.

Amendment  38

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1 – subparagraph 1 – introductory part

Text proposed by the Commission	Amendment
1. The Commission shall adopt delegated acts in accordance with Article 49 to provide for sustainability reporting standards. Those sustainability reporting standards shall specify the information that undertakings are to report in accordance with Articles 19a and 29a and, where relevant, shall specify the structure in which that information shall be reported. In particular:	1. The Commission shall adopt delegated acts in accordance with Article 49 to provide for sustainability reporting standards, in relation to the sustainability factors as defined in Article 2(17) and with particular attention to human rights. Those sustainability reporting standards shall specify the information that undertakings are to report in accordance with Articles 19a and 29a and, where relevant, shall specify the structure in which that information shall be reported. In particular:

Amendment  39

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1 – subparagraph 1 – point b

Text proposed by the Commission	Amendment
(b) by 31 October 2023, the Commission shall adopt delegated acts specifying:	(b) by 31 October 2023, the Commission shall adopt delegated acts providing for sector-specific reporting standards on sustainability factors, which shall be identified based on thorough and independent ex-ante risk assessments, specifying:

Amendment  40

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1 – subparagraph 1 – point b – point –i (new)

Text proposed by the Commission	Amendment
	(-i a) information necessary to understand how sustainability matters affect the undertaking’s development, performance and position and how the undertaking’s strategy and due diligence process has been implemented with regard to the events;

Amendment  41

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1 – subparagraph 1 – point b – point –i a (new)

Text proposed by the Commission	Amendment
	(-i b) information that undertakings shall report that is specific to the sector in which they operate and the scope of which is defined by the ex-ante risk assessment;

Amendment  42

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1 – subparagraph 1 – point b – point ii

Text proposed by the Commission	Amendment
(ii) information that undertakings shall report that is specific to the sector in which they operate.	(ii) information that undertakings shall report that is specific to the sector in which they operate, with particular attention paid to high-risk economic activity sectors.

Amendment  43

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1 – subparagraph 1 – point b a (new)

Text proposed by the Commission	Amendment
	(b a) in the delegated acts relating to both general and sector-specific information, the Commission shall further establish voluntary standards providing for ad hoc reporting on significant events fundamentally changing the risks in the areas of the sustainability factors listed in Article 2(17), information necessary to understand how sustainability factors affect the undertaking’s development, performance and position and how the undertaking’s strategy and due diligence process has been implemented with regard to the events.

Amendment  44

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1 – subparagraph 2

Text proposed by the Commission	Amendment
The Commission shall, at least every three years after its date of application, review any delegated act adopted pursuant to this Article, taking into consideration the technical advice of the European Financial Reporting Advisory Group (EFRAG), and where necessary shall amend such delegated act to take into account relevant developments, including developments with regard to international standards.	The Commission shall, at least every three years after its date of application, review any delegated act adopted pursuant to this Article, taking into consideration the technical advice of the European Financial Reporting Advisory Group (EFRAG) and other relevant stakeholders, including trade unions and civil society organisations, and where necessary shall amend such delegated act to take into account relevant developments, including developments with regard to international standards.

Amendment  45

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1 – subparagraph 2 a (new)

Text proposed by the Commission	Amendment
	The Commission shall within 6 months of the adoption of the upcoming directive on sustainable corporate governance and due diligence adopt a delegated act to align the requirements in Article 19a and in this article with the requirements set out in the new directive. Any additional due diligence requirements on economic operators shall be complementary to the requirements of the new directive and must lead to as little extra burden on these operators as possible.

Amendment  46

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point a – point vi a (new)

Text proposed by the Commission	Amendment
	(vi a) deforestation and forest degradation;

Amendment  47

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point a a (new)

Text proposed by the Commission	Amendment
	(a a) specify the information that undertakings are to disclose about human rights, including information about the identification and assessment of actual and potential consequences for fundamental human rights and decent working conditions that the company has either caused or contributed to, or that are directly linked to the company’s business activities, products or services through supply chains or business partners; the implementation of appropriate measures to stop, prevent or limit negative consequences and monitoring of implementation and results of the measures implemented; communicating with affected stakeholders and licensees about how negative consequences have been handled and arrangements for or cooperation on recovery and compensation where this is required, with reference to:
	(i) democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, including the UN Convention on the Rights of Persons with Disabilities the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work and the ILO fundamental conventions and governance conventions, the ECHR and its additional protocols, the European Social Charter, the OECD Guidelines for multinational enterprises, the Charter of Fundamental Rights of the European Union, the UN Guiding Principles on Business and Human Rights, and the Aarhus Convention;
	(ii) any material risk of involving labour, child labour, forced labour, gross, systematic or widespread human rights violations, in particular.

Amendment  48

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point b

Text proposed by the Commission	Amendment
(b) specify the information that undertakings are to disclose about social factors, including information about:	(b) specify the information that undertakings are to disclose about social factors, with reference where relevant to Union law and the European Pillar of Social Rights, and including:

Amendment  49

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point b – point i

Text proposed by the Commission	Amendment
(i) equal opportunities for all, including gender equality and equal pay for equal work, training and skills development, and employment and inclusion of people with disabilities;	(i) equal treatment and opportunities for all, including gender equality and equal pay for work of equal value, diversity in terms of age, religion and belief, and ethnicity of workers, pay transparency, measures against violence and harassment, training and skills development, and employment and inclusion of people with disabilities;

Amendment  50

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point b – point ii

Text proposed by the Commission	Amendment
(ii) working conditions, including secure and adaptable employment, wages, social dialogue, collective bargaining and the involvement of workers, work-life balance, and a healthy, safe and well-adapted work environment;	(ii) working conditions, including secure and adaptable employment, wages, social dialogue, collective bargaining and the involvement of workers, trade unions, respect for the right of workers to be represented, informed and consulted in accordance with international European and national labour law, work-life balance, and a healthy, safe and well-adapted work environment;

Amendment  51

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point b – point iii a (new)

Text proposed by the Commission	Amendment
	(iii a) the undertaking's value chain linked to severe actual and potential impacts, including sector-specific information on suppliers, types of products and services supplied, and on sourcing and traceability of commodities and materials associated with high likelihood of actual and potential adverse impacts on sustainability matters.

Amendment  52

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point c – point ii

Text proposed by the Commission	Amendment
(ii) business ethics and corporate culture, including anti-corruption and anti-bribery;	(ii) business ethics and corporate culture, including anti-corruption and anti-bribery programmes, assessment of corruption risks, and whistleblowing systems and results;

Amendment  53

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 3 – point a

Text proposed by the Commission	Amendment
(a) the work of global standard-setting initiatives for sustainability reporting, and existing standards and frameworks for natural capital accounting, responsible business conduct, corporate social responsibility, and sustainable development;	(a) the work of global standard-setting initiatives for sustainability reporting and for corporate responsibility to respect human rights, and existing standards and frameworks for natural capital accounting, responsible business conduct, corporate social responsibility, and sustainable development;

Amendment  54

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19c – paragraph 1

Text proposed by the Commission	Amendment
The Commission shall adopt delegated acts in accordance with Article 49 to provide for sustainability reporting standards proportionate to the capacities and characteristics of small and medium-sized undertakings. Those sustainability reporting standards shall specify which information referred to in Articles 19a and 29a small and medium-sized undertakings referred to in Article 2, point (1)(a) shall report. They shall take into account the criteria set out in Article 19b, paragraphs 2 and 3. They shall also, where relevant, specify the structure in which that information shall be reported.	The Commission shall adopt delegated acts in accordance with Article 49 to provide for sustainability reporting standards proportionate to the capacities and characteristics of small and medium-sized undertakings. Those sustainability reporting standards shall be in line with the principle of proportionality. Those sustainability reporting standards shall specify which information referred to in Articles 19a and 29a small and medium-sized undertakings referred to in Article 2, point (1)(a) shall report. They shall take into account the criteria set out in Article 19b, paragraphs 2 and 3. They shall also, where relevant, specify the structure in which that information shall be reported.

Amendment  55

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19c – paragraph 1 a (new)

Text proposed by the Commission	Amendment
	Delegated acts defining the sustainability reporting for SMEs should reflect the sector of activity, the size of the undertaking, the context of its operations, the nature and the severity of risks in its value chain, its business model, its position in value chains and the nature of its products and services.

Amendment  56

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19c – paragraph 1 b (new)

Text proposed by the Commission	Amendment
	Delegated acts need to be sufficiently clear for SMEs to be able to comply with those requirements and know how to avoid sanctions and be equipped to protect human rights and environmental commitments, and due diligence legislation should ensure competitive advantage for European companies in the short and medium term.

Amendment  57

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19d – paragraph -1 (new)

Text proposed by the Commission	Amendment
	-1. Electronic financial statements and management reports shall follow relevant access requirements laid down in the Directive 2019/882 on the accessibility requirements for products and services.

Amendment  58

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19d – paragraph 1

Text proposed by the Commission	Amendment
1. Undertakings subject to Article 19a shall prepare their financial statements and their management report in a single electronic reporting format in accordance with Article 3 of Commission Delegated Regulation (EU) 2019/815*15 and shall mark-up their sustainability reporting, including the disclosures laid down in Article 8 of Regulation (EU) 2020/852, in accordance with that Delegated Regulation.	1. Undertakings subject to Article 19a shall prepare their financial statements and their management report in an open data and machine-readable single electronic reporting format in accordance with Article 3 of Commission Delegated Regulation (EU)2019/815*15 and shall mark-up their sustainability reporting, including the disclosures laid down in Article 8 of Regulation (EU)2020/852, in accordance with that Delegated Regulation.

Amendment  59

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 1

Text proposed by the Commission	Amendment
1. Parent undertakings of a large group shall include in the consolidated management report information necessary to understand the group's impacts on sustainability matters, and information necessary to understand how sustainability matters affect the group's development, performance and position.	1. Parent undertakings of a large group shall include in the consolidated management report information necessary to fully understand the group's and its subsidiaries’ and business relationships’ impacts on sustainability matters, and information necessary to understand how sustainability matters affect the group's development, performance and position. The report shall explain the impact of each subsidiary on sustainability factors.

Amendment  60

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – point a – point i

Text proposed by the Commission	Amendment
(i) the resilience of the group's business model and strategy to risks related to sustainability matters;	(i) the undertaking's business model and strategy on sustainability matters and how it has been implemented;

Amendment  61

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – point a – point ii

Text proposed by the Commission	Amendment
(ii) the opportunities for the group related to sustainability matters;	(ii) how the undertaking’s business model and strategy take account of the interests of the undertaking’s stakeholders and of the impacts of the undertaking on sustainability factors;

Amendment  62

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – point a – point ii a (new)

Text proposed by the Commission	Amendment
	(ii a) how the undertaking ensures that its business model and strategy are contributing to the UN Sustainable Development Goals;

Amendment  63

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – point a – point iii

Text proposed by the Commission	Amendment
(iii) the plans of the group to ensure that the group’s business model and strategy compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement;	(iii) the opportunities for and resilience of the undertaking related to sustainability matters;

Amendment  64

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – point a – point iv

Text proposed by the Commission	Amendment
(iv) how the group’s business model and strategy take account of the interests of the group’s stakeholders and of the impacts of the group on sustainability matters;	(iv) the plans of the undertaking to ensure that its business model and strategy are compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement;

Amendment  65

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – point b

Text proposed by the Commission	Amendment
(b) a description of the targets related to sustainability matters set by the group and of the progress of the undertaking towards achieving them;	(b) a description of the targets related to each of the sustainability factors referred to in Article 2(17) set by the group and of the progress of the undertaking towards achieving them;

Amendment  66

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EC

Article 29a – paragraph 2 – point c

Text proposed by the Commission	Amendment
(c) a description of the role of the administrative, management and supervisory bodies with regard to sustainability matters;	(c) a description of the role of the administrative, management and supervisory bodies with regard to each of the sustainability factors referred to in Article 2(17);

Amendment  67

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – point d

Text proposed by the Commission	Amendment
(d) a description of the group’s policies in relation to sustainability matters;	(d) a description of the group’s policies in relation to sustainability factors referred to in Article 2(17);

Amendment  68

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – point e – point i

Text proposed by the Commission	Amendment
(i) the due diligence process implemented with regard to sustainability matters;	(i) the due diligence process implemented with regard to each of the sustainability factors referred to in Article 2(17), in line with, the EU Directive on Sustainable Corporate Governance, national legislation, and the UN Guiding Principles for Business and Human Rights and the OECD Due Diligence Guidance for Responsible Business Conduct;

Amendment  69

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – point e – point ii

Text proposed by the Commission	Amendment
(ii) the principal actual or potential adverse impacts connected with the group’s value chain, including its own operations, its products and services, its business relationships and its supply chain;	(ii) the actual or potential adverse impacts connected with the group’s value chain, including its own operations, its products and services, its business relationships and its supply chain;

Amendment  70

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – point e – point iii

Text proposed by the Commission	Amendment
(iii) any actions taken, and the result of such actions, to prevent, mitigate or remediate actual or potential adverse impacts;	(iii) all actions taken, and the result of such actions, to prevent, mitigate or remediate such actual or potential adverse impacts;

Amendment  71

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – point e – point iii a (new)

Text proposed by the Commission	Amendment
	(iii a) the structure of the undertaking’s value chain including through a disaggregated mapping of its own operations, subsidiaries, suppliers and business relationships;

Amendment  72

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – point f

Text proposed by the Commission	Amendment
(f) a description of the principal risks to the group related to sustainability matters, including the group’s principal dependencies on such factors, and how the group manages those risks;	(f) a description of the principal risks to the group related to each of the sustainability factors referred to in Article 2(17), including the group’s principal dependencies on such factors, and how the group manages those risks;

Amendment  73

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 3 – subparagraph 4

Text proposed by the Commission	Amendment
Member States may allow information relating to impending devel­opments or matters in the course of negotiation to be omitted in excep­tional cases where, in the duly justified opinion of the members of the administrative, management and supervisory bodies, acting within the competences assigned to them by national law and having collective responsibility for that opinion, the disclosure of such information would be seriously prejudicial to the commercial position of the group, provided that such omission does not prevent a fair and balanced under­standing of the group's development, performance, position and impact of its activity.	Member States may allow information relating to impending developments or matters in the course of negotiation to be omitted in exceptional cases where, in the duly justified opinion of the members of the administrative, management and supervisory bodies, acting within the competences assigned to them by national law and having collective responsibility for that opinion, the disclosure of such information would be seriously prejudicial to the commercial position of the group, provided that such omission does not prevent a fair and balanced understanding of the group's development, performance, position and impact of its activity. This provision shall not apply to disclosure obligations on significant events such as grave human rights abuses or environmental disasters.

Amendment  74

Proposal for a directive

Article 1 – paragraph 1 – point 8 – point a

Directive 2013/34/EU

Article 30 – paragraph 1 – subparagraph 3

Text proposed by the Commission	Amendment
Member States may, however, exempt undertakings from the obligation to publish the management report where a copy of all or part of any such report can be easily obtained upon request at a price not exceeding its administrative cost.’	deleted

Amendment  75

Proposal for a directive

Article 1 – paragraph 1 – point 8 – point a

Directive 2013/34/EU

Article 30 – paragraph 1 – subparagraph 4

Text proposed by the Commission	Amendment
The exemption laid down in the third subparagraph shall not apply to undertakings subject to Articles 19a and 29a.’;	deleted

PROCEDURE – COMMITTEE ASKED FOR OPINION

Title	Amending Directive 2013/34/EU, Directive 2004/109/EC, Directive 2006/43/EC and Regulation (EU) No 537/2014, as regards corporate sustainability reporting
References	COM(2021)0189 – C9-0147/2021 – 2021/0104(COD)
Committee responsible  Date announced in plenary	JURI 23.6.2021
Opinion by  Date announced in plenary	AFET 23.6.2021
Rapporteur for the opinion  Date appointed	Karin Karlsbro 11.11.2021
Discussed in committee	10.12.2021
Date adopted	25.1.2022
Result of final vote	+: –: 0:	61 8 7
Members present for the final vote	Alviina Alametsä, Alexander Alexandrov Yordanov, François Alfonsi, Maria Arena, Petras Auštrevičius, Traian Băsescu, Anna Bonfrisco, Reinhard Bütikofer, Fabio Massimo Castaldo, Susanna Ceccardi, Włodzimierz Cimoszewicz, Katalin Cseh, Tanja Fajon, Anna Fotyga, Michael Gahler, Sunčana Glavak, Raphaël Glucksmann, Klemen Grošelj, Bernard Guetta, Márton Gyöngyösi, Sandra Kalniete, Peter Kofod, Stelios Kouloglou, Andrius Kubilius, Ilhan Kyuchyuk, David Lega, Miriam Lexmann, Nathalie Loiseau, Leopoldo López Gil, Antonio López-Istúriz White, Jaak Madison, Claudiu Manda, Lukas Mandl, Thierry Mariani, Pedro Marques, David McAllister, Vangelis Meimarakis, Jörg Meuthen, Sven Mikser, Francisco José Millán Mon, Javier Nart, Gheorghe-Vlad Nistor, Urmas Paet, Demetris Papadakis, Kostas Papadakis, Tonino Picula, Manu Pineda, Giuliano Pisapia, Thijs Reuten, María Soraya Rodríguez Ramos, Nacho Sánchez Amor, Isabel Santos, Jacek Saryusz-Wolski, Andreas Schieder, Radosław Sikorski, Jordi Solé, Sergei Stanishev, Tineke Strik, Hermann Tertsch, Dragoş Tudorache, Harald Vilimsky, Idoia Villanueva Ruiz, Viola Von Cramon-Taubadel, Thomas Waitz, Witold Jan Waszczykowski, Charlie Weimers, Isabel Wiseler-Lima, Salima Yenbou, Željana Zovko
Substitutes present for the final vote	Özlem Demirel, Assita Kanko, Karsten Lucke, Bert-Jan Ruissen, Mick Wallace
Substitutes under Rule 209(7) present for the final vote	Karin Karlsbro, Ivan Štefanec

 

FINAL VOTE BY ROLL CALL IN COMMITTEE ASKED FOR OPINION

61	+
NI	Fabio Massimo Castaldo, Márton Gyöngyösi
PPE	Alexander Alexandrov Yordanov, Traian Băsescu, Michael Gahler, Sunčana Glavak, Sandra Kalniete, Andrius Kubilius, David Lega, Miriam Lexmann, Leopoldo López Gil, Antonio López-Istúriz White, David McAllister, Lukas Mandl, Vangelis Meimarakis, Francisco José Millán Mon, Gheorghe-Vlad Nistor, Radosław Sikorski, Ivan Štefanec, Isabel Wiseler-Lima, Željana Zovko
Renew	Petras Auštrevičius, Katalin Cseh, Klemen Grošelj, Bernard Guetta, Karin Karlsbro, Ilhan Kyuchyuk, Nathalie Loiseau, Javier Nart, Urmas Paet, María Soraya Rodríguez Ramos, Dragoş Tudorache
S&D	Maria Arena, Włodzimierz Cimoszewicz, Tanja Fajon, Raphaël Glucksmann, Karsten Lucke, Claudiu Manda, Pedro Marques, Sven Mikser, Demetris Papadakis, Tonino Picula, Giuliano Pisapia, Thijs Reuten, Nacho Sánchez Amor, Isabel Santos, Andreas Schieder, Sergei Stanishev
The Left	Özlem Demirel, Stelios Kouloglou, Manu Pineda, Idoia Villanueva Ruiz, Mick Wallace
Verts/ALE	Alviina Alametsä, François Alfonsi, Reinhard Bütikofer, Jordi Solé, Tineke Strik, Viola Von Cramon-Taubadel, Thomas Waitz, Salima Yenbou

 

8	-
ECR	Hermann Tertsch, Charlie Weimers
ID	Peter Kofod, Jaak Madison, Thierry Mariani, Jörg Meuthen, Harald Vilimsky
NI	Kostas Papadakis

 

7	0
ECR	Anna Fotyga, Assita Kanko, Bert-Jan Ruissen, Jacek Saryusz-Wolski, Witold Jan Waszczykowski
ID	Anna Bonfrisco, Susanna Ceccardi

 

Key to symbols:

+ : in favour

- : against

0 : abstention

 

 

OPINION OF THE COMMITTEE ON DEVELOPMENT (4.3.2022)

for the Committee on Legal Affairs

on the proposal for a directive of the European Parliament and of the Council amending Directive 2013/34/EU, Directive 2004/109/EC, Directive 2006/43/EC and Regulation (EU) No 537/2014, as regards corporate sustainability reporting

(COM(2021)0189 – C9‑0147/2021 – 2021/0104(COD))

Rapporteur for opinion: Pierfrancesco Majorino

 

SHORT JUSTIFICATION

Adverse impact on human rights, environment and on the rule of law and good governance systems of the countries and territories where these companies operates present a major risk to the sustainable development of developing countries.

Companies have a major role to play, promoting sustainable value and supply chains and benefits for developing countries. However, a key aspect for success will be that companies measure and report the right information to civil society, investors, banks, and insurers as well as to other stakeholders.

The EU Non-Financial Reporting Directive has provided a legal framework for companies and financial actors to report on sustainability risks exposures and impacts on people and the planet. However most companies fail to disclose relevant, material and comparable sustainability information.

The EC proposal aims at reforming this framework. It will clarify concepts and information that should be disclosed by companies. This clarity is essential for European business operating abroad in developing countries in order to help ensure that they do not cause, contribute or continue to be linked to harms arising in their global operations and supply and value chains and to help them to avoid risks to their reputation and financial consequences.

The Rapporteur welcomes the proposal, which has the potential to have positive impacts on developing countries where companies and their value chains operate and where, unfortunately, most of the adverse impacts on human rights and environment from companies’ activities occur.

The Rapporteur considers it necessary to incorporate a greater sensitivity in relation to the impacts of this directive on the economic, social and environmental development of developing countries. Indeed, the obligation to report on sustainability issues will increase company’s awareness about the positive role they can play and the potential positive impact they can have on the sustainable economic, social and environmental development of the developing countries where they operate. Companies reporting on sustainability matters could become a key incentive for the governments to adopt policies and legislation, reform institutions to comply with international and European standards and requirements.

The proposal will contribute to the implementation of the Agenda 2030 at global level and, more specifically, to the implementation of the European development cooperation objectives concerning the promotion of human rights, environmental protection, rule of law and good governance.

The amendments tabled seek to reinforce the sensibility of the directive concerning the impacts on the developing countries. In doing so, we ensure that, the principle of policy coherence for development as enshrined in Article 208.1 TFEU is duly taking into account.

The Rapporteur is of the opinion that sustainability matters should cover also the respect for the rule of law and good governance systems of the country where the company and its supply chains operate and that the directive should apply to all type of undertakings including all types of small and medium size undertakings, subsidiaries and groups of undertakings. It is indeed essential to avoid possible omissions and loopholes that could distort transparency and a level playing field.

It will be crucial to identify the most high-risk areas of activity, through delegated acts of the Commission. These sectors should be prioritised as the higher and more likely the negative impacts are.

The Rapporteur considers important to ensure that the description of the business model and strategy includes a description of the adverse impacts and risks on sustainability matters and that they contribute to the implementation of UN Agenda 2030. The due diligence process has also been detailed with the most relevant and minimum information.

In order to better connect the due diligence and risks of adverse impact on employees, valuable information about social and governance factors are needed. At the same time, reporting should include information concerning potential impacts on the rule of law and good governance systems of the country, region or territory where the undertaking or its value and supply chain operate.

New administrative sanctions are suggested. They focus on the possibility of losing public benefits and public aid and aim to improve the enforcement of the directive by Member States.

A new Article on cooperation with developing countries has also been proposed to support to better connect the implementation of the directive to what happen in developing countries.

AMENDMENTS

The Committee on Development calls on the Committee on Legal Affairs, as the committee responsible, to take into account the following amendments:

Amendment  1

Proposal for a directive

Citation 5 a (new)

Text proposed by the Commission	Amendment
	Having regard to the development cooperation objectives pursuant to Article 208 of the Treaty on the Functioning of the European Union,

Amendment  2

Proposal for a directive

Recital 1

Text proposed by the Commission	Amendment
(1) In its communication on the European Green Deal adopted on 11 December 201930 , the European Commission made a commitment to review the provisions concerning non-financial reporting of Directive 2013/34/EU of the European Parliament and of the Commission.31 The European Green Deal is the European Union’s new growth strategy. It aims to transform the Union into a modern, resource-efficient and competitive economy with no net emissions of greenhouse gases by 2050. It also aims to protect, conserve and enhance the Union's natural capital, and protect the health and well-being of citizens from environment-related risks and impacts. The European Green Deal aims at decoupling economic growth from resource use, and ensuring that all regions and citizens of the Union participate in a socially just transition to a sustainable economic system. It will contribute to the objective of building an economy that works for the people, strengthening the EU’s social market economy, helping to ensure that it is future-ready and that it delivers stability, jobs, growth and investment. These goals are especially important considering the socio-economic damage caused by the COVID-19 pandemic and the need for a sustainable, inclusive and fair recovery. In its proposal of 4 March 2020 for a European Climate Law, the European Commission proposed to make the objective of climate neutrality by 2050 binding in the Union.32	(1) In its communication on the European Green Deal adopted on 11 December 201930 , the European Commission made a commitment to review the provisions concerning non-financial reporting of Directive 2013/34/EU of the European Parliament and of the Commission.31 The European Green Deal is the European Union’s new growth strategy. It aims to transform the Union into a modern, resource-efficient and competitive economy with no net emissions of greenhouse gases by 2050. It also aims to protect, conserve and enhance the Union's natural capital, and protect the health and well-being of citizens from environment-related risks and impacts. The European Green Deal aims at decoupling economic growth from resource use, and ensuring that all regions and citizens of the Union participate in a socially just transition to a sustainable economic system, so that no person and no place is left behind. It will contribute to the objective of building an economy that works for the people, strengthening the EU’s social market economy, helping to ensure that it is future-ready and that it delivers stability, jobs, growth and sustainable investment. These goals are especially important considering the socio-economic damage caused by the COVID-19 pandemic and the need for a sustainable, inclusive and fair recovery. In its proposal of 4 March 2020 for a European Climate Law, the European Commission proposed to make the objective of climate neutrality by 2050 binding in the Union.32
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30 COM(2019) 640 final.	30 COM(2019) 640 final.
31 Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19).	31 Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19).
32 Proposal for a Regulation of the European Parliament and of the Council establishing the framework for achieving climate neutrality and amending Regulation (EU) 2018/1999 (European Climate Law) [2020/0036 (COD)]	32 Proposal for a Regulation of the European Parliament and of the Council establishing the framework for achieving climate neutrality and amending Regulation (EU) 2018/1999 (European Climate Law) [2020/0036 (COD)]

Amendment  3

Proposal for a directive

Recital 5

Text proposed by the Commission	Amendment
(5) On 25 September 2015, the UN General Assembly adopted a new global sustainable development framework: the 2030 Agenda for Sustainable Development (the ‘2030 Agenda’). The 2030 Agenda has at its core the Sustainable Development Goals and covers the three dimensions of sustainability: economic, social and environmental. The Commission communication of 22 November 2016 on the next steps for a sustainable European future linked the Sustainable Development Goals to the Union policy framework to ensure that all Union actions and policy initiatives, both in and beyond the Union, take those goals on board at the outset.45 In its conclusions of 20 June 2017, the Council confirmed the commitment of the Union and its Member States to the implementation of the 2030 Agenda in a full, coherent, comprehensive, integrated and effective manner, in close cooperation with partners and other stakeholders.46	(5) On 25 September 2015, the UN General Assembly adopted a new global sustainable development framework: the 2030 Agenda for Sustainable Development (the ‘2030 Agenda’). The 2030 Agenda has at its core the Sustainable Development Goals and covers the three dimensions of sustainability: economic, social and environmental. The Commission communication of 22 November 2016 on the next steps for a sustainable European future linked the Sustainable Development Goals to the Union policy framework to ensure that all Union actions and policy initiatives, both in and beyond the Union, take those goals on board at the outset.45That Communication also acknowledges that the Union and its Members States have a significant impact on achieving the Sustainable Development Goals (SDGs) worldwide and that the Union’s impact outside its borders is not limited to its external action agenda. Many of the Union’s policies with a domestic dimension contribute to the implementation of the SDGs worldwide. Therefore, achieving coherence across all Union policies is crucial for achieving the SDGs. Policy coherence for development is an essential element of the Union’s response to the sustainable development challenge enshrined in the Treaties. In accordance with this legal obligation, as enshrined in Article 208 TFEU, the Union should take account of the objectives of development cooperation in the policies that are likely to affect developing countries. This principle has also been recognised in Regulation (EU) 2021/947 of the European Parliament and of the Council45a. In its conclusions of 20 June 2017, the Council confirmed the commitment of the Union and its Member States to the implementation of the 2030 Agenda in a full, coherent, comprehensive, integrated and effective manner, in close cooperation with partners and other stakeholders.46
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45 COM(2016) 739 final	45 COM(2016) 739 final
	45a Regulation (EU) 2021/947 of the European Parliament and of the Council of 9 June 2021 establishing the Neighbourhood, Development and International Cooperation Instrument – Global Europe, amending and repealing Decision No 466/2014/EU of the European Parliament and of the Council and repealing Regulation (EU) 2017/1601 of the European Parliament and of the Council and Council Regulation (EC, Euratom) No 480/2009 (OJ L 209, 14.6.2021, p. 1).
46 Council conclusions “A sustainable European future: The EU response to the 2030 Agenda for Sustainable Development”, 20 June 2017.	46 Council conclusions “A sustainable European future: The EU response to the 2030 Agenda for Sustainable Development”, 20 June 2017.

Amendment  4

Proposal for a directive

Recital 7

Text proposed by the Commission	Amendment
(7) Many stakeholders consider the term ‘non-financial’ to be inaccurate, in particular because it implies that the information in question has no financial relevance. Increasingly, however, the information in question does have financial relevance. Many organisations, initiatives and practitioners in this field refer to ‘sustainability’ information. It is therefore preferable to use the term ‘sustainability information’ in place of ‘non-financial information’. Directive 2013/34/EU should therefore be amended to take account of this change in terminology.	(7) Many stakeholders consider the term ‘non-financial’ to be inaccurate, in particular because it implies that the information in question has no financial relevance. Increasingly, however, the information in question does have financial relevance. Many organisations, initiatives and practitioners in this field refer to ‘sustainability’ information. It is therefore preferable to use the term ‘sustainability information’ in place of ‘non-financial information’. Directive 2013/34/EU should therefore be amended to take account of this change in terminology and to align sustainability reporting standards with financial reporting standards.

Amendment  5

 

Proposal for a directive

Recital 8

Text proposed by the Commission	Amendment
(8) The ultimate beneficiaries of better sustainability reporting by undertakings are individual citizens and savers. Savers who want to invest sustainably will have the opportunity to do so, while all citizens should benefit from a stable, sustainable and inclusive economic system. To realise these benefits, the sustainability information disclosed in undertaking’s annual reports first has to reach two primary groups (‘users’). The first group of users consists of investors, including asset managers, who want to better understand the risks and opportunities that sustainability issues pose to their investments and the impacts of those investments on people and the environment. The second group of users consists of organisations, including non-governmental organisations and social partners, that wish to better hold undertakings to account for their impacts on people and the environment. Other stakeholders may also make use of sustainability information disclosed in annual reports. The business partners of undertakings, including customers, may rely on this information to understand, and where necessary report on, the sustainability risks and impacts through their own value chains. Policy makers and environmental agencies may use such information, in particular on an aggregate basis, to monitor environmental and social trends, to contribute to environmental accounts, and to inform public policy. Few individual citizens and consumers directly consult undertaking’s reports, but they may use such information indirectly such as when considering the advice or opinions of financial advisers or non-governmental organisations. Many investors and asset managers purchase sustainability information from third party data providers, who collect information from various sources, including public corporate reports.	(8) The ultimate beneficiaries of better sustainability reporting by undertakings are public authorities, individual citizens and savers. Policy makers and public authorities need this information in order to design and implement public policies, and in particular to protect people’s rights and the environment, to hold undertakings accountable for their impacts and to conduct a just social and environmental transition. Savers who want to invest sustainably will have the opportunity to do so, while all citizens should benefit from a stable, transparent, sustainable and inclusive economic system. To realise these benefits, the sustainability information disclosed in undertaking’s annual reports first has to reach three primary groups (‘users’). The first group of users consists of policy makers and public authorities. The second group of users consists of investors, including asset managers, who want to better understand the risks and opportunities that sustainability issues pose to their reputation and investments and the impacts of those investments on people, in particular workers and local communities and the environment. The third group of users consists of civil society actors, including, international organisations, national, regional and local governments, non-governmental organisations, social partners, indigenous people and local communities that wish to better hold undertakings to account for their impacts on people and the environment. Other stakeholders may also make use of sustainability information disclosed in annual reports to foster the comparability across market sectors on the basis of environmental merits, corporate entities should disclose the degree to which they contribute to economic activities that qualify as environmentally sustainable pursuant to Article 3 of Regulation (EU) 2020/852 on Sustainable Finance Taxonomy and fully respect the ‘do no significant harm’ principle pursuant to Article 17 of Regulation (EU) 2020/852. The business partners of undertakings, including customers, may rely on this information to understand, and where necessary report on, the sustainability risks and impacts through their own supply and value chains. Experts, policy makers, social partners, non–governmental organisations, and environmental agencies may use such information, in particular on an aggregate basis, to monitor, verify and compare environmental, climate and social data and trends, to contribute to environmental accounts and social progress and to inform public policy. Few individual citizens and consumers directly consult undertaking’s reports, but they may use such information indirectly such as when considering the advice or opinions of financial advisers or non-governmental organisations. Many investors and asset managers purchase sustainability information from third party data providers, who collect information from various sources, including public corporate reports.

Amendment  6

 

Proposal for a directive

Recital 9

Text proposed by the Commission	Amendment
(9) There has been a very significant increase in demand for corporate sustainability information in recent years, especially on the part of the investment community. That increase in demand is driven by the changing nature of risks to undertakings and growing investor awareness of the financial implications of these risks. That is especially the case for climate-related financial risks. Awareness of the risks to undertakings and to investments resulting from other environmental issues and from social issues, including health issues, is also growing. The increase in demand for sustainability information is also driven by the growth in investment products that explicitly seek to meet certain sustainability standards or achieve certain sustainability objectives. Part of that increase is the logical consequence of previously adopted Union legislation, notably Regulation (EU) 2019/2088 and Regulation (EU) 2020/852. Some of the increase would have happened in any case, due to fast-changing citizen awareness, consumer preferences and market practices. The COVID-19 pandemic will further accelerate the increase in users’ information needs, in particular as it has exposed the vulnerabilities of workers and of undertaking’s value chains. Information on environmental impacts is also relevant in the context of mitigating future pandemics with human disturbance of ecosystems increasingly linked to the occurrence and spread of diseases.	(9) There has been a very significant increase in demand for corporate sustainability information in recent years, especially on the part of the investment community and civil society. That increase in demand is driven by the changing nature of risks to undertakings and growing investor awareness of the financial implications of these risks. That is especially the case for climate-related financial risks. Awareness of the risks to undertakings and to investments resulting from other environmental issues, notably related to climate and biodiversity, and from social issues, including health issues, is also growing. The increase in demand for sustainability information is also driven by the growth in investment products that explicitly seek to meet certain sustainability standards or achieve certain sustainability objectives, in line with international Union commitments, notably regarding the Paris Agreement on climate change and the Convention on Biological Diversity. Part of that increase is the logical consequence of previously adopted Union legislation, notably Regulation (EU) 2019/2088 and Regulation (EU) 2020/852. Some of the increase would have happened in any case, due to fast-changing citizen awareness, consumer preferences and market practices. The COVID-19 pandemic will further accelerate the increase in users’ information needs, in particular as it has exposed the vulnerabilities of workers and of undertaking’s due diligence along the supply and value chains. Information on environmental impacts is also relevant in the context of mitigating future pandemics with human disturbance of ecosystems increasingly linked to the occurrence and spread of diseases.

Amendment  7

Proposal for a directive

Recital 10

Text proposed by the Commission	Amendment
(10) Undertakings themselves stand to benefit from carrying out high quality reporting on sustainability matters. The growth in the number of investment products that aim to pursue sustainability objectives means that good sustainability reporting can enhance an undertaking’s access to financial capital. Sustainability reporting can help undertakings to identify and manage their own risks and opportunities related to sustainability matters. It can provide a basis for better dialogue and communication between undertakings and their stakeholders, and can help undertakings to improve their reputation.	(10) Undertakings themselves stand to benefit from carrying out high quality reporting on sustainability matters. The growth in the number of investment products that aim to pursue sustainability objectives means that good sustainability reporting can enhance an undertaking’s access to financial capital, increase its market valuation and attract investors. Sustainability reporting can help undertakings to identify and manage their own risks and opportunities related to sustainability matters. It can provide a basis for better dialogue and communication between undertakings and their stakeholders, and can help undertakings to improve their reputation by increasing their accountability and enhancing trust in them.

Amendment  8

 

Proposal for a directive

Recital 12

Text proposed by the Commission	Amendment
(12) In the absence of policy action, the gap between users’ information needs and the sustainability information reported by undertakings is expected to grow. This gap has significant negative consequences. Investors are unable to take sufficient account of sustainability-related risks and opportunities in their investment decisions. The aggregation of multiple investment decisions that do not take adequate account of sustainability-related risks has the potential to create systemic risks that threaten financial stability. The European Central Bank and international organisations such as the Financial Stability Board have drawn attention to those systemic risks, in particular in the case of climate. Investors are also less able to channel financial resources to undertakings and economic activities that address and do not exacerbate social and environmental problems, which undermines the objectives of the European Green Deal and the Action Plan on Financing Sustainable Growth. Non-governmental organisations, social partners, communities affected by undertakings’ activities, and other stakeholders are less able to hold undertakings accountable for their impacts on people and the environment. This creates an accountability deficit, and may contribute to lower levels of citizen trust in businesses, which in turn may have negative impacts on the efficient functioning of the social market economy. The lack of generally accepted metrics and methods for measuring, valuing, and managing sustainability-related risks is also an obstacle to the efforts of undertakings to ensure that their business models and activities are sustainable.	(12) In the absence of policy action, the gap between users’ information needs and the sustainability information reported by undertakings is expected to grow. This gap has significant negative consequences. Investors are unable to take sufficient account of sustainability-related risks and opportunities in their investment decisions. The aggregation of multiple investment decisions that do not take adequate account of sustainability-related risks has the potential to create systemic risks that threaten financial stability. The European Central Bank and international organisations such as the Financial Stability Board have drawn attention to those systemic risks, in particular in the case of climate. Investors are also less able to channel financial resources to undertakings and economic activities that address and do not exacerbate social and environmental problems, which undermines the objectives of the European Green Deal and the Action Plan on Financing Sustainable Growth, the objectives of the Paris Agreement on climate change and the Convention on Biological Diversity. Non-governmental organisations, social partners, communities affected by undertakings’ activities, and other stakeholders are less able to hold undertakings accountable for their adverse impacts on people, human rights, the environment, including in their activities in third countries, and on the rule of law and good governance systems, including in developing countries where the institutions that are constitutionally in charge of defending and protecting those organisations, social partners, communities and other stakeholders are undermined. This creates an accountability deficit, and may contribute to lower levels of citizen trust in businesses, which in turn may have negative impacts on the efficient functioning of the social market economy. The lack of generally accepted metrics and methods for measuring, valuing, and managing sustainability-related risks is also an obstacle to the efforts of undertakings to ensure that their business models and activities are sustainable. The lack of sustainability information also limits the ability of stakeholders, including civil society actors, trade unions, indigenous people and local communities, to enter into dialogue with undertakings on sustainability matters.

Amendment  9

 

Proposal for a directive

Recital 15

Text proposed by the Commission	Amendment
(15) Articles 19a and 29a of Directive 2013/34/EU apply to large undertakings that are public-interest entities with an average number of employees in excess of 500, and to public-interest entities that are parent undertakings of a large group with an average number of employees in excess of 500 on a consolidated basis, respectively. In view of the growth of users’ needs for sustainability information, additional categories of undertakings should be required to report such information. It is therefore appropriate to require all large undertakings and all undertakings listed on regulated markets, except micro undertakings, to report detailed sustainability information. In addition, all undertakings that are parent undertakings of large groups should prepare sustainability reporting at group level.	(15) Articles 19a and 29a of Directive 2013/34/EU apply to large undertakings that are public-interest entities with an average number of employees in excess of 500, and to public-interest entities that are parent undertakings of a large group with an average number of employees in excess of 500 on a consolidated basis, respectively. In view of the growth of users’ needs for sustainability information, additional categories of undertakings should be required to report such information. It is therefore appropriate to require all large undertakings and all undertakings listed on regulated markets, except micro undertakings, all public interest entities, all small and medium sized undertakings operating in high-risk economic activity sectors, to report detailed sustainability information. In addition, all undertakings that are parent undertakings of large groups should prepare sustainability reporting at group level based on individual reports by subsidiary undertakings. Undertakings established outside the Union, but operating in the internal market should be subject to the same requirements in order to account for their sustainability impacts and to provide a level playing field for undertakings established in the Union.

 

Amendment  10

 

Proposal for a directive

Recital 15 a (new)

Text proposed by the Commission	Amendment
	(15a) The specific situation of undertakings which, although not having any legal establishment in the Union, regularly engage in significant economic activity within the Union, should be taken into account. The requirement that undertakings that are established in third countries and operate in the Union also disclose information on sustainability matters is necessary to account for the need of European users, consumers and investors to access information about sustainability matters related to their activities. It is also necessary in order to guarantee a level playing field in the single market between undertakings established in the Union and third-country undertakings.

Amendment  11

Proposal for a directive

Recital 16

Text proposed by the Commission	Amendment
(16) The requirement that also large non-listed undertakings should disclose information on sustainability matters is mainly driven by concerns about the impacts and accountability of such undertakings, including through their value chain. In this respect, all large undertakings should be subject to the same requirements to report sustainability information publicly. In addition, financial market participants also need information from those large non-listed undertakings.	(16) The requirement that also large non-listed undertakings should disclose information on sustainability matters is mainly driven by concerns about the impacts and accountability of such undertakings, including through their supply and value chain. In this respect, all undertakings should be subject to the same requirements to report sustainability information publicly to ensure a level playing field. In addition, financial market participants also need information from non-listed undertakings.

Amendment  12

Proposal for a directive

Recital 17

Text proposed by the Commission	Amendment
(17) The requirement that undertakings not established in the Union but with securities listed on regulated markets should also disclose information on sustainability matters responds to the needs of financial market participants for information from such undertakings in order to understand the risks and impacts of their investments, and to comply with the disclosure requirements laid down in Regulation (EU) 2019/2088.	(17) The requirement that undertakings not established in the Union but with securities listed on regulated markets or that conduct business in the internal market should also disclose information on sustainability matters responds to the needs of financial market participants for information from such undertakings in order to understand the risks and impacts of their investments, and to comply with the disclosure requirements laid down in Regulation (EU) 2019/2088.

Amendment  13

 

Proposal for a directive

Recital 18

Text proposed by the Commission	Amendment
(18) Considering the growing relevance of sustainability-related risks and taking into account that small and medium-sized enterprises (SMEs) listed on regulated markets comprise a significant proportion of all listed undertakings in the Union, in order to ensure investor protection it is appropriate to require that also those SMEs disclose information on sustainability matters. The introduction of this requirement will help to ensure that financial market participants can include smaller listed undertakings in investment portfolios on the basis that they report the sustainability information that financial market participants need. It will therefore help to protect and enhance the access of smaller listed undertakings to financial capital, and avoid discrimination against such undertakings on the part of financial market participants. The introduction of this requirement is also necessary to ensure that financial market participants have the information they need from investee undertakings to be able to comply with their own sustainability disclosure requirements laid down in Regulation (EU) 2019/2088. SMEs listed on regulated markets should, however, be provided with sufficient time to prepare for the application of the requirement to report sustainability information, due to their smaller size and more limited resources, and taking account of the difficult economic circumstances created by the COVID-19 pandemic. They should also be given the possibility to report according to standards that are proportionate to the capacities and resources of SMEs. Non-listed SMEs can also choose to use these proportionate standards on a voluntary basis. The SME standards will set a reference for undertakings that are within the scope of the Directive regarding the level of sustainability information that they could reasonably request from SME suppliers and clients in their value chains.	(18) Considering the growing relevance of sustainability-related risks and taking into account that small and medium-sized enterprises (SMEs) listed on regulated markets comprise a significant proportion of all listed undertakings in the Union, in order to ensure investor protection as well as due diligence with regard to the environment, human rights and rule of law and good governance systems, it is appropriate to require that also those SMEs disclose information on sustainability matters. It is also appropriate to require all SMEs operating in high-risk sectors of economic activity, defined as those sectors with a significant impact on human rights, the environment and rule of law and good governance systems to carry out sustainability reporting. The introduction of this requirement will help to ensure that financial market participants can include smaller listed undertakings in investment portfolios on the basis that they report the sustainability information that financial market participants need. It will therefore help to protect and enhance the access of smaller listed undertakings to financial capital, and avoid discrimination against such undertakings on the part of financial market participants. The introduction of this requirement is also necessary to ensure that financial market participants have the information they need from investee undertakings to be able to comply with their own sustainability disclosure requirements laid down in Regulation (EU)2019/2088. SMEs listed on regulated markets should, however, be provided with sufficient time to prepare for the application of the requirement to report sustainability information, due to their smaller size and more limited resources, and taking account of the difficult economic circumstances created by the COVID-19 pandemic. They should also be given the possibility to report according to standards that are proportionate to the capacities and resources of SMEs. SMEs not carrying out high-risk economic activities and non-listed SMEs can also choose to use these proportionate standards on a voluntary basis. The SME standards will set a reference for undertakings that are within the scope of the Directive regarding the level of sustainability information that they could reasonably request from SME suppliers and clients in their supply and value chains.

Amendment  14

 

Proposal for a directive

Recital 18 a (new)

Text proposed by the Commission	Amendment
	(18a) Certain sectors of economic activity are recognised as posing particularly significant sustainability risks. A high-risk economic activity sector is a sector that is associated, as a result of its business and value and supply chain characteristics, with a high likelihood of actual or potential severe impacts on the environment, people, human rights as well as on the rule of law and good governance systems of the country, region or territory where the undertaking or its value and supply chains operate. Some sectors, such as, among others, mining, extractives industries, agriculture, fisheries, forestry and food production, fertilizers, pesticides and antibiotics, garment industry, plastic production, timber, the electronic industry, the energy industry, finance and international shipping or the gig economy, may be more exposed to severe environmental, social, human right, impacts and rule of law and governance systems, in particular in developing countries. In order to ensure that this Directive applies also to SMEs operating in high-risk sectors of economic activity, such sectors should be defined. To that end, the Commission shall be empowered to adopt delegated acts in accordance with Article 49 to establish and update a list of high-risk sectors of economic activity. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, to establish and update the list of high-risk economic activity sectors, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Inter-institutional Agreement of 13 April 2016 on Better Law-Making. In particular, to ensure their equal participation in the preparation of delegated acts, Parliament and the Council should receive all documents at the same time as Member States’ experts, and their experts should systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts. SMEs carrying out a high-risk economic activity should also be subject to sustainability reporting obligations.

 

Amendment  15

 

Proposal for a directive

Recital 18 b (new)

Text proposed by the Commission	Amendment
	(18b) The definition of sectors of high- risk economic activity should be based on and inspired by the NACE Codes and should take into account Union legislation, scientific evidence and data about sectors that are particularly exposed to sustainability risks or are likely to have actual or potential severe impacts on the environment, human rights and the rule of law and good governance systems, sectors that are already considered "high-risk” under international standards and sectors that are already considered “high-risk” under market or business initiatives. The definition of high-risk sectors of economic activity sectors should take into account also the geographical area where the undertaking and its value and supply chain operate, in particular if it is considered as a conflict-affected or high-risk area as defined in Regulation (EU) 2017/821. The Commission should also take into account the work of the Platform on Sustainable Finance established in accordance with Article 20 of Regulation (EU) 2020/852 and the OECD Due Diligence Guidance for Responsible Business Conduct.

 

Amendment  16

 

Proposal for a directive

Recital 18  c (new)

Text proposed by the Commission	Amendment
	(18c) The requirement that SMEs operating in high-risk sectors  disclose information on sustainability matters is mainly driven by the likelihood that the severity of sustainability impacts is higher in some specific sectors regardless of the size of the undertaking.

Amendment  17

Proposal for a directive

Recital 19

Text proposed by the Commission	Amendment
(19) Directive 2004/109/EC of the European Parliament and of the Council49 applies to all undertakings with securities listed on regulated markets. In order to ensure that all undertakings with securities listed on regulated markets, including third country issuers, fall under the same sustainability reporting requirements, Directive 2004/109/EC should contain the necessary cross-references to any requirement on sustainability reporting in the annual financial report.	(19) Directive 2004/109/EC of the European Parliament and of the Council49 applies to all undertakings with securities listed on regulated markets. In order to ensure that all undertakings with securities listed on regulated markets or business activities in the Union internal market, including third country issuers, fall under the same sustainability reporting requirements, Directive 2004/109/EC should contain the necessary cross-references to any requirement on sustainability reporting in the annual financial report.
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49 Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (OJ L 390, 31.12.2004, p. 38).	49 Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (OJ L 390, 31.12.2004, p. 38).

Amendment  18

 

Proposal for a directive

Recital 21

Text proposed by the Commission	Amendment
(21) Articles 19a(3) and 29a(3) of Directive 2013/34/EU currently exempt all subsidiary undertakings from the obligation to report non-financial information where such undertakings and their subsidiary undertakings are included in the consolidated management report of their parent undertaking, provided this includes the required non-financial information. It is necessary, however to ensure that sustainability information is easily accessible for users, and to bring transparency about which is the parent undertaking of the exempted subsidiary undertaking which is reporting at consolidated level. It is therefore necessary to require those subsidiary undertakings to publish the consolidated management report of their parent undertaking and to include a reference in their management report to the fact that they are exempted from reporting sustainability information. That exemption should also apply where the parent undertaking reporting at consolidated level is a third country undertaking reporting sustainability information in accordance with the requirements of this Directive or in a manner equivalent to EU sustainability reporting standards.	(21) Articles 19a(3) and 29a(3) of Directive 2013/34/EU currently exempt all subsidiary undertakings from the obligation to report non-financial information where such undertakings and their subsidiary undertakings are included in the consolidated management report of their parent undertaking, as defined in  Directive 2013/34/EU, provided this includes the required non-financial information. It is necessary, however, to ensure that sustainability information is easily accessible for users, and to bring transparency about the activities of all the undertakings covered by the scope of the Directive. It is therefore necessary to require those subsidiary undertakings to publish a management report containing information on sustainability. The absence of an exemption does not affect the possibility for a parent undertaking to pool costs and resources with its subsidiaries in order for them to fulfil their obligations concerning sustainability reporting and auditing of sustainability reporting. Nor does it affect the possibility for parent undertakings to produce a consolidated management report.

Amendment  19

Proposal for a directive

Recital 22

Text proposed by the Commission	Amendment
(22) Article 23 of Directive 2013/34/EU exempts parent undertakings from the obligation to prepare consolidated financial statements and a consolidated management report where those undertakings are subsidiaries of another parent undertaking that complies with that obligation. It should be specified, however, that the exemption regime for consolidated financial statements and consolidated management reports operates independently from the exemption regime for consolidated sustainability reporting. An undertaking can therefore be exempted from consolidated financial reporting obligations but not exempted from consolidated sustainability reporting obligations where its ultimate parent prepares consolidated financial statements and consolidated management reports in accordance with Union law, or in accordance with equivalent requirements if the undertaking is established in a third country, but does not prepare consolidated sustainability reporting in accordance with EU law, or in accordance with equivalent requirements if the undertaking is established in a third country.	deleted

Amendment  20

Proposal for a directive

Recital 23

Text proposed by the Commission	Amendment
(23) Credit institutions and insurance undertakings play a key role in the transition towards a fully sustainable and inclusive economic and financial system in line with the European Green Deal. They can have significant positive and negative impacts via their lending, investment and underwriting activities. Credit institutions and insurance undertakings other than those that are required to comply with Directive 2013/34/EU, including cooperatives and mutual undertakings, should therefore be subject to sustainability reporting requirements provided that they meet certain size criteria. Users of that information would thus be enabled to assess both the impacts of these undertakings on society and the environment and the risks arising from sustainability matters that these undertakings could face. To ensure coherence with the reporting requirements of Council Directive 86/635/EEC50 on the annual accounts and consolidated accounts of banks and other financial institutions, sustainability reporting Member States may choose not to apply sustainability reporting requirements to credit institutions listed in Article 2(5) of Directive 2013/36/EU of the European Parliament and of the Council51 .	(23) Credit institutions and insurance undertakings play a key role in the transition towards a fully sustainable and inclusive economic and financial system in line with the European Green Deal. They can have significant positive and negative impacts via their lending, investment and underwriting activities. Credit institutions and insurance undertakings other than those that are required to comply with Directive 2013/34/EU, including cooperatives and mutual undertakings, should therefore be subject to sustainability reporting requirements. Users of that information would thus be enabled to assess both the impacts of these undertakings on society and the environment and the risks arising from sustainability matters that these undertakings could face. To ensure coherence with the reporting requirements of Council Directive 86/635/EEC50 on the annual accounts and consolidated accounts of banks and other financial institutions, sustainability reporting Member States may choose not to apply sustainability reporting requirements to credit institutions listed in Article 2(5) of Directive 2013/36/EU of the European Parliament and of the Council51 .
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50 Council Directive 86/635/EEC of 8 December 1986 on the annual accounts and consolidated accounts of banks and other financial institutions (OJ L 372, 31.12.1986, p. 1).	50 Council Directive 86/635/EEC of 8 December 1986 on the annual accounts and consolidated accounts of banks and other financial institutions (OJ L 372, 31.12.1986, p. 1).
51 Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338).	51 Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338).

Amendment  21

Proposal for a directive

Recital 24

Text proposed by the Commission	Amendment
(24) The list of sustainability matters on which undertakings are required to report should be as coherent as possible with the definition of ‘sustainability factors’ laid down in Regulation (EU) 2019/2088. That list should also correspond to the needs and expectations of users and undertakings themselves, who often use the terms ‘environmental’, ‘social’ and ‘governance’ as a means to categorise the three main sustainability matters. The list of sustainability factors laid down in Regulation (EU) 2019/2088 does not explicitly include governance matters. The definition of sustainability matters in Directive 2013/34/EU should therefore be based on the definition of ‘sustainability factors’ laid down in Regulation (EU) 2019/2088, but with the addition of governance matters.	(24) The list of sustainability matters on which undertakings are required to report should be built on the definition of ‘sustainability factors’ laid down in Regulation (EU) 2019/2088. That list should also correspond to the needs and expectations of users and undertakings themselves, who often use the terms ‘environmental’, ‘social’ and ‘governance’ as a means to categorise the three main sustainability matters. The list of sustainability factors laid down in Regulation (EU) 2019/2088 does not explicitly include governance matters. The definition of sustainability matters in Directive 2013/34/EU should therefore be based on the definition of ‘sustainability factors’ laid down in Regulation (EU) 2019/2088, but with the addition of governance matters. This definition should also be fully aligned with the international definition of ‘due diligence’ in the UN Guiding Principles on Business and Human Rights and OECD Guidelines for Multinational Enterprises and corresponding guidance that this Directive assumes and should take into account the definitions provided by the European Parliament in its resolution of 10 March 2021 on Corporate due diligence and corporate accountability. The due diligence requirements provided for in this Directive should be adapted so that they are in line with future legislation on sustainable corporate governance and due diligence.

Amendment  22

Proposal for a directive

Recital 24 a (new)

Text proposed by the Commission	Amendment
	(24a) To enable the use of corporate sustainability information defined in this Directive for incentives in the context of the Union public procurement directives and State Aid measures, Directive 2013/34/EU should be amended to provide for an evaluation mechanism, including indicators, as part of the sustainability reporting that allows for a quantitative rating of the sustainability performance of undertakings.

Amendment  23

 

Proposal for a directive

Recital 26

Text proposed by the Commission	Amendment
(26) Articles 19a(1) and 29a(1) of Directive 2013/34/EU require undertakings to disclose information about five reporting areas: business model, policies (including due diligence processes implemented), the outcome of those policies, risks and risk management, and key performance indicators relevant to the business. Article 19a(1) of Directive 2013/34/EU does not contain explicit references to other reporting areas that users of information consider relevant, some of which align with disclosures included in international frameworks, including the recommendations of the Task Force on Climate-related Financial Disclosures. Disclosure requirements should be specified in sufficient detail to ensure that undertakings report information on their resilience to risks related to sustainability matters. In addition to the reporting areas identified in Articles 19a(1) and 29a(1) of Directive 2013/34/EU, undertakings should therefore be required to disclose information about their business strategy and the resilience of the business model and strategy to risks related to sustainability matters, any plans they may have to ensure that their business model and strategy are compatible with the transition to a sustainable and climate-neutral economy; whether and how their business model and strategy take account of the interests of stakeholders; any opportunities for the undertaking arising from sustainability matters; the implementation of the aspects of the business strategy which affect, or are affected by sustainability matters; any sustainability targets set by the undertaking and the progress made towards achieving them; the role of the board and management with regard to sustainability matters; the principal actual and potential adverse impacts connected with the undertaking’s activities; and how the undertaking has identified the information that they report on. Once the disclosure of elements such as targets and the progress towards achieving them is required, the separate requirement to disclose the outcomes of policies is no longer necessary.	(26) Articles 19a(1) and 29a(1) of Directive 2013/34/EU require undertakings to disclose information about five reporting areas: business model, policies (including due diligence processes implemented), the outcome of those policies, risks and risk management, and key indicators relevant to the business. Article 19a(1) of Directive 2013/34/EU does not contain explicit references to other reporting areas that users of information consider relevant, some of which align with disclosures included in international frameworks, including the recommendations of the Task Force on Climate-related Financial Disclosures. Disclosure requirements should be specified in sufficient detail to ensure that undertakings report information on their resilience to risks related to sustainability matters. In addition to the reporting areas identified in Articles 19a(1) and 29a(1) of Directive 2013/34/EU, undertakings should therefore be required to disclose information about their business strategy and the resilience of the business model and strategy to risks related to sustainability matters, any plans they may have to ensure that their business model and strategy are compatible with the transition to a sustainable and climate-neutral economy and the preservation of biodiversity, in particular by delivering information in sectors causing the greatest environmental impact, such as agriculture, fishing, logging, mining and large-scale infrastructure; whether and how their business model and strategy respect and safeguard the rights, the interests and the needs of stakeholders including workers, indigenous peoples and local communities and the principle of prior and informed consent; any opportunities and risk for the undertaking arising from sustainability matters; the implementation of the aspects of the business strategy which affect, or are affected by sustainability matters; any science-based and time-bound short-term, mid-term and long-term sustainability targets set by the undertaking and a description of the investments, actions and policies adopted to achieve those targets and of the progress made towards achieving them; the role of the board and management with regard to sustainability matters; the due diligence process implemented with regard to sustainability matters, the actual and potential adverse impacts connected with the undertaking’s activities; the negative or positive effects of the undertaking’s business practices, policies and decisions on the identified impacts and how the undertaking has identified the information that they report on, including on whether undertakings have directly consulted with stakeholders to identify such information. Once the disclosure of elements such as targets and the progress towards achieving them is required, the separate requirement to disclose the outcomes of policies is no longer necessary.

Amendment  24

 

Proposal for a directive

Recital 27

Text proposed by the Commission	Amendment
(27) To ensure consistency with international instruments such as the UN Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance for Responsible Business Conduct, the due diligence disclosure requirements should be specified in greater detail than is the case in Article 19a(1), point (b), and Article 29a(1), point (b) of Directive 2013/34/EU. Due diligence is the process that undertakings carry out to identify, prevent, mitigate and remediate the principal actual and potential adverse impacts connected with their activities and identifies how they address those adverse impacts. Impacts connected with an undertaking’s activities include impacts directly caused by the undertaking, impacts to which the undertaking contributes, and impacts which are otherwise linked to the undertaking’s value chain. The due diligence process concerns the whole value chain of the undertaking including its own operations, its products and services, its business relationships and its supply chains. In alignment with the UN Guiding Principles on Business and Human Rights, an actual or potential adverse impact is to be considered principal where it measures among the greatest impacts connected with the undertaking’s activities based on: the gravity of the impact on people or the environment; the number of individuals that are or could be affected, or the scale of damage to the environment; and the ease with which the harm could be remediated, restoring the environment or affected people to their prior state.	(27) To ensure consistency with international instruments such as the UN Guiding Principles on Business and Human Rights, including the UNGPs 10+, and the OECD Due Diligence Guidance for Responsible Business Conduct, the ILO Tripartite Declaration of Principles concerning Multinational enterprises and Social Policy (ILO Tripartite Declaration), the UN Declaration on the Rights of Indigenous Peoples (UNDRIP) and its principle of Free, Prior and Informed Consent (Greens) , as well as other regional instruments such as the Inter-American Standards for Business and human rights, the due diligence disclosure requirements should be specified in greater detail than is the case in Article 19a(1), point (b), and Article 29a(1), point (b) of Directive 2013/34/EU. Due diligence is the process that undertakings carry out to identify, assess prevent, mitigate, cease, monitor, communicate, account for, address and remediate the actual and potential adverse impacts connected with their activities. Impacts connected with an undertaking’s activities include impacts directly caused by the undertaking, impacts to which the undertaking contributes, and impacts which are otherwise linked to the undertaking’s supply and value chain. The due diligence process concerns the whole value chain of the undertaking including its own operations, its products and services, its business relationships and its supply chains. In alignment with the UN Guiding Principles on Business and Human Rights, an actual or potential adverse impact is to be considered principal where it measures among the greatest impacts connected with the undertaking’s activities based on: the gravity of the impact on people or the environment; the number of individuals that are or could be affected, or the scale of damage to the environment; and the ease with which the harm could be remediated, restoring the environment or affected people to their prior state. With regard to the impacts on the rule of law and governance systems of the country where the undertaking and its value and supply chains are operating, consistency and coherence should also be pursued with other international and regional instruments, such as the UN Convention against Corruption, Section VII of the OECD Guidelines for Multinational Enterprises and the principles of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and related Recommendations.

Amendment  25

Proposal for a directive

Recital 29

Text proposed by the Commission	Amendment
(29) Articles 19a(1) and 29a(1) of Directive 2013/34/EU do not specify whether the information to be reported is to be forward looking or information about past performance. There is currently a lack of forward-looking disclosures, which users of sustainability information especially value. Articles 19a and 29a of Directive 2013/34/EU should therefore specify that the sustainability information reported shall include forward-looking and retrospective, and both qualitative and quantitative information. Reported sustainability information should also take into account short, medium and long-term time horizons and contain information about the undertaking’s whole value chain, including its own operations, its products and services, its business relationships, and its supply chain, as appropriate. Information about the undertaking’s whole value chain would include information related to its value chain within the EU and information that covers third countries if the undertaking’s value chain extends outside the EU.	(29) Articles 19a(1) and 29a(1) of Directive 2013/34/EU do not specify whether the information to be reported is to be forward looking or information about past performance. There is currently a lack of forward-looking disclosures, which users of sustainability information especially value. Articles 19a and 29a of Directive 2013/34/EU should therefore specify that the sustainability information reported shall include forward-looking and retrospective, and both qualitative and quantitative information. Reported sustainability information should also take into account short, medium and long-term time horizons and contain information about the undertaking’s whole value chain, including its own operations, workforce, investments, assets, its products and services, its business relationships, and its supply chain, and all information useful in order to understand the impacts and risks related to sustainability matters for the undertaking. Information about the undertaking’s whole value chain would include information related to its value chain within the EU and information that covers third countries if the undertaking’s value chain extends outside the EU.

Amendment  26

 

Proposal for a directive

Recital 34

Text proposed by the Commission	Amendment
(34) The European Financial Reporting Advisory Group (EFRAG) is a non-profit association established under Belgian law that serves the public interest by providing advice to the Commission on the endorsement of international financial reporting standards. EFRAG has established a reputation as a European centre of expertise on corporate reporting, and is well placed to foster coordination between European sustainability reporting standards and international initiatives that seek to develop standards that are consistent across the world. In March 2021, a multi-stakeholder task force set up by EFRAG published recommendations for the possible development of sustainability reporting standards for the European Union. Those recommendations contain proposals to develop a coherent and comprehensive set of reporting standards, covering all sustainability matters from a double-materiality perspective. Those recommendations also contain a detailed roadmap for developing such standards, and proposals for mutually reinforcing cooperation between global standard-setting initiatives and standard-setting initiatives of the European Union. In March 2021, the EFRAG President published recommendations for possible governance changes to EFRAG if it were to be asked to develop technical advice about sustainability reporting standards. These recommendations include offsetting up within EFRAG a new sustainability reporting pillar while not significantly modifying the existing financial reporting pillar. When adopting sustainability reporting standards, the Commission should take account of technical advice that EFRAG will develop. In order to ensure high-quality standards that contribute to the European public good and meet the needs of undertakings and of users of the information reported, EFRAG’s technical advice should be developed with proper due process, public oversight and transparency, accompanied by cost benefit analyses, and be developed with the expertise of relevant stakeholders. To ensure that Union sustainability reporting standards take account of the views of the Member States of the Union, before adopting the standards the Commission should consult the Member State Expert Group on Sustainable Finance referred to in Article 24 of Regulation (EU) 2020/852 on EFRAG’s technical advice. The European Securities and Markets Authority (ESMA) plays a role in drafting regulatory technical standards pursuant to Regulation (EU) 2019/2088 and there needs to be coherence between those regulatory technical standards and sustainability reporting standards. According to Regulation (EU) No 1095/2010 of the European Parliament and of the Council54 , ESMA also plays a role in promoting supervisory converge in the enforcement of corporate reporting by issuers whose securities are listed on EU regulated markets and who will be required to use these sustainability reporting standards. Therefore, ESMA should be required to provide an opinion on EFRAG’s technical advice. This opinion should be provided within two months from the date of receipt of the request from the Commission. In addition, the Commission should consult the European Banking Authority, the European Insurance and Occupational Pensions Authority, the European Environment Agency, the European Union Agency for Fundamental Rights, the European Central Bank, the Committee of European Auditing Oversight Bodies and the Platform on Sustainable Finance to ensure that the sustainability reporting standards are coherent with relevant Union policy and legislation. Where any of those bodies decide to submit an opinion, they shall do so within two months from the date of being consulted by the Commission.	(34) The European Financial Reporting Advisory Group (EFRAG) is a non-profit association established under Belgian law that serves the public interest by providing advice to the Commission on the endorsement of international financial reporting standards. EFRAG has established a reputation as a European centre of expertise on corporate reporting, and is well placed to foster coordination between European sustainability reporting standards and international initiatives that seek to develop standards that are consistent across the world. In March 2021, a multi-stakeholder task force set up by EFRAG published recommendations for the possible development of sustainability reporting standards for the European Union. Those recommendations contain proposals to develop a coherent and comprehensive set of reporting standards, covering all sustainability matters from a double-materiality perspective. Those recommendations also contain a detailed roadmap for developing such standards, and proposals for mutually reinforcing cooperation between global standard-setting initiatives and standard-setting initiatives of the European Union. In March 2021, the EFRAG President published recommendations for possible governance changes to EFRAG if it were to be asked to develop technical advice about sustainability reporting standards. These recommendations include offsetting up within EFRAG a new sustainability reporting pillar while not significantly modifying the existing financial reporting pillar. When adopting sustainability reporting standards, the Commission should take account of technical advice that EFRAG will develop. In order to ensure high-quality standards that contribute to the European public good and meet the needs of undertakings and of users of the information reported, EFRAG’s technical advice should be developed with proper due process, public oversight and transparency, accompanied by cost benefit analyses, and be based on and developed through a broad consultation process. The Commission should guarantee a transparent process avoiding any risk of conflict of interest, as well as the full inclusion in the development of sustainability reporting standards of trade unions, consumer organisations, NGOs and all other relevant stakeholders, such as international organisations or governments from countries where the undertaking or its value and supply chain will operate, in order to represent the interests of all groups of users. To ensure that Union sustainability reporting standards take account of the views of the Member States of the Union, before adopting the standards the Commission should consult the Member State Expert Group on Sustainable Finance referred to in Article 24 of Regulation (EU) 2020/852 on EFRAG’s technical advice. The European Securities and Markets Authority (ESMA) plays a role in drafting regulatory technical standards pursuant to Regulation (EU) 2019/2088 and there needs to be coherence between those regulatory technical standards and sustainability reporting standards. According to Regulation (EU) No 1095/2010of the European Parliament and of the Council54 , ESMA also plays a role in promoting supervisory converge in the enforcement of corporate reporting by issuers whose securities are listed on EU regulated markets and who will be required to use these sustainability reporting standards. Therefore, ESMA should be required to provide an opinion on EFRAG’s technical advice. This opinion should be provided within two months from the date of receipt of the request from the Commission. In addition, the Commission should consult the European Banking Authority, the European Insurance and Occupational Pensions Authority, the European Environment Agency, the European Union Agency for Fundamental Rights, the European Central Bank, the Committee of European Auditing Oversight Bodies and the Platform on Sustainable Finance to ensure that the sustainability reporting standards are coherent with relevant Union policy and legislation. In addition, the expertise and opinion of the International Sustainability Standards Board (ISSB) of the International Financial Reporting Standard (IFRS) Foundation should be taken into account. Where any of those bodies decide to submit an opinion, they shall do so within three months from the date of being consulted by the Commission.
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54 Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, p. 84).	54 Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, p. 84).

Amendment  27

 

Proposal for a directive

Recital 35

Text proposed by the Commission	Amendment
(35) Sustainability reporting standards should be coherent with other Union legislation. Those standards should in particular be aligned with the disclosure requirements laid down in Regulation (EU) 2019/2088, and they should take account of underlying indicators and methodologies set out in the various delegated acts adopted pursuant to Regulation (EU) 2020/852, disclosure requirements applicable to benchmark administrators pursuant to Regulation (EU) 2016/1011 of the European Parliament and of the Council55 , the minimum standards for the construction of EU climate transition benchmarks and EU Paris-aligned benchmarks; and of any work carried out by the European Banking Authority in the implementation of the Pillar III disclosure requirements of Regulation (EU) No 575/2013. Standards should take account of Union environmental legislation, including Directive 2003/87/EC of the European Parliament and of the Council56 and Regulation (EC) No 1221/2009 of the European Parliament and of the Council57 , and should take account of Commission Recommendation 2013/179/EU58 and its annexes, and their updates. Other relevant Union legislation, including Directive 2010/75/EU of the European Parliament and of the Council59 , and requirements laid down in Union law for undertakings as regards directors’ duties and due diligence, should also be taken into account.	(35) Sustainability reporting standards should be coherent with other Union legislation, in particular with legislation dealing with the issues covered by this Directive. Those standards should in particular be aligned with the disclosure requirements laid down in Regulation (EU) 2019/2088, and they should take account of underlying indicators and methodologies set out in the various delegated acts adopted pursuant to Regulation (EU) 2020/852, disclosure requirements applicable to benchmark administrators pursuant to Regulation (EU) 2016/1011 of the European Parliament and of the Council55 , the minimum standards for the construction of EU climate transition benchmarks and EU Paris-aligned benchmarks; and of any work carried out by the European Banking Authority in the implementation of the Pillar III disclosure requirements of Regulation (EU) No 575/2013. Standards should take account of Union environmental legislation, including Directive 2003/87/EC of the European Parliament and of the Council56 and Regulation (EC) No 1221/2009 of the European Parliament and of the Council57 , and should take account of Commission Recommendation 2013/179/EU58 and its annexes, and their updates. All other relevant Union legislation, including Directive 2010/75/EU of the European Parliament and of the Council59 , and requirements laid down in Union law for undertakings as regards directors’ duties and due diligence, should also be taken into account.
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55 Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (OJ L 171, 29.6.2016, p. 1).	55 Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (OJ L 171, 29.6.2016, p. 1).
56 Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32).	56 Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32).
57 Regulation (EC) No 1221/2009 of the European Parliament and of the Council of 25 November 2009 on the voluntary participation by organisations in a Community eco-management and audit scheme (EMAS), repealing Regulation (EC) No 761/2001 and Commission Decisions 2001/681/EC and 2006/193/EC (OJ L 342, 22.12.2009, p. 1).	57 Regulation (EC) No 1221/2009 of the European Parliament and of the Council of 25 November 2009 on the voluntary participation by organisations in a Community eco-management and audit scheme (EMAS), repealing Regulation (EC) No 761/2001 and Commission Decisions 2001/681/EC and 2006/193/EC (OJ L 342, 22.12.2009, p. 1).
58 Commission Recommendation 2013/179/EU of 9 April 2013 on the use of common methods to measure and communicate the life cycle environmental performance of products and organisations (OJ L 124, 4.5.2013, p. 1).	58 Commission Recommendation 2013/179/EU of 9 April 2013 on the use of common methods to measure and communicate the life cycle environmental performance of products and organisations (OJ L 124, 4.5.2013, p. 1).
59 Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control) (OJ L 334, 17.12.2010, p. 17).	59 Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control) (OJ L 334, 17.12.2010, p. 17).

Amendment  28

 

Proposal for a directive

Recital 36

Text proposed by the Commission	Amendment
(36) Sustainability reporting standards should take account of the Commission guidelines on non-financial reporting60 and the Commission guidelines on reporting climate-related information61 . They should also take account of other reporting requirements in Directive 2013/34/EU not directly related to sustainability, with the aim of providing the users of the reported information with a better understanding of the development, performance, position and impact of the undertaking, by maximising the links between the sustainability information and other information reported in accordance with Directive 2013/34/EU.	(36) Sustainability reporting standards should take account of the Commission guidelines on non-financial reporting60 and the Commission guidelines on reporting climate-related information61 . They should also take account of other reporting requirements in Directive 2013/34/EU, including reporting on payments to governments by undertakings, set out in Chapter X of that Directive, as well as other reporting requirements not directly related to sustainability, with the aim of providing the users of the reported information with a better understanding of the development, performance, position and environmental and social impact of the undertaking, by maximising the links between the sustainability information and other information reported in accordance with Directive 2013/34/EU.
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60 2017/C 215/01.	60 2017/C 215/01.
61 2019/C 209/01.	61 2019/C 209/01.

Amendment  29

 

Proposal for a directive

Recital 39

Text proposed by the Commission	Amendment
(39) Sustainability reporting standards should also take account of internationally recognised principles and frameworks on responsible business conduct, corporate social responsibility, and sustainable development, including the UN Sustainable Development Goals, the UN Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises, the OECD Due Diligence Guidance for Responsible Business Conduct and related sectoral guidelines, the UN Global Compact, the Tripartite Declaration of Principles of the International Labour Organisation concerning Multinational Enterprises and Social Policy, the ISO 26000 standard on social responsibility, and the UN Principles for Responsible Investment.	(39) Sustainability reporting standards should also take account of internationally recognised principles and frameworks on responsible business conduct, corporate social responsibility, and sustainable development, including the UN Sustainable Development Goals, the UN Guiding Principles on Business and Human Rights, and its guidance on ensuring that the activities of human rights defenders are not obstructed, the OECD Guidelines for Multinational Enterprises, the OECD Due Diligence Guidance for Responsible Business Conduct and related sectoral guidelines, the UN Global Compact, the Tripartite Declaration of Principles of the International Labour Organisation concerning Multinational Enterprises and Social Policy, the ISO 26000 standard on social responsibility, and the UN Principles for Responsible Investment. Other frameworks such as the UN Declaration on the Rights of Indigenous Peoples (UNDRIP) and its principle of Free, Prior and Informed Consent, the UN Convention against Corruption, Section VII of the OECD Guidelines for Multinational Enterprises, the principles of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, and related recommendations should also be equally taken into account.

Amendment  30

Proposal for a directive

Recital 40

Text proposed by the Commission	Amendment
(40) It should be ensured that the information reported by undertakings in accordance with the sustainability reporting standards meet the needs of users. The reporting standards should therefore specify the information that undertakings are to disclose on all major environmental factors, including their impacts and dependencies on climate, air, land, water and biodiversity. Regulation (EU) 2020/852 provides a classification of the environmental objectives of the Union. For reasons of coherence, it is appropriate to use a similar classification to identify the environmental factors that should be addressed by sustainability reporting standards. The reporting standards should consider and specify any geographical or other contextual information that undertakings should disclose to provide an understanding of their principal impacts on sustainability matters and the principal risks to the undertaking arising from sustainability matters.	(40) It should be ensured that the information reported by undertakings in accordance with the sustainability reporting standards meet the needs of users, including policy makers and public authorities, investors, social partners, and non-governmental organisations. The reporting standards should therefore specify the information that undertakings are to disclose on all major environmental factors, including their impacts and dependencies on climate, air, land, water and biodiversity. Regulation (EU) 2020/852 provides a classification of the environmental objectives of the Union. For reasons of coherence, it is appropriate to use a similar classification to identify the environmental factors that should be addressed by sustainability reporting standards. The reporting standards should consider and specify any geographical or other contextual information that undertakings should disclose to provide an understanding of their principal impacts on sustainability matters and the principal risks to the undertaking arising from sustainability matters.

Amendment  31

Proposal for a directive

Recital 41

Text proposed by the Commission	Amendment
(41) With regard to climate-related information, users are interested in knowing about undertakings’ physical and transition risks, and about their resilience to different climate scenarios. They are also interested in the level and scope of greenhouse gas emissions and removals attributed to the undertaking, including the extent to which the undertaking uses offsets and the source of those offsets. Achieving a climate neutral economy requires the alignment of greenhouse gas accounting and offset standards. Users need reliable information regarding offsets that addresses concerns regarding possible double-counting and overestimations, given the risks to the achievement of climate-related targets that double-counting and overestimations can create. The reporting standards should therefore specify the information undertakings should report with regard to those matters.	(41) With regard to climate-related information, users are interested in knowing about undertakings’ physical and transition risks, about its detailed plans to mitigate its own emissions, and about their resilience and plans to adapt to different climate scenarios. They are also interested in the level and scope of greenhouse gas emissions and removals attributed to the undertaking, including the extent to which the undertaking uses offsets and the source of those offsets. Achieving a climate neutral economy requires the alignment of greenhouse gas accounting and offset standards. Users need reliable information regarding offsets that addresses concerns regarding possible double-counting and overestimations, given the risks to the achievement of climate-related targets that double-counting and overestimations can create. The reporting standards should therefore specify the information undertakings should report with regard to those matters.

Amendment  32

 

Proposal for a directive

Recital 43

Text proposed by the Commission	Amendment
(43) Sustainability reporting standards should specify the information that undertakings should disclose on social factors, including employee factors and human rights. Such information should cover the impacts of undertakings on people, including on human health. The information that undertakings disclose about human rights should include information about forced labour in their value chains where relevant. Reporting standards that address social factors should specify the information that undertakings should disclose with regard to the principles of the European Pillar of Social Rights that are relevant to businesses, including equal opportunities for all and working conditions. The European Pillar of Social Rights Action Plan adopted in March 2021 calls for stronger requirements on undertakings to report on social issues. The reporting standards should also specify the information that undertakings should disclose with regard to the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the fundamental conventions of the International Labour Organisation, and the Charter of Fundamental Rights of the European Union.	(43) Sustainability reporting standards should specify the information that undertakings should disclose on social factors, including employee factors and human rights. Such information should cover the impacts of undertakings on people, including on human health. The undertaking should disclose country-by-country information regarding their workforce, working conditions, including wages per gender, working hours, workers’ physical and psychological health and safety. It should also disclose information on social dialogue and workers’ representation. The information that undertakings disclose about human rights should include the impacts on human rights and workers’ rights in their value and supply chains, including forced labour and living wages and child labour in their value and supply chains. Reporting standards that address social factors should specify the information that undertakings should disclose with regard to the principles of the European Pillar of Social Rights that are relevant to businesses, including equal opportunities for all and working conditions. The European Pillar of Social Rights Action Plan adopted in March 2021 calls for stronger requirements on undertakings to report on social issues. The reporting standards should also specify the information that undertakings should disclose with regard to the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, such as the Convention on the Rights of the Child and the UN Declaration on the Rights of Indigenous Peoples, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the relevant conventions of the international Labour Organization and in particular the fundamental conventions of the International Labour Organisation, and the Charter of Fundamental Rights of the European Union, the United Nations Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises.

Amendment  33

 

Proposal for a directive

Recital 44

Text proposed by the Commission	Amendment
(44) Users need information about governance factors, including information on the role of an undertaking’s administrative, management and supervisory bodies, including with regard to sustainability matters, the composition of such bodies, and an undertaking’s internal control and risk management systems, including in relation to the reporting process. Users also need information about undertakings’ corporate culture and approach to business ethics, including anti-corruption and anti-bribery, and about their political engagements, including lobbying activities. Information about the management of the undertaking and the quality of relationships with business partners, including payment practices relating to the date or period for payment, the rate of interest for late payment or the compensation for recovery costs referred to in Directive 2011/7/EU of the European Parliament and of the Council62 on late payment in commercial transactions, helps users to understand an undertaking’s risks as well as its impacts on sustainability matters. Every year, thousands of businesses, especially SMEs, suffer administrative and financial burdens because they are paid late, or not at all. Ultimately, late payments lead to insolvency and bankruptcy, with destructive effects on entire value chains. Increasing information about payment practices should empower other undertakings to identify prompt and reliable payers, detect unfair payment practices, access information about the businesses they trade with, and negotiate fairer payment terms.	(44) Users need information about governance factors, including information on the role of an undertaking’s administrative, management and supervisory bodies, including with regard to sustainability matters, the composition of such bodies, and an undertaking’s internal control, alert mechanisms and risk management systems, including in relation to the reporting process. Users also need information about undertakings’ corporate culture and approach to business ethics, including concrete indicators on anti-corruption and anti-bribery policies and programmes and about their political and public policy engagements, including lobbying activities and on beneficial ownership and organisation structure, as well as on the undertakings’ respect for the rule of law and good governance systems of the country where the undertakings and their value and/or supply chains operate. Information, broken down by countries, on corporate strategies and practices, on private and public procurement, security, taxes, public administrative relations and procedures, corporate communication and information, corporate litigation are also part of corporate governance aspects that are important to be disclosed. The disclosure of those data aims at enabling investors to make better-informed decisions, improving corporate governance and accountability and contributing to containing tax evasion. Information about the management of the undertaking and the quality of relationships with business partners, including payment practices relating to the date or period for payment, the rate of interest for late payment or the compensation for recovery costs referred to in Directive 2011/7/EU of the European Parliament and of the Council62 on late payment in commercial transactions, helps users to understand an undertaking’s risks as well as its impacts on sustainability matters. Every year, thousands of businesses, especially SMEs, suffer administrative and financial burdens because they are paid late, or not at all. Ultimately, late payments lead to insolvency and bankruptcy, with destructive effects on entire value chains. Increasing information about payment practices should empower other undertakings to identify prompt and reliable payers, detect unfair payment practices, access information about the businesses they trade with, and negotiate fairer payment terms.
__________________	__________________
62 Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (OJ L 48, 23.2.2011, p. 1).	62 Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (OJ L 48, 23.2.2011, p. 1).

Amendment  34

 

Proposal for a directive

Recital 46

Text proposed by the Commission	Amendment
(46) Undertakings in the same sector are often exposed to similar sustainability-related risks, and they often have similar impacts on society and the environment. Comparisons between undertakings in the same sector are especially valuable to investors and other users of sustainability information. Sustainability reporting standards adopted by the Commission should therefore specify both information that undertakings in all sectors should disclose and information that undertakings should disclose depending on their sector of activity. Standards should also take account of the difficulties that undertakings may encounter in gathering information from actors throughout their value chain, especially from SME suppliers and from suppliers in emerging markets and economies.	(46) Undertakings in the same sector are often exposed to similar sustainability-related risks, and they often have similar impacts on society and the environment. Comparisons between undertakings in the same sector are especially valuable to investors and other users of sustainability information. Sustainability reporting standards adopted by the Commission should therefore specify both information that undertakings in all sectors should disclose and information that undertakings should disclose depending on their sector of activity. Standards applicable to undertakings in high-risk economic activity sectors should be consistent with reporting requirements of Chapter 10 of Directive 2013/34/EU and require sustainability disclosures to be made at project-level. Project-level disclosures are crucial for investors who need consistent and detailed information on projects to fully understand the impact of climate-related financial risk. Project-level disclosure is equally crucial for communities affected and civil society organisations of resource-rich countries, to understand and scrutinize the benefits of the economic activities and their environmental, social, human rights and rule of law and governance systems impacts. Standards should also take account of the difficulties that undertakings may encounter in gathering information from actors throughout their value chain, especially from SME suppliers, from suppliers in emerging markets and economies or suppliers operating in fragile contexts, conflict-related areas or affected by security concerns.

Amendment  35

 

Proposal for a directive

Recital 47

Text proposed by the Commission	Amendment
(47) To meet the information needs from users in a timely manner, and in particular given the urgency to meet the information needs of financial market participants subject to the requirements laid down in the delegated acts adopted pursuant to Article 4, paragraphs 6 and 7 of Regulation (EU) 2019/2088, the Commission should adopt a first set of reporting standards by 31 October 2022. That set of reporting standards should specify the information that undertakings should disclose with regard to all reporting areas and sustainability matters, and that financial market participants need to comply with the disclosure obligations laid down in Regulation (EU) 2019/2088. The Commission should adopt a second set of reporting standards at the latest by 31 October 2023, specifying complementary information that undertakings should disclose about sustainability matters and reporting areas where necessary, and information that is specific to the sector in which an undertaking operates. The Commission should review the standards every 3 years to take account of relevant developments, including the development of international standards.	(47) To meet the information needs from users in a timely manner, and in particular given the urgency to meet the information needs of financial market participants subject to the requirements laid down in the delegated acts adopted pursuant to Article 4, paragraphs 6 and 7 of Regulation (EU) 2019/2088, the Commission should adopt a first set of reporting standards within 18 months of the entry into force of this Directive. That set of reporting standards should specify the information that undertakings should disclose with regard to all reporting areas and sustainability matters, and that financial market participants need to comply with the disclosure obligations laid down in Regulation (EU) 2019/2088. The Commission should adopt a second set of reporting standards within two years of the entry into force of this Directive, specifying complementary information that undertakings should disclose about sustainability matters and reporting areas where necessary, and information that is specific to the sector in which an undertaking operates. Standards for undertakings active in high risks economic activity sectors where sustainability risks are the most severe should be developed as a priority, in particular undertakings active in the extractive industry, the manufacture of wearing apparel, large-scale crop, animal production and seafood industry. The Commission should review the standards every 5 years to take account of relevant developments, including the development of international standards. A one-off review of the standards should take place following the adoption of the due diligence legislation, in order to ensure as close as possible alignment between corporate sustainability reporting and due diligence.

Amendment  36

Proposal for a directive

Recital 48 a (new)

Text proposed by the Commission	Amendment
	(48a) The online platform to access the information should allow users to easily compare the data disclosed by companies online, including by categories such as themes, sectors, countries, turnover and number of employees.

Amendment  37

Proposal for a directive

Recital 49

Text proposed by the Commission	Amendment
(49) To allow for the inclusion of the reported sustainability information in the European single access point, Member States should ensure that undertakings publish the duly approved annual financial statements and the management report in the prescribed electronic format, and ensure that management reports containing sustainability reporting are made available, without delay following their publication, to the relevant officially appointed mechanism referred to in Article 21(2) of Directive 2004/109/EC.	(49) To allow for the inclusion of the reported sustainability information in the European single access point, Member States should ensure that undertakings publish the duly approved annual financial statements and the management report in the prescribed open data and machine-readable electronic format, and ensure that management reports containing sustainability reporting are made available, without delay following their publication, to the relevant officially appointed mechanism referred to in Article 21(2) of Directive 2004/109/EC.

Amendment  38

Proposal for a directive

Recital 53

Text proposed by the Commission	Amendment
(53) The assurance profession distinguishes between limited and reasonable assurance engagements. The conclusion of a limited assurance engagement is usually provided in a negative form of expression by stating that no matter has been identified by the practitioner to conclude that the subject matter is materially misstated. The auditor performs fewer tests than in a reasonable assurance engagement. The amount of work for a limited assurance engagement is therefore less than for reasonable assurance. The work effort in a reasonable assurance engagement entails extensive procedures including consideration of internal controls of the reporting undertaking and substantive testing, and is therefore significantly higher than in a limited assurance engagement. The conclusion of this type of engagement is usually provided in a positive form of expression and states an opinion on the measurement of the subject matter against previously defined criteria. Article 19a(5) and Article 29a(5) of Directive 2013/34/EU require Member States to ensure that the statutory auditor or audit firm checks whether the non-financial statement or the separate report has been provided. It does not require that an independent provider of assurance services verifies the information, although it allows Member States to require such verification where they wish to. The absence of an assurance requirement on sustainability reporting, in contrast to the requirement for the statutory auditor to perform a reasonable assurance engagement on financial statements, would threaten the credibility of the sustainability information disclosed, thus failing to meet the needs of the intended users of that information. Although the objective is to have a similar level of assurance for financial and sustainability reporting, the absence of a commonly agreed standard for the assurance of sustainability reporting creates the risk of different understandings and expectations of what a reasonable assurance engagement would consist of for different categories of sustainability information, especially with regard to forward looking and qualitative disclosures. Therefore, a progressive approach to enhance the level of the assurance required for sustainability information should be considered, starting with an obligation on the statutory auditor or audit firm to express an opinion about the compliance of the sustainability reporting with Union requirements based on a limited assurance engagement. This opinion should cover the compliance of the sustainability reporting with Union sustainability reporting standards, the process carried out by the undertaking to identify the information reported pursuant to the sustainability reporting standards and compliance with the requirement to mark-up sustainability reporting. The auditor should also assess whether the undertaking’s reporting complies with the reporting requirements of Article 8 of Regulation (EU) 2020/852. To guarantee a common understanding and expectations of what a reasonable assurance engagement would consist of, the statutory auditor or audit firm should be required to express an opinion based on a reasonable assurance engagement about the compliance of the sustainability reporting with Union requirements, should the Commission adopt assurance standards for reasonable assurance of sustainability reporting. This would also allow for the progressive development of the assurance market for sustainability information, and of undertakings’ reporting practices. Finally, this progressive approach would phase in the increase in costs for reporting undertakings, given that reasonable assurance is more costly than limited assurance.	(53) The assurance profession distinguishes between limited and reasonable assurance engagements. The conclusion of a limited assurance engagement is usually provided in a negative form of expression by stating that no matter has been identified by the practitioner to conclude that the subject matter is materially misstated. The auditor performs fewer tests than in a reasonable assurance engagement. The amount of work for a limited assurance engagement is therefore less than for reasonable assurance. The work effort in a reasonable assurance engagement entails extensive procedures including consideration of internal controls of the reporting undertaking and substantive testing, and is therefore significantly higher than in a limited assurance engagement. The conclusion of this type of engagement is usually provided in a positive form of expression and states an opinion on the measurement of the subject matter against previously defined criteria. Article 19a(5) and Article 29a(5) of Directive 2013/34/EU require Member States to ensure that the statutory auditor or audit firm checks whether the non-financial statement or the separate report has been provided. It does not require that an independent provider of assurance services verifies the information, although it allows Member States to require such verification where they wish to. The absence of an assurance requirement on sustainability reporting, in contrast to the requirement for the statutory auditor to perform a reasonable assurance engagement on financial statements, would threaten the credibility of the sustainability information disclosed, thus failing to meet the needs of the intended users of that information. Although the objective is to have a similar level of assurance for financial and sustainability reporting, the absence of a commonly agreed standard for the assurance of sustainability reporting creates the risk of different understandings and expectations of what a reasonable assurance engagement would consist of for different categories of sustainability information, especially with regard to forward looking and qualitative disclosures. Therefore, a progressive approach to enhance the level of the assurance required for sustainability information should be considered, starting with an obligation on the statutory auditor or audit firm to express an opinion about the compliance of the sustainability reporting with Union requirements based on a limited assurance engagement. This opinion should cover the compliance of the sustainability reporting with Union sustainability reporting standards, the process carried out by the undertaking to identify the information reported pursuant to the sustainability reporting standards and compliance with the requirement to mark-up sustainability reporting. The auditor should also assess whether the undertaking’s reporting complies with the reporting requirements of Article 8 of Regulation (EU) 2020/852. To guarantee a common understanding and expectations of what a reasonable assurance engagement would consist of, the Commission should adopt assurance standards for reasonable assurance of sustainability reporting by 31 October 2023. The statutory auditor or audit firm should then be required to express an opinion based on a reasonable assurance engagement about the compliance of the sustainability reporting with Union requirements. This would also allow for the progressive development of the assurance market for sustainability information, and of undertakings’ reporting practices. Finally, this progressive approach would phase in the increase in costs for reporting undertakings, given that reasonable assurance is more costly than limited assurance.

Amendment  39

Proposal for a directive

Recital 57 a (new)

Text proposed by the Commission	Amendment
	(57a) A high level of independence should be ensured for sustainability reporting assurance operations by establishing the principle of incompatibility between a statutory audit engagement and an assurance of sustainability reporting engagement being carried out by the same statutory auditor or the same audit firm.

Amendment  40

Proposal for a directive

Recital 57 b (new)

Text proposed by the Commission	Amendment
	(57b) The audit bodies for sustainability reports should have a high level of technical and specialised expertise in the field of sustainability in order to assess the information.

Amendment  41

Proposal for a directive

Recital 60

Text proposed by the Commission	Amendment
(60) Article 27 of Directive 2006/43/EC sets out rules on the statutory audit of a group of undertakings. Those rules should be extended to the assurance of consolidated sustainability reporting, where the statutory auditor performs the statutory audit.	(60) Article 27 of Directive 2006/43/EC sets out rules on the statutory audit of a group of undertakings. Those rules should be extended to the assurance of consolidated sustainability reporting.

Amendment  42

Proposal for a directive

Recital 71

Text proposed by the Commission	Amendment
(71) Member States are invited to assess the impact of their transposition act on SMEs in order to ensure that they are not disproportionately affected, giving specific attention to micro-enterprises and to the administrative burden, and to publish the results of such assessments. Member States should consider introducing measures to support SMEs in applying the voluntary simplified reporting standards.	(71) Member States are invited to assess the impact of their transposition act on SMEs in order to ensure that they provide the necessary information on sustainability matters and impacts but are not disproportionately affected, giving specific attention to micro-enterprises and to the administrative burden, and to publish the results of such assessments. Member States should consider introducing measures to support SMEs in applying the voluntary simplified reporting standards.

Amendment  43

 

Proposal for a directive

Article 1 – paragraph 1 – point 1

Directive 2013/34/EU

Article 1 – paragraph 3 – subparagraph 1 – introductory part

Text proposed by the Commission	Amendment
The coordination measures prescribed by Articles 19a, 19d, 29a, 30 and 33, Article 34(1), second subparagraph, point (aa), paragraphs 2 and 3 of Article 34, and Article 51 of this Directive shall also apply to the laws, regulations and administrative provisions of the Member States relating to the following undertakings regardless of their legal form:	The coordination measures prescribed by Articles 19a, 19d, 29a, 30 and 33, Article 34(1), second subparagraph, point (aa), paragraphs 2 and 3 of Article 34, and Article 51 of this Directive shall also apply to the laws, regulations and administrative provisions of the Member States relating to the following undertakings, provided that they meet the criteria laid down in Article19a (1), regardless of their legal form:

Amendment  44

 

Proposal for a directive

Article 1 – paragraph 1 – point 2

Directive 2013/34/EU

Article 2 – points 17 to 20 f (new)

Text proposed by the Commission	Amendment
(2) in Article 2, the following points (17) to (20) are added:	(2) in Article 2, the following points (17) to (20) are added:
(17) ‘sustainability matters’ means sustainability factors as defined in Article 2, point (24) of Regulation (EU) 2019/2088 of the European Parliament and of the Council*4, and governance factors;	(17) ‘sustainability matters’ means sustainability factors as defined in Article 2, point (24) of Regulation (EU) 2019/2088 of the European Parliament and of the Council*4, namely respect for environmental, social and employee issues, human rights, the respect for the rule of law and good governance systems of the country, region or territory where the undertaking or its supply chain operates and governance factors;
(18) ‘sustainability reporting’ means reporting information related to sustainability matters in accordance with Articles 19a, 19d and 29a of this Directive;	(18) ‘sustainability reporting’ means reporting information related to sustainability matters in accordance with Articles 19a, 19d and 29a of this Directive;
(19) ’intangibles’ means non-physical resources that contribute to the undertaking’s value creation;	(19) ’intangibles’ means non-physical resources that contribute to the undertaking’s value creation such as the intellectual, human, and social and relationship capital;
(20) ‘independent assurance services provider’ means a conformity assessment body accredited in accordance with Regulation (EC) No 765/2008 of the European Parliament and of the Council*5 for the specific conformity assessment activity referred to in Article 34(1), second subparagraph, point (aa) of this Directive.	(20) ‘independent assurance services provider’ means a conformity assessment body accredited in accordance with Regulation (EC) No 765/2008 of the European Parliament and of the Council*5 for the specific conformity assessment activity referred to in Article 34(1), second subparagraph, point (aa) of this Directive.
	(20a) ‘high-risk economic activity sector’ means a sector of economic activity that is particularly exposed to sustainability risks or is likely to have actual or potential severe impacts on the environment, human rights and the rule of law and good governance systems of countries, regions and territories where the undertaking or its supply chains operate and defined by the Commission with delegated acts;
	(20b ) 'high-risk undertaking' means an undertaking active in one or more of the high- risk economic activity sectors defined by the Commission by means of delegated acts ;
	(20c) ‘sustainability strategy’ means the undertaking’s plans of action to achieve long term SDGs and targets in line with the UN 2030 Agenda, the Paris Agreement and other relevant international commitments, as well as Union policies and legislation. It includes corporate due diligence processes aimed at identifying and managing the potential or actual adverse risks and impacts linked to sustainability matters;
	(20d) ‘targets’ means measurable, specific, time-bound and, when applicable, science-based indicators;
	(20e)  ‘specific science-based measurable targets’ means indicators which take into account the UN programme ‘Transforming our world: the 2030 Agenda for Sustainable Development’, reports and analyses of the Organisation for Economic Cooperation and Development (OECD) on the Sustainable Development Goals and the EU’s ‘Europe 2020 strategy’;
	(20f) 'severe impacts' are adverse impacts on people, their fundamental human rights and the environment and on the rule of law and governance systems of the country, region or territory where the undertaking or its supply and value chain operate connected to the undertaking's value chain by its own operations, its products and services, its business relationships, its subsidiaries, and its supply chain, based on the gravity of the impact on the sustainability matter, the number of individuals that are or could be affected, or the scale of the damage to the environment; the ease with which the harm could be remediated, restoring the environment or affected people to their prior state; and which cause the greatest harm relative to other impacts the undertaking has identified.

Amendment  45

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 1

Text proposed by the Commission	Amendment
1. Large undertakings and, as of 1 January 2026, small and medium-sized undertakings which are undertakings referred to in Article 2, point (1), point (a), shall include in the management report information necessary to understand the undertaking’s impacts on sustainability matters, and information necessary to understand how sustainability matters affect the undertaking’s development, performance and position.	1. Large undertakings, public-interest entities and all undertakings referred to in Article 3(7) which are governed by the law of a third country and are not established in the territory of the Union when they operate in the internal market selling goods or providing services under the arrangements set out in Article 19b(1), those entities registered as foundations, partnerships or similar structures fulfilling the criteria for undertaking and, as of 1 January 2026, small and medium-sized undertakings which are undertakings referred to in Article 2, point (1), point (a), and small and medium sized undertakings referred to in Article 3(2) and (3) which operate in one or more of the high-risk economic activity sectors defined by the Commission by means of delegated act shall include in the management report information necessary to understand the undertaking’s impacts on sustainability matters, and information necessary to understand how sustainability matters affect the undertaking’s development, performance and position and that of its supply and value chain.

Amendment  46

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point a

Text proposed by the Commission	Amendment
(a) a brief description of the undertaking's business model and strategy, including:	(a) a brief description of the undertaking's business model and strategy and its implementation, including:
	(-i  new) a description of the adverse impacts on and risks for sustainability matters identified by the undertaking, and in particular, those that are likely to take place in their supply and value chains, including in developing countries. Transparency shall be required with regard to products, services and assets generated;
(i) the resilience of the undertaking's business model and strategy to risks related to sustainability matters;	(i) the resilience of the undertaking's business model and strategy to risks related to sustainability matters and climate change;
(ii) the opportunities for the undertaking related to sustainability matters;	(ii) the opportunities and risks for the undertaking related to sustainability matters and the transition to a carbon neutral economy;
(iii) the plans of the undertaking to ensure that its business model and strategy are compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement;	(iii) the plans of the undertaking to ensure that its business model and strategy are compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement;
	(iii a) how the business model and strategies contribute to the implementation of the UN 2030 Agenda for Sustainable development in the developing countries where the undertaking or its supply and value chains operate;
	(iii b) the plans of the undertaking to ensure that its business model and strategy respect workers’ rights and potentially affected communities;
(iv) how the undertaking’s business model and strategy take account of the interests of the undertaking’s stakeholders and of the impacts of the undertaking on sustainability matters;	(iv) how the undertaking’s business model and strategy take account of the interests and needs of the undertaking’s stakeholders, and risk management and of the principal actual or potential adverse impacts of the undertaking on sustainability matters and climate change along the entire supply and value chain;
(v) how the undertaking’s strategy has been implemented with regard to sustainability matters;	(v) how the undertaking’s sustainability strategy has been implemented and the results achieved with regard to sustainability matters and climate change and related targets, in connection with principal risks, opportunities and severe impacts.

Amendment  47

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point b

Text proposed by the Commission	Amendment
(b) a description of the targets related to sustainability matters set by the undertaking and of the progress the undertaking has made towards achieving those targets;	(b) a description of the time-bound, short, medium and long-term targets related to sustainability matters set by the undertaking to address risks, opportunities and impacts of its activities whether such targets are science-based alongside corresponding evidence, and of the progress the undertaking has made towards achieving those targets including;
	(i) a clearly defined path to reach the targets and corresponding timeframes;
	(ii) the methods, main data and rationale used in setting those targets which must uphold the principle of ‘do no significant harm’ within the meaning of Article 17 of Regulation (EU) 2020/852;
	(iii) targets to be reviewed by independent scientific reviewers, and made available to the general public including information on how and to what extent the undertaking is aligned with the broader strategy that qualify as 'environmentally sustainable' pursuant to Regulation (EU) 2020/852;
	(iv) where relevant an analysis of the lack of progress in relation to those targets and the reasons explaining the impossibility or failure to reach intermediary and final targets;
	(vi) the actions to be taken to successfully achieve those targets including corrective measures and a description of the investments, actions and policies adopted.

Amendment  48

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point c

Text proposed by the Commission	Amendment
(c) a description of the role of the administrative, management and supervisory bodies with regard to sustainability matters;	(c) a description of the role and the composition of the administrative, management and supervisory bodies with regard to sustainability matters, including:
	(i) the extent to which those bodies are to take into consideration sustainability matters and, where appropriate, the resources at their disposal in order to do so;
	(ii) the consistency of the remuneration schemes of their members with the company's sustainability strategy;
	(iii) engagements in the due diligence process implemented with regard to sustainability matters and on adverse effects as well as the involvement and exchanges with the different stakeholders affected by the identified impacts;
	(iv) engagements in the analysis of risks and opportunities for the undertaking with regard to sustainability matters;
	(v) the process set up to oversee the implementation of the undertaking’s strategy related to sustainability matters;
	(vi) expertise on sustainability matters of the members of the administrative, management and supervisory bodies and consultation of external experts;
	(vi) the matters addressed by these bodies during the reporting period;

Amendment  49

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point d

Text proposed by the Commission	Amendment
(d) a description of the undertaking’s policies in relation to sustainability matters;	(d) a description of the undertaking’s policies in relation to sustainability matters and in particular with respect to identified actual or potential severe impacts and opportunities;

Amendment  50

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point e

Text proposed by the Commission	Amendment
(e) a description of:	(e) a description of:
(i) the due diligence process implemented with regard to sustainability matters;	(i) the due diligence process implemented with regard to sustainability matters in particular regarding human rights, social rights, rule of law and good governance systems and environmental due diligence along the entire supply and value chain, the Charter of Fundamental Rights of the European Union and the international and regional human rights conventions, guidelines and standards such as the UN Guiding Principles on Business and Human Rights, the OECD Due Diligence Guidance for Responsible Business Conduct, the International Labour Organisation (ILO) Declaration on Fundamental Principles and Rights at Work, the ILO fundamental conventions.
	The reporting requirements as regards due diligence should be based upon the upcoming legislation on corporate due diligence.
	The description of the corporate due diligence process shall include as a minimum the following information:
	- identification, assessment and prioritisation of actual and potential adverse impacts,
	- prevention, mitigation and cessation of such impacts,
	- tracking implementation and their results,
	- identification and engagement of the adversely affected people, and
	- alert mechanisms and how complaints and grievances are received and managed.
(ii) the principal actual or potential adverse impacts connected with the undertaking’s value chain, including its own operations, its products and services, its business relationships and its supply chain;	(ii) the actual or potential adverse impacts connected with the undertaking’s supply and value chain, in particular as identified through the due diligence process, including its own operations, its products and services, its business relationships and its supply chain, including with regard to:
	- all people affected by those impacts with particular attention to persons who frequently face discrimination or are in a vulnerable situation, such as women, children, minorities, indigenous people, persons experiencing poverty or social exclusion, LGBTIQ persons, persons with disabilities;
	- the negative or positive effect of the undertaking’s business policies, practices and decisions on the identified issues, including of the undertaking’s purchasing policies and practices;
(iii) any actions taken, and the result of such actions, to prevent, mitigate or remediate actual or potential adverse impacts;	(iii) any actions taken, and the result of such actions, to identify, assess, prevent, mitigate, cease, monitor, communicate, account for, address and remediate actual or potential adverse impacts;

Amendment  51

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point f

Text proposed by the Commission	Amendment
(f) a description of the principal risks to the undertaking related to sustainability matters, including the undertaking’s principal dependencies on such matters, and how the undertaking manages those risks;	(f) a description of the risks to the undertaking related to sustainability matters, including the undertaking’s principal dependencies on such matters, and how the undertaking manages those risks;

Amendment  52

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point g

Text proposed by the Commission	Amendment
(g) indicators relevant to the disclosures referred to in points (a) to (f).	(g) indicators, including those relating to performance, impact and results, relevant to the disclosures referred to in points (a) to (f), provided by the Commission by means of a delegated act.

Amendment  53

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 3

Text proposed by the Commission	Amendment
3. The information referred to in paragraphs 1 and 2 shall contain forward-looking and retrospective information, and qualitative and quantitative information.	3. The information referred to in paragraphs 1 and 2 shall contain forward-looking and retrospective information, and qualitative and quantitative information. It shall be clear, accessible, accurate, concise and reliable.
Where appropriate, the information referred to in paragraphs 1 and 2 shall contain information about the undertaking’s value chain, including the undertaking’s own operations, products and services, its business relationships and its supply chain.	The information referred to in paragraphs 1 and 2 shall contain all information about the undertaking’s value chain, including the undertaking’s own operations, workforce, investments, assets, products and services, its business relationships and its supply chain , in particular in high-risk economic activity sectors, that is useful in order to understand the impacts and risks related to sustainability matters for the undertaking.
Where appropriate, the information referred to in paragraphs 1 and 2 shall also contain references to, and additional explanations of, other information included in the management report in accordance with Article 19 and amounts reported in the annual financial statements.	Where appropriate, the information referred to in paragraphs 1 and 2 shall also contain references to, and additional explanations of, other information included in the management report in accordance with Article 19 and amounts reported in the annual financial statements.
Member States may allow information relating to impending devel­opments or matters in the course of negotiation to be omitted in excep­tional cases where, in the duly justified opinion of the members of the administrative, management and supervisory bodies, acting within the competences assigned to them by national law and having collective responsibility for that opinion, the disclosure of such information would be seriously prejudicial to the commercial position of the undertaking, provided that such omission does not prevent a fair and balanced under­standing of the undertaking's development, performance, position and impact of its activity.	deleted

Amendment  54

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 3 a (new)

Text proposed by the Commission	Amendment
	3a. The information referred to in paragraphs 1 and 2 shall be published in a specific section of the management report and in a format equivalent to, and consistent with, that laid down for the publication of financial statements.

Amendment  55

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 4

Text proposed by the Commission	Amendment
4. Undertakings shall report the information referred to in paragraphs 1 to 3 in accordance with the sustainability reporting standards referred to in Article 19b.	4. Undertakings shall report the information referred to in paragraphs 1 to 3 in accordance with the sustainability reporting standards referred to in Article 19b, and shall annex the separate reports of any subsidiary undertakings, broken down by country.

Amendment  56

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 6 a (new)

Text proposed by the Commission	Amendment
	6 a. The Commission shall be empowered to adopt delegated acts in accordance with Article 49 to establish and update a list of high-risk economic activity sectors set out in Article 19a. In defining that list the Commission shall take into account the work of the Platform on Sustainable Finance established in accordance with Article 20 of Regulation (EU) 2020/852 and the OECD Due Diligence Guidance for Responsible Business Conduct, including for mining, extractive industries, agriculture, clothing and footwear, finance and international shipping, as well as other relevant UN bodies’ guidance on specific sectors. The list of sectors shall take account of the need to be consistent with the NACE classification.

Amendment  57

 

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 7

Text proposed by the Commission	Amendment
7. An undertaking which is a subsidiary undertaking shall be exempted from the obligations set out in paragraphs 1 to 4 if that undertaking and its subsidiary undertakings are included in the consolidated management report of a parent undertaking, drawn up in accordance with Articles 29 and 29a. An undertaking that is a subsidiary undertaking from a parent undertaking that is established in a third country shall also be exempted from the obligations set out in paragraphs 1 to 4 where that undertaking and its subsidiary undertakings are included in the consolidated management report of that parent undertaking and where the consolidated management report is drawn up in a manner that may be considered equivalent, in accordance with the relevant implementing measures adopted pursuant to Article 23(4), point (i), of Directive 2004/109/EC of the European Parliament and of the Council*6, to the manner required by the sustainability reporting standards referred to in Article 19b of this Directive.	7.
The consolidated management report of the parent undertaking referred to in subparagraph 1 shall be published in accordance with Article 30, in the manner prescribed by the law of the Member State by which the undertaking that is exempted from the obligations set out in paragraphs 1 to 4 is governed.	The consolidated management report of the parent undertaking shall be published in accordance with Article 30, in the manner prescribed by the law of the Member State by which the undertaking which meets the requirements referred to in paragraphs 1 to 4 is governed.
The Member State by which the undertaking that is exempted from the obligations set out in paragraphs 1 to 4 is governed, may require that the consolidated management report referred to in the first subparagraph of this paragraph is published in an official language of the Member State or in a language customary in the sphere of international finance, and that any necessary translation into those languages is certified.	The Member State where the undertaking which meets the requirements referred to in paragraphs 1 to 4 is governed, may require that the consolidated management report of a parent undertaking referred is published in an official language of the Member State or in a language customary in the sphere of international finance.
The management report of an undertaking that is exempted from the obligations set out in paragraphs 1 to 4 shall contain all of the following information:	The management report of a subsidiary of a parent undertaking subject to the obligations set out in paragraphs 1 to 4 shall contain the name and registered office of the parent undertaking that reports information at group level in accordance with Articles 29 and 29a, or in a manner that may be considered equivalent, in accordance with the implementing measures adopted pursuant to Article 23(4), point (i) of Directive 2004/109/EC, to the manner required by the sustainability reporting standards referred to in Article 19b;
(a) the name and registered office of the parent undertaking that reports information at group level in accordance with Articles 29 and 29a, or in a manner that may be considered equivalent, in accordance with the implementing measures adopted pursuant to Article 23(4), point (i) of Directive 2004/109/EC, to the manner required by the sustainability reporting standards referred to in Article 19b;
(b) the fact that the undertaking is exempted from the obligations set out in paragraphs 1 to 4 of this Article.

Amendment  58

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1

Text proposed by the Commission	Amendment
1. The Commission shall adopt delegated acts in accordance with Article 49 to provide for sustainability reporting standards. Those sustainability reporting standards shall specify the information that undertakings are to report in accordance with Articles 19a and 29a and, where relevant, shall specify the structure in which that information shall be reported. In particular:	1. The Commission shall adopt delegated acts in accordance with Article 49 to provide for sustainability reporting standards. Those sustainability reporting standards shall specify the information that undertakings are to report in accordance with Articles 19a and 29a and shall specify the structure, format  in which that information shall be reported and the manner of calculation. In particular:
(a) by 31 October 2022, the Commission shall adopt delegated acts specifying the information that undertakings are to report in accordance with paragraphs 1 and 2 of Article 19a, and at least specifying information corresponding to the needs of financial market participants subject to the disclosure obligations of Regulation (EU) 2019/2088.	(a) within 18 months of the entry into force of this Directive, the Commission shall adopt delegated acts specifying the information that undertakings are to report in accordance with paragraphs 1 and 2 of Article 19a, and at least specifying information corresponding to the needs of financial market participants subject to the disclosure obligations of Regulation (EU) 2019/2088.
(b) by 31 October 2023, the Commission shall adopt delegated acts specifying:	(b) within two years of the entry into force of this Directive, the Commission shall adopt delegated acts specifying:
(i) complementary information that undertakings shall report with regard to the sustainability matters and reporting areas listed in Article 19a(2), where necessary;	(i) complementary information that undertakings shall report with regard to the sustainability matters and reporting areas listed in Article 19a(2), in a precise and accessible form;
	(ia) key targets against which all undertakings are required to report in relation to sustainability matters;
(ii) information that undertakings shall report that is specific to the sector in which they operate.	(ii) information that undertakings shall report that is specific to the sector in which they operate. Standards for undertakings operating in high-risk sectors shall be developed as a priority;
	(iia) the specific measurable objectives based on scientific evidence set out in Article 2 (20b);
	(iib) the criteria and implementing information rules for sustainability reporting for SMEs referred to in Article 19a(1);
	(iic) the criteria and implementing rules for sustainability reporting for undertakings referred to in Article 3(7), which are governed by the law of a third country and are not established in the territory of the Union when they operate in the internal market selling goods or providing services;
The Commission shall, at least every three years after its date of application, review any delegated act adopted pursuant to this Article, taking into consideration the technical advice of the European Financial Reporting Advisory Group (EFRAG), and where necessary shall amend such delegated act to take into account relevant developments, including developments with regard to international standards.	The Commission shall, at least every five years after its date of application, review any delegated act adopted pursuant to this Article taking into consideration the technical advice of the European Financial Reporting Advisory Group (EFRAG) provided that such advice has been developed by an independent way while ensuring the meaningful participation of all relevant stakeholders in the process. Where necessary, the Commission shall amend such delegated act to take into account relevant developments, including developments with regard to international standards. In addition, the Commission shall carry out a one-off review of the aforementioned delegated acts following the adoption of the upcoming legislation on corporate due diligence.

Amendment  59

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 1

Text proposed by the Commission	Amendment
The sustainability reporting standards referred to in paragraph 1 shall require that the information to be reported is understandable, relevant, representative, verifiable, comparable, and is represented in a faithful manner.	The sustainability reporting standards referred to in paragraph 1 shall require that the information to be reported is understandable, concise, accessible, accurate, relevant, representative, verifiable, reliable, comparable, and is represented in a faithful manner.

Amendment  60

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 1 a (new)

Text proposed by the Commission	Amendment
	When applicable, the information shall be science-based and measurable. The sustainable reporting standards referred to in paragraph 1 shall require undertakings to disclose all contextual information that is necessary to understand the information reported.

Amendment  61

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point a

Text proposed by the Commission	Amendment
(a) specify the information that undertakings are to disclose about environmental factors, including information about:	(a) specify the information that undertakings are to disclose about environmental factors, including information about:
(i) climate change mitigation;	(i) climate change mitigation including reduction of greenhouse gas emissions and substantiated explanation on the alignment of the undertaking’s business model and strategy with the goal of limiting global warming to 1,5 °C;
(ii) climate change adaptation;	(ii) climate change adaptation, including identification of risks under different climate scenarios, targets and detailed transition plans to address these risks;
(iii) water and marine resources;	(iii) the sustainable use and protection of water, soil, land and marine resources, including information on the changes in quality or quantity of those resources and the fair access to those resources by other users and local stakeholders;
(iv) resource use and circular economy;	(iv) targets to limit the use of resource and application of circular economy;
(v) pollution;	(v) pollution of any kind, including plastic pollution, water, air and soil pollution, diffuse pollution;
(vi) biodiversity and ecosystems;	(vi) biodiversity and ecosystems including targets to reduce deforestation and impacts on wildlife;
	(vi a) animal welfare, including living and transport conditions;

Amendment  62

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point b

Text proposed by the Commission	Amendment
(b) specify the information that undertakings are to disclose about social factors, including information about:	(b) specify the information that undertakings are to disclose about social factors, including information about:
(i) equal opportunities for all, including gender equality and equal pay for equal work, training and skills development, and employment and inclusion of people with disabilities;	(i) the undertaking’s workforce, including country-by-country data on:
	- workforce composition and diversity with respect to vulnerable groups, gender equality, and use of contingent labour,
	- equal opportunities for all, including gender equality and equal pay for equal work or work of equal value as well as pay transparency,
	- wage levels disaggregated per gender, per quartiles, per category of occupation, and comparison with applicable minimum wage levels and living wages,
	- freedom of association, collective bargaining coverage, social dialogue practices, and consultation, information and involvement of workers,
	- working conditions, including secure employment, work-life balance and a healthy, safe and well- adapted work environment, including data on workplace accidents and safety programmes ,in line with the Council Directive 89/391,
	- employment and inclusion of people with disabilities,
	- training and skills development broken down by hours, gender and category of workers and the average expenditure on training per worker,
	- steps taken to reduce inequalities,
	- diversity at all levels of management, in particular the number of women on boards, and the workforce broken down by gender, age, ethnicity and possible other relevant factors;
(ii) working conditions, including secure and adaptable employment, wages, social dialogue, collective bargaining and the involvement of workers, work-life balance, and a healthy, safe and well-adapted work environment;	(ii) workers in the value chain, including:
	- sector-specific data on workers in the value chains associated with a high likelihood of actual or potential adverse impacts, corresponding to the data concerning the undertaking’s workforce;
	- information on impacts on human rights, including those concerning forced labour, child labour, privacy, freedom of expression, access to clean water and sanitation, and adequate housing, and
	- information on protection of labour costs, payment times and cancellations in purchasing policies and practices.
(iii) respect for the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work and the ILO fundamental conventions and the Charter of Fundamental Rights of the European Union.	(iii) respect for the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work and the relevant ILO conventions and in particular the fundamental conventions of the International Labour Organization, the European Convention on human Rights, the European Social Charter, the Charter of Fundamental Rights of the European Union, the UN Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises , the European Convention on Human Rights and its additional protocols, the UNECE Convention on Access to Information, Public Participation in Decision Making and Access to Justice in Environmental Matters (Aarhus Convention) the UN Declaration on the Rights of Indigenous Peoples (UNDRIP ) and its principle of Free, Prior and Informed Consent, the ILO Indigenous and Tribal People Convention, 1989, and Resolution 48/13 adopted by the Human Rights Council on the 8 October 2021 on the human right to a clean, healthy environment;
	(iii a) the undertaking’s value chain linked to adverse actual and potential impacts on sustainability matters, including sector-specific information on suppliers, types of products and services supplied, and on sourcing and traceability of commodities and materials associated with a high likelihood of actual or potential adverse impacts on sustainability matters;
	(iii b) affected communities, including information on:
	- human rights impact assessments carried out by the undertaking or their supply and value chains,
	- respect for indigenous peoples’ rights and implementation of the undertaking’s policy on the right to free prior and informed consent,
	- health, safety and security of persons; freedom of assembly and freedom of expression,
	- human rights impacts related to land and access to water, and
	- economic impacts on communities;
	(iii c) implementation and results of the undertaking’s due diligence process.

Amendment  63

 

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point c

Text proposed by the Commission	Amendment
(c) specify the information that undertakings are to disclose about governance factors, including information about:	(c) specify the information that undertakings are to disclose about governance factors, including information about:
(i) the role of the undertaking’s administrative, management and supervisory bodies, including with regard to sustainability matters, and their composition;	(i) the role of the undertaking’s administrative, management and supervisory bodies, including with regard to sustainability matters, engagement and proper implementation of the due diligence strategy, including engagement with the stakeholders affected by the identified impacts and their composition;
	(ia) respect for workers’ right to information and consultation as defined by national, international and Union law;
(ii) business ethics and corporate culture, including anti-corruption and anti-bribery;	(ii) business ethics and corporate culture, including anti-corruption, anti-bribery policies, risks assessments and programme, anti-workplace violence, anti-harassment and internal alert mechanisms and arrangements within the undertaking for protecting whistleblowers;
(iii) political engagements of the undertaking, including its lobbying activities;	(iii) political and policy engagements and influence of the undertaking, including its direct and indirect lobbying activities, expenses, and political donations;
	(iiia) management and quality of the relationships with state actors and in particular with public administrations, and information on public administrative procedural practices including public procurement;
(iv) the management and quality of relationships with business partners, including payment practices;	(iv) business partners management and quality of relationships, including payment and purchasing practices, in particular towards SMEs;
	(iva) corporate litigation and alternative dispute resolution practices;
	(ivb) tax practices broken down by country;
	(ivc) security practices;
(v) the undertaking’s internal control and risk management systems, including in relation to the undertaking’s reporting process.	(v) the undertaking’s internal control and risk management systems, including in relation to the undertaking’s reporting process and implementation of the due diligence strategy;
	(v a) the undertaking’s meaningful engagement with civil society, local communities, informal actors, and structures on sustainability matters, especially just transition measures and the undertaking’s social purpose;
	(v b) information on beneficial ownership and organisational structure, including subsidiaries, affiliates, joint ventures and non-fully consolidated holdings;
	(v c) corporate communication and information strategy and practices;
	(v d) respect for the rule of law and good governance systems of the country, region or territory where the undertaking and its value and supply chain operate, and impact on the rule of law and good governance systems.

Amendment  64

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 a (new)

Text proposed by the Commission	Amendment
	2a. Undertakings subject to an obligation to prepare and make public a report on payments made to governments pursuant to Article 42 shall disclose, at project level as defined in Article 41(4), all documents and data required to understand their sustainability reporting under Article 19a. Those documents shall include:
	(a) all contracts, licenses, leases and concessions including annexes and amendments, which provide the terms attached to the exploitation of oil gas and mineral resources;
	(b) any agreements, or sets of agreements involving the provision of goods and services, including loans, grants and infrastructure works, in full or partial exchange for oil, gas or mining exploration or production concessions or physical delivery of such commodities;
	(c) any agreements that mandate social expenditure by companies; and
	(d) any environmental and/or social impact assessments.

Amendment  65

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 b (new)

Text proposed by the Commission	Amendment
	2b. The sustainability reporting standards referred to in paragraph 1 shall include an evaluation mechanism, based on qualitative information and indicators, which makes the disclosed sustainability information comparable between companies and allows for the quantitative rating of corporate sustainability performance as a basis for public procurement, State aid and other policy measures.

Amendment  66

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 3 – introductory part

Text proposed by the Commission	Amendment
3. When adopting delegated acts pursuant to paragraph 1, the Commission shall take account of:	3. When adopting delegated acts pursuant to paragraph 1, the Commission shall ensure consistency with its own work and the work of global standard-setting initiatives for sustainability reporting, existing standards and frameworks for natural capital accounting, responsible business conduct, corporate social responsibility, sustainable corporate governance and other sustainable development. The Commission shall furthermore take account of:

Amendment  67

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 3 – point c

Text proposed by the Commission	Amendment
(c) the criteria set out in the delegated acts adopted pursuant to Regulation (EU) 2020/852*7;	(c) the criteria set out in the delegated acts adopted pursuant to Regulation (EU) 2020/852*7whose feasibility in practice and by means of concrete templates and examples are ensured by the Commission;
____________________	_________
*7 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13).	*7 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13).

Amendment  68

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 3 – point h a (new)

Text proposed by the Commission	Amendment
	(ha) Directive (EU) 2019/1937 of the European Parliament and of the Council on the protection of persons who report breaches of Union law1 a.
	___________
	1a Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law (OJ L 305, 26.11.2019, p. 17).

Amendment  69

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19 d – paragraph 1

Text proposed by the Commission	Amendment
1. Undertakings subject to Article 19a shall prepare their financial statements and their management report in a single electronic reporting format in accordance with Article 3 of Commission Delegated Regulation (EU) 2019/815*15 and shall mark-up their sustainability reporting, including the disclosures laid down in Article 8 of Regulation (EU) 2020/852, in accordance with that Delegated Regulation.	1. Undertakings subject to Article 19a shall prepare their financial statements and their management report in a single electronic reporting format in accordance with Article 3 of Commission Delegated Regulation (EU) 2019/815*15 and shall mark-up their sustainability reporting, including the disclosures laid down in Article 8 of Regulation (EU) 2020/852, in accordance with that Delegated Regulation, as well as to other Regulations referred to in Article 19b.

Amendment  70

 

Proposal for a directive

Article 1 – paragraph 1 – point 5 – point a

Directive 2013/34/EU

Article 20 – paragraph 1 – point g

Text proposed by the Commission	Amendment
(g) a description of the diversity policy applied in relation to the undertaking's administrative, management and supervisory bodies with regard to gender and other aspects such as, age, or educational and professional backgrounds, the objectives of that diversity policy, how it has been implemented and the results in the reporting period. If no such policy is applied, the statement shall contain an explanation as to why this is the case.	(g) a description of the diversity and inclusion policy applied in relation to the undertaking's administrative, management and supervisory bodies with regard to gender equality, anti-discrimination, support for minority and vulnerable groups, including persons with disabilities and other aspects such as, age, or educational and professional backgrounds, the objectives of that diversity policy, how it has been implemented and the results in the reporting period.

Amendment  71

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 1

Text proposed by the Commission	Amendment
1. Parent undertakings of a large group shall include in the consolidated management report information necessary to understand the group's impacts on sustainability matters, and information necessary to understand how sustainability matters affect the group's development, performance and position.	1. Parent undertakings of a large group shall include in the consolidated management report information necessary to understand the group's impacts on sustainability matters, and information, broken down by country, necessary to understand how sustainability matters affect the group's development, performance and position. That information shall be published in a specific section of the management report and in a format equivalent to, and compatible with, that laid down for the publication of the financial statements.

Amendment  72

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point a

Text proposed by the Commission	Amendment
(a) a brief description of the group's business model and strategy, including:	(a) a brief description of the group's business model and strategy, including:
(i) the resilience of the group's business model and strategy to risks related to sustainability matters;	(i) the resilience of the group's business model and strategy to risks related to sustainability matters and climate change;
(ii) the opportunities for the group related to sustainability matters;	(ii) the opportunities and risks for the group related to sustainability matters and the transition to a carbon-neutral economy;
	(iia) the assessment by the undertaking of its impacts on sustainability matters;
(iii) the plans of the group to ensure that the group’s business model and strategy compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement;	(iii) the plans of the group to ensure that the group’s business model and strategy compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement;
(iv) how the group’s business model and strategy take account of the interests of the group’s stakeholders and of the impacts of the group on sustainability matters;	(iv) how the group’s business model and strategy take account of the interests of the group’s stakeholders with a specific reference on whether there have been direct consultations with stakeholders to identify such information, and of the impacts of the group on sustainability matters, including the group’s measures to ensure respect workers’ rights, decent work conditions, fair wages, training and further education for workers, information and consultation of workers and safeguard the rights of trade unions;
(v) how the group’s strategy has been implemented with regard to sustainability matters;	(v) how sustainability matters and related targets, in connection with principal risks, opportunities, and severe impacts, have been integrated into the group’s strategy and how the group’s strategy has been implemented with regard to sustainability matters and climate change.

Amendment  73

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point b

Text proposed by the Commission	Amendment
(b) a description of the targets related to sustainability matters set by the group and of the progress of the undertaking towards achieving them;	(b) a description of the science-based and time-bound short-term, mid-term and long-term targets set by the group to address the principal risks, opportunities and impacts of its activities with regards to sustainability matters, along with corresponding evidence and of the progress of the undertaking towards achieving them;

Amendment  74

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point c

Text proposed by the Commission	Amendment
(c) a description of the role of the administrative, management and supervisory bodies with regard to sustainability matters;	(c) a description of the role of the administrative, management and supervisory bodies with regard to sustainability matters, including with regard to:
	(i) the matters addressed by these bodies during the reporting period;
	(ii) their engagement in the due diligence process implemented with regard to sustainability matters, to identify adverse impacts, including any direct engagement with the stakeholders affected by the identified impacts;
	(ii) their engagement in the analysis of main risks and opportunities for the undertaking related to sustainability matters;
	(iii) approval of the undertaking’s strategy and targets related to sustainability matters and of financial resources for their implementation;
	(iv) specific oversight on the implementation of the undertaking’s strategy related to sustainability matters;
	(v) expertise on sustainability matters possessed by the members of the administrative, management and supervisory bodies and consultation of external experts;

Amendment  75

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point e

Text proposed by the Commission	Amendment
(e) a description of:	(e) a description of:
(i) the due diligence process implemented with regard to sustainability matters;	(i) the due diligence process implemented with regard to sustainability in particular with regard to the environment, human rights, rule of law and good governance systems throughout the entire supply and value chain, including gender equality and workers’ rights, as well as plans to eradicate child labour and forced labour, in accordance with international and regional human rights conventions, guidelines and standards such as the UN Guiding Principles on Business and Human Rights, the OECD Due Diligence Guidance for Responsible Business Conduct, the International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work, the ILO fundamental conventions and the Charter of Fundamental Rights of the European Union and in line with applicable Union legislation on due diligence (Directive (EU) XX/XX);
	The reporting requirements as regards due diligence shall be based upon the upcoming legislation on corporate due diligence.
	(ia) the structure of the undertaking’s value chain including through a mapping of its own operations, subsidiaries, suppliers and business relationships. Disclosed information should include names, locations, types of products and services supplied;
(ii) the principal actual or potential adverse impacts connected with the group’s value chain, including its own operations, its products and services, its business relationships and its supply chain;	(ii) the actual or potential adverse impacts connected with the group’s value chain as identified through the due diligence process including its own operations, its products and services, its subsidiaries, its business relationships and its supply chain, including with regard to all people affected by those impacts with particular attention to persons who frequently face discrimination or are in a vulnerable situation, such as women, children, minorities, indigenous people, persons experiencing poverty or social exclusion; LGBTIQ persons or persons with disabilities; the effect of the undertaking’s business policies, practices and decisions on the identified issues, including of the undertaking’s purchasing policies and practices;
(iii) any actions taken, and the result of such actions, to prevent, mitigate or remediate actual or potential adverse impacts;	(iii) any actions taken, and the result of such actions, to identify, assess, prevent, mitigate, cease, monitor, communicate, account for, address and or remediate actual or potential adverse impacts;

Amendment  76

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point f

Text proposed by the Commission	Amendment
(f) a description of the principal risks to the group related to sustainability matters, including the group’s principal dependencies on such factors, and how the group manages those risks;	(f) a description of the risks to the group related to sustainability matters, including the group’s dependencies on such factors, and how the group manages those risks;

Amendment  77

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

29a – paragraph 2 – subparagraph 1 – point g

Text proposed by the Commission	Amendment
(g) indicators relevant to the relevant to the disclosures referred to in points (a) to (f).	(g) indicators relevant to the relevant to the disclosures referred to in points (a) to (f), which are provided by the Commission by means of a delegated act, in collaboration with the technical advice of the EFRAG.

Amendment  78

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 3

Text proposed by the Commission	Amendment
3. The information referred to in paragraphs 1 and 2 shall contain forward-looking information and information about past performance, and qualitative and quantitative information. This information shall take into account short, medium and long-term time horizons, where appropriate.	3. The information referred to in paragraphs 1 and 2 shall contain as much as possible forward-looking information and information about past performance, in qualitative and quantitative form. This information shall take into account short, medium and long-term time horizons, where appropriate.
The information referred to in paragraphs 1 and 2 shall include information about the group’s value chain, including its own operations, its products and services, its business relationships and its supply chain, where appropriate.	The information referred to in paragraphs 1 and 2 shall include information about the group’s value chain, including its own operations, workforce, investments, assets, its products and services, its business relationships and its supply chain, where appropriate.
The information referred to in paragraphs 1 and 2 shall also, where appropriate, include references to, and additional explanations of, other information included in the consolidated management report in accordance with Article 29 of this Directive and amounts reported in the consolidated financial statements.	The information referred to in paragraphs 1 and 2 shall also, where appropriate, include references to, and additional explanations of, other information included in the consolidated management report in accordance with Article 29 of this Directive and amounts reported in the consolidated financial statements.
Member States may allow information relating to impending devel­opments or matters in the course of negotiation to be omitted in excep­tional cases where, in the duly justified opinion of the members of the administrative, management and supervisory bodies, acting within the competences assigned to them by national law and having collective responsibility for that opinion, the disclosure of such information would be seriously prejudicial to the commercial position of the group, provided that such omission does not prevent a fair and balanced under­standing of the group's development, performance, position and impact of its activity.

Amendment  79

 

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 7

Text proposed by the Commission	Amendment
7. A parent undertaking which is also a subsidiary undertaking shall be exempted from the obligation set out in paragraphs 1 to 4 if that exempted parent undertaking and its subsidiaries are included in the consolidated management report of another undertaking, drawn up in accordance with Article 29 and this Article. A parent undertaking that is a subsidiary undertaking from a parent undertaking that is established in a third country shall also be exempted from the obligations set out in paragraphs 1 to 4 where that undertaking and its subsidiary undertakings are included in the consolidated management report of that parent undertaking and where the consolidated management report is drawn up in a manner that may be considered equivalent, in accordance with the relevant implementing measures adopted pursuant to Article 23(4)(i) of Directive 2004/109/EC, to the manner required by the sustainability reporting standards referred to in Article 19b of this Directive.	7.
The consolidated management report of the parent undertaking referred to in subparagraph 1 shall be published in accordance with Article 30, in the manner prescribed by the law of the Member State by which the parent undertaking that is exempted from the obligations set out in paragraphs 1 to 4 is governed.	The consolidated management report of the parent undertaking referred to in subparagraph 1 shall be published in accordance with Article 30, in the manner prescribed by the law of the Member State by which the parent undertaking that is subject to the obligations set out in paragraphs 1 to 4 is governed.
The Member State by which the parent undertaking that is exempted from the obligations set out in paragraphs 1 to 4 is governed may require that the consolidated management report referred to in in the first subparagraph of this paragraph is published in its official language or in a language customary in the sphere of international finance, and that any necessary translation into those languages is certified.	The Member State by which the parent undertaking is governed may require that the consolidated management report of that parent undertaking is published in its official language or in a language customary in the sphere of international finance.
The consolidated management report of a parent undertaking that is exempted from the obligations set out in paragraphs 1 to 4 shall contain all of the following information:	The consolidated management report of subsidiaries of a parent undertaking that are subject to the obligations set out in paragraphs 1 to 4 shall contain the name and registered office of the parent undertaking that reports information at group level in accordance with Articles 29 and this Article, or in a manner that may be considered equivalent, in accordance with the relevant implementing measures adopted pursuant to Article 23(4)(i) of Directive 2004/109/EC, to the manner required by the sustainability standards adopted pursuant to Article 19b;
(a)  the name and registered office of the parent undertaking that reports information at group level in accordance with Articles 29 and this Article, or in a manner that may be considered equivalent, in accordance with the relevant implementing measures adopted pursuant to Article 23(4)(i) of Directive 2004/109/EC, to the manner required by the sustainability standards adopted pursuant to Article 19b;
(b)  the fact that the undertaking is exempted from the obligations set out in paragraphs 1 to 4 of this Article.;

Amendment  80

Proposal for a directive

Article 1 – paragraph 1 – point 8 – point a

Directive 2013/34/EU

Article 30 – paragraph 1 – subparagraph 3

Text proposed by the Commission	Amendment
Member States may, however, exempt undertakings from the obligation to publish the management report where a copy of all or part of any such report can be easily obtained upon request at a price not exceeding its administrative cost.’	deleted

Amendment  81

Proposal for a directive

Article 1 – paragraph 1 – point 10 – point a – point ii

Directive 2013/34/EU

Article 34 – paragraph 1 – point aa

Text proposed by the Commission	Amendment
(aa) where applicable, express an opinion based on a limited assurance engagement as regards the compliance of the sustainability reporting with the requirements of this Directive, including the compliance of the sustainability reporting with the reporting standards adopted pursuant to Article 19b, the process carried out by the undertaking to identify the information reported pursuant to those reporting standards, and the compliance with the requirement to mark-up sustainability reporting in accordance with Article 19d, and as regards the compliance with the reporting requirements of Article 8 of Regulation (EU) 2020/852.;	(aa) where applicable, express an opinion based on a reasonable assurance engagement as regards the compliance of the sustainability reporting with the requirements of this Directive, including the compliance of the sustainability reporting with the reporting standards adopted pursuant to Article 19b, the process carried out by the undertaking to identify the information reported pursuant to those reporting standards, and the compliance with the requirement to mark-up sustainability reporting in accordance with Article 19d, and as regards the compliance with the reporting requirements of Article 8 of Regulation (EU) 2020/852.;

Amendment  82

Proposal for a directive

Article 1 – paragraph 1 – point 10 – point b

Directive 2013/34/EU

Article 34 – paragraph 3

Text proposed by the Commission	Amendment
3. Member States may allow an independent assurance services provider to express the opinion referred to in paragraph 1, second subparagraph, point (aa), provided that it is subject to requirements that are consistent with those set out in Directive 2006/43/EC as regards the assurance of sustainability reporting as defined in Article 2(1), point (r) of that Directive.	3. Member States shall allow an independent assurance services provider to express the opinion referred to in paragraph 1, second subparagraph, point (aa), provided that it is subject to requirements that are consistent with those set out in Directive 2006/43/EC as regards the assurance of sustainability reporting as defined in Article 2(1), point (r) of that Directive.

Amendment  83

Proposal for a directive

Article 1 – paragraph 1 – point 11 – point b

Directive 2013/34/EU

Article 49 – paragraph 3a – subparagraph 1

Text proposed by the Commission	Amendment
When adopting delegated acts pursuant to Articles 19b and 19c, the Commission shall take into consideration technical advice from EFRAG, provided such advice has been developed with proper due process, public oversight and transparency and with the expertise of relevant stakeholders, and is accompanied by cost-benefit analyses that include analyses of the impacts of the technical advice on sustainability matters.	When adopting delegated acts pursuant to Articles 19b and 19c, the Commission shall ensure that  trade unions are involved. It shall also include other relevant stakeholders and civil society organisations. It may take into consideration technical advice from EFRAG, provided such advice has been developed by an independent technical advisory body funded by the Union and financially independent from private stakeholders. The technical advice shall be developed with proper due process, public oversight and transparency and with the expertise and direct and balanced participation of relevant stakeholders and trade unions in particular. The technical advice shall cover all sustainability matters outlined in Articles 19a and 19b and shall be accompanied by analyses that balance the costs of reporting for undertakings of the technical advice on sustainability matters with the benefits for users and public policy goals.

Amendment  84

Proposal for a directive

Article 1 – paragraph 1 – point 11 – point b

Directive 2013/34/EU

Article 49 – paragraph 3a – subparagraph 3

Text proposed by the Commission	Amendment
	The Commission shall give immediate access to experts of the Parliament and of the Council to all documents and meetings of preparation of the delegated acts.

Amendment  85

Proposal for a directive

Article 1 – paragraph 1 – point 11 – point c

Directive 2013/34/EU

Article 49 – paragraph 5

Text proposed by the Commission	Amendment
5. A delegated act adopted pursuant to Article 1(2), Article 3(13), Article 46(2), Article 19b and Article 19c shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of two months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by two months at the initiative of the European Parliament or the Council.	5. A delegated act adopted pursuant to Article 1(2), Article 3(13), Article 46(2), Article 19b and Article 19c shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of four months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by two months at the initiative of the European Parliament or the Council.
	In all the delegated acts listed in the first subparagraph, the Commission and its advisory bodies shall ensure a coordinated and staggered approach to implementation, to ensure high reporting and data quality, reliability and implementability.

Amendment  86

Proposal for a directive

Article 1 – paragraph 1 – point 12

Directive 2013/34/EU

Article 51 – paragraph 2 – point a

Text proposed by the Commission	Amendment
(a) a public statement indicating the natural person or the legal entity responsible and the nature of the infringement;	(a) a public statement indicating the natural person or the legal entity responsible, including the company directors, and the nature of the infringement;

Amendment  87

Proposal for a directive

Article 1 – paragraph 1 – point 12

Directive 2013/34/EU

Article 51 – paragraph 2 a (new)

Text proposed by the Commission	Amendment
	2a. Member States may include other penalties such as:
	(a) exclusion from entitlement to public benefits or aid;
	(b) temporary or permanent exclusion from access to public funding, including tender procedures, grants and concessions;
	(c) temporary or permanent disqualification from the carrying out of commercial activities.

Amendment  88

Proposal for a directive

Article 1 – paragraph 1 – point 12

Directive 2013/34/EU

Article 51 – paragraph 3 – point e a (new)

Text proposed by the Commission	Amendment
	(ea) the impaired ability of affected people and organisations, including non-governmental organisations, social partners, human rights and environmental defenders and anti-corruption activists, to hold undertakings to account for their impacts on people, the environment and good governance.

Amendment  89

Proposal for a directive

Article 1 – paragraph 1 – point 12 a (new)

Directive 2013/34/EU

Article 51a (new)

Text proposed by the Commission	Amendment
	12a. Article 51a is added:
	Article 51a
	Cooperation with developing countries
	1. Developing countries shall be consulted in the procedure of the Commission aimed at defining the sustainability reporting standards if there is a legitimate interest that is based on the fact that the undertaking or its supply and value chains operate in their territory.
	2. Member States and the Commission shall step up cooperation with developing countries with a view to strengthening their institutional and legal systems to effectively implement and enforce corporate sustainability reporting in line with the international, regional and Union frameworks and standards.
	3. Special support shall be provided to small and medium undertakings operating in high-risk economic activity sectors in developing countries with a view to facilitating the implementation of the sustainability reporting requirements of this Directive, including concerning undertakings’ value and supply chains.

Amendment  90

Proposal for a directive

Article 3 – paragraph 1 – point 1

Directive 2006/43/EC

Article 1 – paragraph 1

Text proposed by the Commission	Amendment
This Directive establishes rules concerning the statutory audit of annual and consolidated accounts and the assurance of annual and consolidated sustainability reporting, where this is performed by the statutory auditor or audit firm carrying out the statutory audit of financial statements.;	This Directive establishes rules concerning the statutory audit of annual and consolidated accounts and the assurance of annual and consolidated sustainability reporting, where this is performed either by the statutory auditor or by the audit firm carrying out the statutory audit of financial statements.;

Amendment  91

Proposal for a directive

Article 3 – paragraph 1 – point 4 – point b

Directive 2006/43/EC

Article 8 – paragraph 1 – point cc

Text proposed by the Commission	Amendment
(cc) sustainability reporting standards;	(cc) sustainability reporting standards as referred to in Article 19b of Directive 2013/34/EU;

Amendment  92

Proposal for a directive

Article 3 – paragraph 1 – point 4 – point d

Directive 2006/43/EC

Article 8 – paragraph 1 – point ff

Text proposed by the Commission	Amendment
(ff) due diligence processes with regard to sustainability matters;;	deleted

Justification

Due diligence should be covered by the upcoming Sustainable Corporate Governance Commission Proposal. Otherwise, due diligence obligations would need to be included in reporting before the standards are clear, which prevents legal certainty.

Amendment  93

Proposal for a directive

Article 3 – paragraph 1 – point 13

Directive 2006/43/EC

Article 27 a – subparagraph 1 a (new)

Text proposed by the Commission	Amendment
	The statutory auditor or the audit firm carrying out the statutory audit of an undertaking referred to in Article 19a(1) of Directive 2013/34/EU, or any member of the network to which the statutory auditor or the audit firm belongs, shall not directly or indirectly provide to the audited entity, to its parent undertaking or to its controlled undertakings within the Union any assurance of sustainability reporting in:
	(a) the period between the beginning of the period audited and the issuing of the audited report;
	(b) the financial year immediately preceding the period referred to in point (a) of this subparagraph.

Amendment  94

Proposal for a directive

Article 3 – paragraph 1 – point 14 – point e

Directive 2006/43/EC

Article 28 – paragraph 4 – subparagraph 1

Text proposed by the Commission	Amendment
The audit report shall be signed and dated by the statutory auditor. Where an audit firm carries out the statutory audit and, where applicable, the assurance of sustainability reporting, the audit report shall bear the signature of at least the statutory auditor(s) carrying out the statutory audit and the assurance of sustainability reporting on behalf of the audit firm. Where more than one statutory auditor or audit firm have been simultaneously engaged, the audit report shall be signed by all statutory auditors or at least by the statutory auditors carrying out the statutory audit and the assurance of sustainability reporting on behalf of every audit firm. In exceptional circumstances Member States may provide that such signature(s) need not be disclosed to the public if such disclosure could lead to an imminent and significant threat to the personal security of any person.;	The audit report shall be signed and dated by the statutory auditor or by the audit firm carrying out the audit. Where an audit firm carries out the statutory audit and, where applicable, the assurance of sustainability reporting, the audit report shall bear the signature of at least the statutory auditor(s) carrying out the statutory audit and that of the auditor carrying out the assurance of sustainability reporting on behalf of the audit firm. Where more than one statutory auditor or audit firm have been simultaneously engaged, the audit report shall be signed by all statutory auditors or at least by the statutory auditors carrying out the statutory audit and the assurance of sustainability reporting on behalf of every audit firm. In exceptional circumstances Member States may provide that such signature(s) need not be disclosed to the public if such disclosure could lead to an imminent and significant threat to the personal security of any person.;

Amendment  95

Proposal for a directive

Article 6 – paragraph 1

Text proposed by the Commission	Amendment
Article 4 of this Directive shall apply to financial years starting on or after 1 January 2023.	Article 4 of this Directive shall apply to financial years not earlier than one full financial year during which the undertakings have had the opportunity to adapt to the provisions and reporting standards set out in this Directive and the accompanying, adopted and published delegated acts.

PROCEDURE – COMMITTEE ASKED FOR OPINION

Title	Amending Directive 2013/34/EU, Directive 2004/109/EC, Directive 2006/43/EC and Regulation (EU) No 537/2014, as regards corporate sustainability reporting
References	COM(2021)0189 – C9-0147/2021 – 2021/0104(COD)
Committee responsible  Date announced in plenary	JURI 23.6.2021
Opinion by  Date announced in plenary	DEVE 8.7.2021
Rapporteur for the opinion  Date appointed	Pierfrancesco Majorino 14.6.2021
Date adopted	28.2.2022
Result of final vote	+: –: 0:	14 11 1
Members present for the final vote	Barry Andrews, Eric Andrieu, Anna-Michelle Asimakopoulou, Hildegard Bentele, Dominique Bilde, Udo Bullmann, Catherine Chabaud, Antoni Comín i Oliveres, Ryszard Czarnecki, Gianna Gancia, Charles Goerens, Mónica Silvana González, Pierrette Herzberger-Fofana, György Hölvényi, Rasa Juknevičienė, Beata Kempa, Karsten Lucke, Pierfrancesco Majorino, Erik Marquardt, Janina Ochojska, Christian Sagartz, Tomas Tobé, Miguel Urbán Crespo, Bernhard Zimniok
Substitutes present for the final vote	María Soraya Rodríguez Ramos, Caroline Roose

 

 

 

FINAL VOTE BY ROLL CALL IN COMMITTEE ASKED FOR OPINION

14	+
S&D	Eric Andrieu, Udo Bullmann, Mónica Silvana González, Karsten Lucke, Pierfrancesco Majorino
Renew	Barry Andrews, Catherine Chabaud, Charles Goerens, María Soraya Rodríguez Ramos
Verts/ALE	Pierrette Herzberger‑Fofana, Erik Marquardt, Caroline Roose
The Left	Miguel Urbán Crespo
NI	Antoni Comín i Oliveres

 

11	-
PPE	Anna‑Michelle Asimakopoulou, Hildegard Bentele, György Hölvényi, Rasa Juknevičienė, Janina Ochojska, Christian Sagartz, Tomas Tobé
ID	Gianna Gancia, Bernhard Zimniok
ECR	Ryszard Czarnecki, Beata Kempa

 

1	0
ID	Dominique Bilde

 

Key to symbols:

+ : in favour

- : against

0 : abstention

 

 

LETTER OF THE COMMITTEE ON INDUSTRY, RESEARCH AND ENERGY (3.3.2022)

Mr Adrián Vázquez Lázara

Chair

Committee on Legal Affairs

BRUSSELS

Subject: Opinion on the proposal for a directive of the European Parliament and of the Council amending Directive 2013/34/EU, Directive 2004/109/EC, Directive 2006/43/EC and Regulation (EU) No 537/2014, as regards corporate sustainability reporting (COM(2021)0189 – 2021/0104(COD))

Dear Mr Vázquez Lázara,

Under the procedure referred to above, the Committee on Industry, Research and Energy has been asked to submit an opinion to your committee. At their meeting of 14 July 2021, the Coordinators of the Committee on Industry, Research and Energy decided to send the opinion in the form of a letter. The Committee on Industry, Research and Energy considered the matter at its meeting of 3 March 2022, and adopted the opinion at that meeting.

The opinion consists of the following amendments, which, in accordance with the usual treatment of opinions under Rule 56, I kindly ask you to put to the vote during the vote on the report in your committee:

ITRE 1

Recital 18

(18) Considering the growing relevance of sustainability-related risks and taking into account that small and medium-sized enterprises (SMEs) listed on regulated markets comprise a significant proportion of all listed undertakings in the Union, in order to ensure investor protection it is appropriate to require that also those SMEs disclose information on sustainability matters. The introduction of this requirement will help to ensure that financial market participants can include smaller listed undertakings in investment portfolios on the basis that they report the sustainability information that financial market participants need. It will therefore help to protect and enhance the access of smaller listed undertakings to financial capital, and avoid discrimination against such undertakings on the part of financial market participants. The introduction of this requirement is also necessary to ensure that financial market participants have the information they need from investee undertakings to be able to comply with their own sustainability disclosure requirements laid down in Regulation (EU) 2019/2088. SMEs listed on regulated markets should, however, be provided with sufficient time to prepare for the application of the requirement to report sustainability information, due to their smaller size and more limited resources, and taking account of the difficult economic circumstances created by the COVID-19 pandemic. They should also be given the possibility to report according to standards that are proportionate to the capacities and resources of SMEs. Such standards should be developed having regard to all available data and the results of an impact assessment on SMEs (SME test), and taking due account of the recommendations of the European Financial Reporting Advisory Group. In order to exploit best practices and optimise synergies across various reporting requirements, the data to be considered could include, for example, invoices and other information submitted to third-party service providers in the context of other regular reporting requirements. Non-listed SMEs can also choose to use these proportionate standards on a voluntary basis. The SME standards will set a reference for undertakings that are within the scope of the Directive regarding the level of sustainability information that they could reasonably request from SME suppliers and clients in their value chains.

ITRE 2

Recital 18a (new)

(18a) When designing reporting standards, the Commission should ensure coherence with the industrial ecosystem-based approach adopted in its two most recent communications on industrial strategy (COM(2020)0102 and COM(2021)0350). Accordingly, the Commission should seek to design specific reporting standards adapted to the needs of particular types of industry. As part of this, the Commission should ensure proper consultation periods to guarantee the participation of all interested stakeholders, in particular workers, employers and SME representatives. The Commission should alsodevelop specific sustainability reporting standards applicable to the extractive industry, which would be adapted to its specificities, as this industry can pose particular environmental challenges in terms of greenhouse gas emissions, pollution and biodiversity loss and hence threats to human rights and human health.

ITRE 3

Recital 27

(27) To ensure consistency with international instruments such as the UN Guiding Principles on Business and Human Rights, the OECD Due Diligence Guidance for Responsible Business Conduct, the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, ILO Convention 169 on the right of Indigenous Peoples to Free, Prior, and Informed consent and  EU legislation on mandatory human rights due diligence, the due diligence disclosure requirements should be specified in greater detail than is the case in Article 19a(1), point (b), and Article 29a(1), point (b) of Directive 2013/34/EU. Due diligence is the process that undertakings carry out to identify, prevent, mitigate and remediate the principal actual and potential adverse impacts connected with their activities and identifies how they address those adverse impacts. Impacts connected with an undertaking’s activities include impacts directly caused by the undertaking, impacts to which the undertaking contributes, and impacts which are otherwise linked to the undertaking’s value chain. The due diligence process concerns the whole value chain of the undertaking including its own operations, its products and services, its business relationships and its supply chains. In alignment with the UN Guiding Principles on Business and Human Rights, an actual or potential adverse impact is to be considered principal where it measures among the greatest impacts connected with the undertaking’s activities based on: the gravity of the impact on people or the environment; the number of individuals that are or could be affected, or the scale of damage to the environment; and the ease with which the harm could be remediated, restoring the environment or affected people to their prior state.

ITRE 4

Recital 48

(48) Directive 2013/34/EU does not require that the financial statements or the management report are provided in a digital format, which hinders the findability and usability of the reported information. Users of sustainability information increasingly expect such information to be findable and machine-readable in digital formats. Digitalisation creates opportunities to exploit information more efficiently and holds the potential for significant cost savings for both users and undertakings. Digitalisation also enables the centralisation at EU and Member State level of data in an open and accessible format that facilitates reading and allows for the comparison of data. Undertakings should therefore be required to prepare their financial statements and their management report in XHTML format in accordance with Article 3 of Commission Delegated Regulation (EU) 2019/815,1 and to mark-up sustainability information, including the disclosures required by Article 8 of Regulation (EU) 2020/852, in accordance with that Delegated Regulation. A digital taxonomy to the Union sustainability reporting standards will be necessary to allow for the information reported to be tagged in accordance with those standards. These requirements should feed into the work on digitalisation announced by the Commission in its Communication A European strategy for data2 and in the Digital Finance Strategy for the EU. 3 These requirements also complement the creation of a European single access point for public corporate information as envisaged in the capital markets union action plan, which also considers the need for structured data.

_______

1 Commission Delegated Regulation (EU) 2018/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (OJ L 143, 29.5.2019, p. 1).

2 https://ec.europa.eu/digital-single-market/en/european-strategy-data

3 https://ec.europa.eu/info/publications/200924-digital-finance-proposals_en

ITRE 5

Article 1 – point 3

(Directive 2013/34/EU
Article 19 a – paragraph 1)

1. Large undertakings and, as of [4 years from the date of entry into force], small and medium-sized undertakings which are undertakings referred to in Article 2, point (1), point (a), shall include in the management report information necessary to understand the undertaking’s impacts on sustainability matters, and information necessary to understand how sustainability matters affect the undertaking’s development, performance and position.

ITRE 6

Article 1 – point 4

(Directive 2013/34/EU
Article 19 b – paragraph 2 – point b – point iii)

(iii) respect for the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the ILO fundamental conventions, the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy and ILO Convention 169 on the right of Indigenous Peoples to Free, Prior, and Informed consent and the Charter of Fundamental Rights of the European Union, the EU acquis and the rule of law.

ITRE 7

Article 1 – point 4

(Directive 2013/34/EU
Article 19 b – paragraph 2 – point c – point i)

(i) the role of the undertaking’s administrative, management and supervisory bodies, including with regard to sustainability matters, and their composition and whether such composition includes the presence of trade union or workers’ representatives;

ITRE 8

Article 1 – point 4

(Directive 2013/34/EU
Article 19 b – paragraph 2 – point c – point iii)

(iii) political engagements of the undertaking, including its lobbying activities and whistleblowing policies, which must adhere to best practices and international standards;

ITRE 9

Article 1 – point 4

(Directive 2013/34/EU
Article 19 c – subparagraph 1a (new))

The sustainability reporting standards applicable to SMEs referred to in the first subparagraph shall make use of simplified reporting forms and means as reflecting their size and structurally more limited capacities and resources.

ITRE 10

Article 1 – point 4

(Directive 2013/34/EU
Article 19 c – subparagraph 2)

The Commission shall adopt those delegated acts at the latest by 31 October 2023. Before adopting any such delegated acts, the Commission shall conduct an in-depth SME test, taking due account of the recommendations of the European Financial Reporting Advisory Group. That test shall look, in particular, at the risk of encouraging SMEs’ de-listing and at the impact of competitiveness and market distortions in applying different regimes for SMEs that are listed and those that are not.

ITRE 11

Article 4a (new)

Article 4a

Review clause

The Commission shall review the impact of the amendments made by this Directive by [6 years from the date of entry into force]. This review shall examine, in particular, the impact of the sustainability reporting standards, including the associated indirect costs and the economic, social and environmental benefits thereof, on SMEs.

In addition to the amendments set out above, on behalf of the Committee, I would like to draw attention, as a matter of background, to our assessment that the impact assessment does not include operational targets that set specific policy outcomes under the preferred option. It also does not set specific targets or timelines, which means that the targets are neither fully measurable nor time-bound. Furthermore, the Commission does not put the feasibility and implementation capability of the data preparers (from the industrial side) in the foreground, but prioritises the data users (banks, financial service providers and also NGOs).

From an SME perspective, the Commission’s impact assessment has not quantified the impact on SMEs of the proposed voluntary standards and their associated indirect costs, but neither their economic, social and environmental benefits. This may be because this impact cannot be quantified, due to a lack of data. It may also be due to the fact that in its survey, the Commission only focused 1 of 13 questions on SMEs, and the panel only included 3 % of listed SMEs.

Yours sincerely,

 

 

 

Cristian‑Silviu Buşoi

ITRE Chair

Members participating in the final vote
Cristian‑Silviu Buşoi	Chair
Zdzisław Krasnodębski	Vice-Chair
Morten Petersen	Vice-Chair
Patrizia Toia	Vice-Chair
Lina Gálvez Muñoz	Vice-Chair
Isabella Adinolfi
Nicola Beer
François‑Xavier Bellamy
Hildegard Bentele
Tom Berendsen
Vasile Blaga
Michael Bloss
Manuel Bompard
Paolo Borchia
Marc Botenga
Markus Buchheit
Jerzy Buzek
Maria da Graça Carvalho
Ignazio Corrao
Ciarán Cuffe
Nicola Danti
Pilar del Castillo Vera
Jakop G. Dalunde
Martina Dlabajová
Francesca Donato
Christian Ehler
Valter Flego
Niels Fuglsang
Claudia Gamon
Jens Geier
Nicolás González Casares
Bart Groothuis
Christophe Grudler
András Gyürk
Henrike Hahn
Robert Hajšel
Ivo Hristov
Ivars Ijabs
Romana Jerković
Eva Kaili
Seán Kelly
Izabela‑Helena Kloc
Łukasz Kohut
Andrius Kubilius
Miapetra Kumpula‑Natri
Thierry Mariani
Marisa Matias
Eva Maydell
Georg Mayer
Joëlle Mélin
Iskra Mihaylova
Dan Nica
Angelika Niebler
Ville Niinistö
Aldo Patriciello
Mauri Pekkarinen
Mikuláš Peksa
Tsvetelina Penkova
Pina Picierno
Markus Pieper
Clara Ponsatí Obiols
Manuela Ripa
Robert Roos
Sara Skyttedal
Maria Spyraki
Jessica Stegrud
Beata Szydło
Riho Terras
Grzegorz Tobiszowski
Patrizia Toia
Evžen Tošenovský
Marie Toussaint
Isabella Tovaglieri
Henna Virkkunen
Pernille Weiss
Carlos Zorrinho

 

OPINION OF THE COMMITTEE ON WOMEN'S RIGHTS AND GENDER EQUALITY (22.2.2022)

for the Committee on Legal Affairs

on the proposal for a directive of the European Parliament and of the Council amending Directive 2013/34/EU, Directive 2004/109/EC, Directive 2006/43/EC and Regulation (EU) No 537/2014, as regards corporate sustainability reporting

(COM(2021)0189 – C9‑0147/2021 – 2021/0104(COD))

Rapporteur for opinion: Robert Biedroń

 

 

SHORT JUSTIFICATION

The European Commission’s proposal to recast the Non-Financial Reporting Directive (NFRD) sets strong reporting requirements in the area of corporate environmental sustainability, with the objective to transform the EU into a modern, resource-efficient and competitive economy with no net emissions of greenhouse gases by 2050. Unfortunately, the proposal currently lacks the same level of ambition in the field of social sustainability.

Current proposal for NFDR does not adequately address reporting requirements concerning issues such as diversity, social inclusion, gender equality or protection of minority and vulnerable groups and  neglects Commission’ s obligations and commitments in this regard, including:

1. Commitments listed in “Gender Equality Strategy 2020-2025”, such as addressing women’s under-representation in decision-making positions in Europe's businesses and industry.

2. Pushing for the adoption of the so called “Women on Boards Directive”, which sets the aim of a minimum of 40% of non-executive members of the under-represented sex on company board in order to improve gender balance on the boards of large EU listed companies by sharing information on companies’ diversity policies.

3. The right to equal pay for the same work or work of equal value between female and male workers, which is one of the founding principles of the European Union since the Treaty on the Functioning of the European Union (TFEU). In practice, however, its implementation has been hindered by systemic lack of transparency in pay systems, lack of legal certainty and by procedural obstacles faced by victims of discrimination. Increased transparency requirements under the NFRD would allow monitoring for possible gender bias and discrimination in the pay structures of companies in the EU. For that reason, the Commission released On 4 March 2021, a proposal for a Pay Transparency Directive, which includes specific reporting requirements. Regrettably, the proposal for NFRD fails to take them into account.

4. The European Court of Auditors (ECA) found in May 2021 that - despite the EU’s long-standing commitment to gender equality - too little has been done for gender mainstreaming, i.e. to systematically and actively promote gender equality in policy-making and in spending the EU budget. According to the ECA, the gender analysis of EU policies and programmes has not been sufficient. The NFRD proposal illustrates the ECA’s findings have not been addressed.

Having in mind the aforementioned points, as well as the numerous obstacles and discriminations that women still face on the labour market, the European Parliament’s Committee on Women’s Rights and Gender Equality must ensure that social sustainability and gender equality are adequately incorporated within the upcoming directive.

As revealed by the European Gender Equality Institute, the EU is at least 60 years away from reaching complete gender equality, if we continue at the current pace. Some of the biggest problems holding back gender equality is segregation in education and work, unequal pay contributing to the pay and pension gap, as well as women’s underrepresentation in leadership and managerial positions.

Achieving a gender equal Europe and eliminating structural inequality between women and men requires a strong commitment not only from the EU institutions, policymakers and NGOs, but also from all economic sectors and their supply chains.

Antidiscrimination, diversity and gender equality measures should therefore become an integral part of social sustainability reporting standards. Special attention should be given to vulnerable and minority groups and people with disabilities. Social sustainability reporting standards must include working conditions, including flexible work schedules, maternity, paternity and parental leave as well as gender-equality informed procurement policies, gender-performance audits of suppliers and gender impact assessment of supply chains.

The Covid-19 pandemic and its economic and social consequences makes it even more pressing to tackle this issue, given that the crisis has hit female workers especially hard. 

AMENDMENTS

The Committee on Women's Rights and Gender Equality calls on the Committee on Legal Affairs, as the committee responsible, to take into account the following amendments:

Amendment  1

Proposal for a directive

Recital 2 a (new)

Text proposed by the Commission	Amendment
	(2a) Gender equality is a human and fundamental right and a key principle of the European Pillar of Social Rights and according to the treaties the Union is to ensure that it is promoted in all the Union’s activities and actions. Despite being enshrined in the Treaty on the Functioning of the European Union (TFEU), the principle of “equal pay for equal work or work of equal value” has been undermined, mainly due to a lack of transparency in pay systems, a lack of legal certainty regarding the concept of ‘work of equal value’, and procedural obstacles faced by victims of discrimination1a. To enforce the right to equal pay the Commission proposed, on 4 March 2021, a Pay Transparency Directive1b as key action based on Article 157(3) of the TFEU, introducing concrete measures regarding reporting on the gender pay gap. The Commission also announced the tabling of a legislative proposal to combat gender-based violence and stressed the importance for Member States to ratify the International Labour Organization (ILO) Convention on combating violence and harassment in the world of work and implement the existing Union rules on protecting workers from sexual harassment.
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	1a Commission Staff Working Document on an evaluation of the relevant provisions in the Directive 2006/54/EC implementing the Treaty principle on ‘equal pay for equal work or work of equal value, SWD(2020)0051, p.53 -66.
	1b Proposal for a Directive of the European Parliament and of the Council to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms (COM(2020)0093).

 

Amendment  2

Proposal for a directive

Recital 2 b (new)

Text proposed by the Commission	Amendment
	(2b) In its Communication on “A Union of Equality: Gender Equality Strategy 2020-2025”1a, the Commission underlined that a broad range of talents and skills contributes to better decision-making and corporate governance and drives economic growth. However, women’s under-representation in decision-making positions in Europe's businesses and industry persists. In this regard, the Commission committed to pushing for the adoption of the 2012 proposal of the so-called “Women on Boards” Directive that sets the aim of attaining a minimum of 40% of non-executive members of the under-represented sex on company boards in order to improve gender balance on the boards of large EU listed companies by sharing information on companies. Women’s underrepresentation in the labour market has been also addressed by the Work-life Balance Directive1b. In order to assess the extent to which the companies take into account diversity in their board and to which management composition can improve the quality of their leadership and decision-making, especially in relation to performance on sustainability issues, further studies in this field should be encouraged. Efforts already made by companies and public and private funds that implement diversity policies in this regard are welcome, including the Diversity Commitment initiative.
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	1a Communication of the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on “A Union of Equality: Gender Equality Strategy 2020-2025”.
	1b Directive (EU) 2019/1158 of the European Parliament and of the Council of 20 June 2019 on work-life balance for parents and carers and repealing Council Directive 2010/18/EU (OJ L 188, 12.7.2019, p. 79).

Amendment  3

Proposal for a directive

Recital 2 c (new)

Text proposed by the Commission	Amendment
	(2c) Additional Union funding should be reserved for research into the topic of diversity, company management, business development, innovation and sustainability. Such research should look broadly at characteristics such as gender, ethnicity, culture, age, disability, professional experience and education, in order to fully  elucidate all aspects of  the issue of diversity in the companies’ boards and management.

Amendment  4

Proposal for a directive

Recital 6

Text proposed by the Commission	Amendment
(6) Directive 2014/95/EU of the European Parliament and the Council47 amended Directive 2013/34/EU as regards disclosure of non-financial information by certain large undertakings and groups. Directive 2014/95/EU introduced a requirement on undertakings to report information on, as a minimum, environmental, social and employee matters, respect for human rights, and anti-corruption and bribery matters. With regard to these topics, Directive 2014/95/EU required undertakings to disclose information under the following reporting areas: business model, policies (including due diligence processes implemented), the outcome of the policies, risks and risk management, and key performance indicators relevant to the business.	(6) Directive 2014/95/EU of the European Parliament and the Council47 amended Directive 2013/34/EU as regards disclosure of non-financial information by certain large undertakings and groups. Directive 2014/95/EU introduced a requirement on undertakings to report information on, as a minimum, environmental, social and employee matters, respect for human rights, and anti-corruption and bribery matters. With regard to these topics, Directive 2014/95/EU required undertakings to disclose information under the following reporting areas: business model, policies (including due diligence processes implemented), the outcome of the policies, risks and risk management, and key performance indicators relevant to the business. Such information to be reported by undertakings could concern, inter alia, the actions taken to ensure gender equality, implementation of fundamental conventions of the ILO, working conditions, social dialogue or health and safety at work.
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47 Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups (OJ L 330, 15.11.2014, p. 1).	47 Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups (OJ L 330, 15.11.2014, p. 1).

 

Amendment  5

Proposal for a directive

Recital 6 a (new)

Text proposed by the Commission	Amendment
	(6a) The concepts which undertakings are to report about, including gender equality, should be sufficiently defined to ensure compliance, lessen the administrative burden and improve the comparability of data.

Amendment  6

Proposal for a directive

Recital 8

Text proposed by the Commission	Amendment
(8) The ultimate beneficiaries of better sustainability reporting by undertakings are individual citizens and savers. Savers who want to invest sustainably will have the opportunity to do so, while all citizens should benefit from a stable, sustainable and inclusive economic system. To realise these benefits, the sustainability information disclosed in undertaking’s annual reports first has to reach two primary groups (‘users’). The first group of users consists of investors, including asset managers, who want to better understand the risks and opportunities that sustainability issues pose to their investments and the impacts of those investments on people and the environment. The second group of users consists of organisations, including non-governmental organisations and social partners, that wish to better hold undertakings to account for their impacts on people and the environment. Other stakeholders may also make use of sustainability information disclosed in annual reports. The business partners of undertakings, including customers, may rely on this information to understand, and where necessary report on, the sustainability risks and impacts through their own value chains. Policy makers and environmental agencies may use such information, in particular on an aggregate basis, to monitor environmental and social trends, to contribute to environmental accounts, and to inform public policy. Few individual citizens and consumers directly consult undertaking’s reports, but they may use such information indirectly such as when considering the advice or opinions of financial advisers or non-governmental organisations. Many investors and asset managers purchase sustainability information from third party data providers, who collect information from various sources, including public corporate reports.	(8) The ultimate beneficiaries of better sustainability reporting by undertakings are individual citizens and savers. Savers who want to invest sustainably will have the opportunity to do so, while all citizens should benefit from a stable, sustainable, transparent, accountable and inclusive socio-economic system. To realise these benefits, the sustainability information disclosed in undertaking’s annual reports first has to reach two primary groups (‘users’).The first group of users consists of investors, including asset managers, who want to better understand the risks and opportunities that sustainability issues pose to their reputation and investments and the impacts of those investments on people, including to advance societal issues such as gender equality and diversity and intersectionality and inclusion, and on the environment. The second group of users consists of organisations, including non-governmental organisations and social partners, that wish to better hold undertakings to account for their societal and environmental impacts. Other stakeholders may also make use of sustainability information disclosed in annual reports. The integration of gender-related information into sustainability reporting can also assist organisations in publicly demonstrating their accountability to women and commitment towards gender equality and non-discrimination. The business partners of undertakings, including customers, may rely on this information to understand, and where necessary report on, the sustainability risks and impacts through their own value chains. Policy makers, NGOs, social and economic partners and environmental agencies and other stakeholders may use such information, in particular on an aggregate basis, to monitor environmental, social and gender equality trends, to contribute to environmental accounts, and to inform public policy, including as regards tackling discrimination. Few individual citizens and consumers directly consult undertaking’s reports, but they may use such information indirectly such as when considering the advice or opinions of financial advisers or non-governmental organisations. Many investors and asset managers purchase sustainability information from third party data providers, who collect information from various sources, including public corporate reports.

 

Amendment  7

Proposal for a directive

Recital 9

Text proposed by the Commission	Amendment
(9) There has been a very significant increase in demand for corporate sustainability information in recent years, especially on the part of the investment community. That increase in demand is driven by the changing nature of risks to undertakings and growing investor awareness of the financial implications of these risks. That is especially the case for climate-related financial risks. Awareness of the risks to undertakings and to investments resulting from other environmental issues and from social issues, including health issues, is also growing. The increase in demand for sustainability information is also driven by the growth in investment products that explicitly seek to meet certain sustainability standards or achieve certain sustainability objectives. Part of that increase is the logical consequence of previously adopted Union legislation, notably Regulation (EU) 2019/2088 and Regulation (EU) 2020/852. Some of the increase would have happened in any case, due to fast-changing citizen awareness, consumer preferences and market practices. The COVID-19 pandemic will further accelerate the increase in users’ information needs, in particular as it has exposed the vulnerabilities of workers and of undertaking’s value chains. Information on environmental impacts is also relevant in the context of mitigating future pandemics with human disturbance of ecosystems increasingly linked to the occurrence and spread of diseases.	(9) There has been a very significant increase in demand for corporate sustainability information in recent years, especially on the part of the investment community. That increase in demand is driven by the changing nature of risks to undertakings and growing investor awareness of the implications of these risks. That is especially the case for climate-related financial risks. Awareness of the risks to undertakings and to investments resulting from other environmental issues and from social issues, including health issues, inclusion and gender equality, is also growing. The increase in demand for sustainability information is also driven by the growth in investment products that explicitly seek to meet certain sustainability standards or achieve certain sustainability objectives. Part of that increase is the logical consequence of previously adopted Union legislation, notably Regulation (EU)2019/2088 and Regulation (EU) 2020/852. Some of the increase would have happened in any case, due to fast-changing citizen awareness, consumer preferences and market practices. The COVID-19 pandemic will further accelerate the increase in users’ information needs, in particular as it has exposed the vulnerabilities of workers, particularly women and people with disabilities, and of undertaking’s value chains. Information on environmental impacts is also relevant in the context of mitigating future pandemics with human disturbance of ecosystems increasingly linked to the occurrence and spread of diseases. Currently, limited amounts of gender-disaggregated data are being reported despite the inclusion of gender-related indicators in the GRI framework.

 

Amendment 8

Proposal for a directive

Recital 10

Text proposed by the Commission	Amendment
(10) Undertakings themselves stand to benefit from carrying out high quality reporting on sustainability matters. The growth in the number of investment products that aim to pursue sustainability objectives means that good sustainability reporting can enhance an undertaking’s access to financial capital. Sustainability reporting can help undertakings to identify and manage their own risks and opportunities related to sustainability matters. It can provide a basis for better dialogue and communication between undertakings and their stakeholders, and can help undertakings to improve their reputation.	(10) Undertakings themselves stand to benefit from carrying out high quality reporting on sustainability matters. The growth in the number of investment products that aim to pursue sustainability objectives means that good sustainability reporting can enhance an undertaking’s access to financial capital. Sustainability reporting can help undertakings to identify and manage their own risks and opportunities related to sustainability matters. It can provide a basis for better dialogue and communication between undertakings and their stakeholders, and can help undertakings to improve their reputation. The Union also benefits from high quality reporting on sustainability matters as it informs the Union's policies on priority issues such as gender equality in the workplace.

 

 

Amendment  9

Proposal for a directive

Recital 18

Text proposed by the Commission	Amendment
(18) Considering the growing relevance of sustainability-related risks and taking into account that small and medium-sized enterprises (SMEs) listed on regulated markets comprise a significant proportion of all listed undertakings in the Union, in order to ensure investor protection it is appropriate to require that also those SMEs disclose information on sustainability matters. The introduction of this requirement will help to ensure that financial market participants can include smaller listed undertakings in investment portfolios on the basis that they report the sustainability information that financial market participants need. It will therefore help to protect and enhance the access of smaller listed undertakings to financial capital, and avoid discrimination against such undertakings on the part of financial market participants. The introduction of this requirement is also necessary to ensure that financial market participants have the information they need from investee undertakings to be able to comply with their own sustainability disclosure requirements laid down in Regulation (EU) 2019/2088. SMEs listed on regulated markets should, however, be provided with sufficient time to prepare for the application of the requirement to report sustainability information, due to their smaller size and more limited resources, and taking account of the difficult economic circumstances created by the COVID-19 pandemic. They should also be given the possibility to report according to standards that are proportionate to the capacities and resources of SMEs. Non-listed SMEs can also choose to use these proportionate standards on a voluntary basis. The SME standards will set a reference for undertakings that are within the scope of the Directive regarding the level of sustainability information that they could reasonably request from SME suppliers and clients in their value chains.	(18) Considering the growing relevance of sustainability-related risks and taking into account that small and medium-sized enterprises (SMEs) listed on regulated markets comprise a significant proportion of all listed undertakings in the Union, in order to ensure investor protection it is appropriate to require that also those SMEs disclose information on social, economic and environmental sustainability matters. The reporting standards are not only necessary but also useful and constitute an opportunity for companies to demonstrate their commitment to the ecological, social and gender-equal transition and are therefore useful for the establishment of leading standards, and thereby feed into their competitive advantage. The introduction of this requirement will help to ensure that financial market participants can include smaller listed undertakings in investment portfolios on the basis that they report the sustainability information that financial market participants need. It will therefore help to protect and enhance the access of smaller listed undertakings to financial capital, and avoid discrimination against such undertakings on the part of financial market participants. The introduction of this requirement is also necessary to ensure that financial market participants have the information they need from investee undertakings to be able to comply with their own sustainability disclosure requirements laid down in Regulation (EU) 2019/2088. SMEs listed on regulated markets should, however, be provided with sufficient time to prepare for the application of the requirement to report sustainability information, due to their smaller size and more limited resources, and taking account of the difficult economic circumstances created by the COVID-19 pandemic. They should also be given the possibility to report according to standards that are proportionate to the capacities and resources of SMEs. Non-listed SMEs can also choose to use these proportionate standards on a voluntary basis. The SME standards will set a reference for undertakings that are within the scope of the Directive regarding the level of sustainability information that they could reasonably request from SME suppliers and clients in their value chains.

 

 

Amendment  10

Proposal for a directive

Recital 27

Text proposed by the Commission	Amendment
(27) To ensure consistency with international instruments such as the UN Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance for Responsible Business Conduct, the due diligence disclosure requirements should be specified in greater detail than is the case in Article 19a(1), point (b), and Article 29a(1), point (b) of Directive 2013/34/EU. Due diligence is the process that undertakings carry out to identify, prevent, mitigate and remediate the principal actual and potential adverse impacts connected with their activities and identifies how they address those adverse impacts. Impacts connected with an undertaking’s activities include impacts directly caused by the undertaking, impacts to which the undertaking contributes, and impacts which are otherwise linked to the undertaking’s value chain. The due diligence process concerns the whole value chain of the undertaking including its own operations, its products and services, its business relationships and its supply chains. In alignment with the UN Guiding Principles on Business and Human Rights, an actual or potential adverse impact is to be considered principal where it measures among the greatest impacts connected with the undertaking’s activities based on: the gravity of the impact on people or the environment; the number of individuals that are or could be affected, or the scale of damage to the environment; and the ease with which the harm could be remediated, restoring the environment or affected people to their prior state.	(27) To ensure consistency with international instruments such as the UN Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance for Responsible Business Conduct, the due diligence disclosure requirements should be specified in greater detail than is the case in Article 19a(1), point (b), and Article 29a(1), point (b) of Directive 2013/34/EU. Due diligence is the process that undertakings carry out to identify, prevent, mitigate and remediate the principal actual and potential adverse impacts connected with their activities and identifies how they address those adverse impacts. Impacts connected with an undertaking’s activities include impacts directly caused by the undertaking, impacts to which the undertaking contributes, and impacts which are otherwise linked to the undertaking’s value chain. The due diligence process concerns the whole value chain of the undertaking including its own operations, its products and services, its business relationships and its supply chains. In alignment with the UN Guiding Principles on Business and Human Rights, an actual or potential adverse impact is to be considered principal where it measures among the greatest impacts connected with the undertaking’s activities based on: the gravity of the impact on people or the environment; the number of individuals that are or could be affected, or the scale of damage to the environment; and the ease with which the harm could be remediated, restoring the environment or affected people to their prior state. Guidance to businesses on respecting human rights should also include advice on appropriate methods, including human rights due diligence, and consider effectively issues of gender equality, vulnerability and marginalisation, as well as recognising the specific challenges that may be faced by women with an intersectional perspective, in particular LGBTI+ persons, racial, ethnic and religious minorities, persons with disabilities, and migrant workers.1a
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	1a UN Guiding Principles on Business and Human, p. 5-6.

 

Amendment  11

Proposal for a directive

Recital 28

Text proposed by the Commission	Amendment
(28) Directive 2013/34/EU does not require the disclosure of information on intangibles other than intangible assets recognised in the balance sheet. It is widely recognised that information on intangible assets and other intangible factors, including internally-generated intangibles, is underreported, impeding the proper assessment of an undertaking’s development, performance and position and monitoring of investments. To enable investors to better understand the increasing gap between the accounting book value of many undertakings and their market valuation, which is observed in many sectors of the economy, adequate reporting on intangibles should be required. It is therefore necessary to require undertakings to disclose information on intangibles other than intangible assets recognised in the balance sheet, including intellectual capital, human capital, including skills development, and social and relationship capital, including reputation capital. Information on intangibles should also include information related to research and development.	(28) Directive 2013/34/EU does not require the disclosure of information on intangibles other than intangible assets recognised in the balance sheet. It is widely recognised that information on intangible assets and other intangible factors, including internally-generated intangibles, is underreported, impeding the proper assessment of an undertaking’s development, performance and position and monitoring of investments. To enable investors to better understand the increasing gap between the accounting book value of many undertakings and their market valuation, which is observed in many sectors of the economy, adequate reporting on intangibles should be required. It is therefore necessary to require undertakings to disclose information on intangibles other than intangible assets recognised in the balance sheet, including intellectual capital, human capital, including skills development, and social and relationship capital, including reputation capital, and gender equality measures. Information on intangibles should also include information related to research and development.

 

Amendment  12

Proposal for a directive

Recital 32

Text proposed by the Commission	Amendment
(32) Undertakings under the scope of Articles 19a(1) and 29a(1) of Directive 2013/34/EU may rely on national, Union-based or international reporting frameworks, and where they do so, they have to specify which frameworks they relied upon. However, Directive 2013/34/EU does not require undertakings to use a common reporting framework or standard, and it does not prevent undertakings from choosing not to use any reporting framework or standards at all. As required by Article 2 of Directive 2014/95/EU, the Commission published in 2017 non-binding guidelines for undertakings under the scope of that Directive52. In 2019, the Commission published additional guidelines, specifically on reporting climate-related information53. The climate reporting guidelines explicitly incorporated the recommendations of the Task Force on Climate-related Financial Disclosures. Available evidence indicates that those non-binding guidelines did not have a significant impact on the quality of non-financial reporting by undertakings under the scope of Articles 19a and 29a of Directive 2013/34/EU. The voluntary nature of the guidelines means that undertakings are free to apply them or not. The guidelines can therefore not ensure on their own the comparability of information disclosed by different undertakings or the disclosure of all information that users consider relevant. That is why there is a need for mandatory common reporting standards to ensure that information is comparable and that all relevant information is disclosed. Building on the double-materiality principle, standards should cover all information that is material to users. Common reporting standards are also necessary to enable the audit and digitalisation of sustainability reporting and to facilitate its supervision and enforcement. The development of mandatory common sustainability reporting standards is necessary to progress to a situation in which sustainability information has a status comparable to that of financial information.	(32) Undertakings under the scope of Articles 19a(1) and 29a(1) of Directive 2013/34/EU may rely on national, Union-based or international reporting frameworks, and where they do so, they have to specify which frameworks they relied upon. However, Directive 2013/34/EU does not require undertakings to use a common reporting framework or standard, and it does not prevent undertakings from choosing not to use any reporting framework or standards at all. As required by Article 2 of Directive 2014/95/EU, the Commission published in 2017 non-binding guidelines for undertakings under the scope of that Directive52. The guidelines on non-financial reporting cover social and employee matters with information that companies are expected to disclose, such as diversity issues, gender diversity and equal treatment in employment and occupations, respect for human rights, as well as environmental matters. In 2019, the Commission published additional guidelines, specifically on reporting climate-related information53. The climate reporting guidelines explicitly incorporated the recommendations of the Task Force on Climate-related Financial Disclosures. Available evidence indicates that those non-binding guidelines did not have a significant impact on the quality of non-financial reporting by undertakings under the scope of Articles 19a and 29a of Directive 2013/34/EU. The voluntary nature of the guidelines means that undertakings are free to apply them or not. The guidelines can therefore not ensure on their own the comparability of information disclosed by different undertakings or the disclosure of all information that users consider relevant. That is why there is a need for mandatory common reporting standards to ensure that information is comparable and that all relevant information is disclosed. Building on the double-materiality principle, standards should cover all information that is material to users. Common reporting standards are also necessary to enable the audit and digitalisation of sustainability reporting and to facilitate its supervision and enforcement. The development of mandatory common sustainability reporting standards is necessary to progress to a situation in which sustainability information has a status comparable to that of financial information.
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52 Communication from the Commission Guidelines on non-financial reporting (methodology for reporting non-financial information) (C/2017/4234).	52 Communication from the Commission Guidelines on non-financial reporting (methodology for reporting non-financial information) (C/2017/4234).
53 Communication from the Commission Guidelines on non-financial reporting: Supplement on reporting climate-related information (C/2019/4490).	53 Communication from the Commission Guidelines on non-financial reporting: Supplement on reporting climate-related information (C/2019/4490).

Amendment  13

Proposal for a directive

Recital 33

Text proposed by the Commission	Amendment
(33) No existing standard or framework satisfies the Union’s needs for detailed sustainability reporting by itself. Information required by Directive 2013/34/EU needs to cover information relevant from each of the materiality perspectives, needs to cover all sustainability matters and needs to be aligned, where appropriate, with other obligations under Union law to disclose sustainability information, including obligations laid down in Regulation (EU) 2020/852 and Regulation (EU) 2019/2088. In addition, mandatory sustainability reporting standards for Union undertakings must be commensurate with the level of ambition of the European Green Deal and the Union’s climate-neutrality objective for 2050. It is therefore necessary to empower the Commission to adopt Union sustainability reporting standards, enabling their rapid adoption and ensuring that the content of sustainability reporting standards are consistent with the Union’s needs.	(33) No existing standard or framework satisfies the Union’s needs for detailed sustainability reporting by itself. Information required by Directive 2013/34/EU needs to cover information relevant from each of the materiality perspectives, needs to cover all sustainability matters and needs to be aligned, where appropriate, with other obligations under Union law to disclose sustainability information, including obligations laid down in Regulation (EU) 2020/852 and Regulation (EU) 2019/2088. In addition, mandatory sustainability reporting standards for Union undertakings must be commensurate with the level of ambition of the European Green Deal, the Union’s climate-neutrality objective for 2050 and the principles of the European Pillar of Social Rights. It is therefore necessary to empower the Commission to adopt Union sustainability reporting standards, enabling their rapid adoption and ensuring that the content of sustainability reporting standards are consistent with the Union’s needs.

 

Amendment  14

Proposal for a directive

Recital 34

Text proposed by the Commission	Amendment
(34) The European Financial Reporting Advisory Group (EFRAG) is a non-profit association established under Belgian law that serves the public interest by providing advice to the Commission on the endorsement of international financial reporting standards. EFRAG has established a reputation as a European centre of expertise on corporate reporting, and is well placed to foster coordination between European sustainability reporting standards and international initiatives that seek to develop standards that are consistent across the world. In March 2021, a multi-stakeholder task force set up by EFRAG published recommendations for the possible development of sustainability reporting standards for the European Union. Those recommendations contain proposals to develop a coherent and comprehensive set of reporting standards, covering all sustainability matters from a double-materiality perspective. Those recommendations also contain a detailed roadmap for developing such standards, and proposals for mutually reinforcing cooperation between global standard-setting initiatives and standard-setting initiatives of the European Union. In March 2021, the EFRAG President published recommendations for possible governance changes to EFRAG if it were to be asked to develop technical advice about sustainability reporting standards. These recommendations include offsetting up within EFRAG a new sustainability reporting pillar while not significantly modifying the existing financial reporting pillar. When adopting sustainability reporting standards, the Commission should take account of technical advice that EFRAG will develop. In order to ensure high-quality standards that contribute to the European public good and meet the needs of undertakings and of users of the information reported, EFRAG’s technical advice should be developed with proper due process, public oversight and transparency, accompanied by cost benefit analyses, and be developed with the expertise of relevant stakeholders. To ensure that Union sustainability reporting standards take account of the views of the Member States of the Union, before adopting the standards the Commission should consult the Member State Expert Group on Sustainable Finance referred to in Article 24 of Regulation (EU) 2020/852 on EFRAG’s technical advice. The European Securities and Markets Authority (ESMA) plays a role in drafting regulatory technical standards pursuant to Regulation (EU) 2019/2088 and there needs to be coherence between those regulatory technical standards and sustainability reporting standards. According to Regulation (EU) No 1095/2010 of the European Parliament and of the Council54, ESMA also plays a role in promoting supervisory converge in the enforcement of corporate reporting by issuers whose securities are listed on EU regulated markets and who will be required to use these sustainability reporting standards. Therefore, ESMA should be required to provide an opinion on EFRAG’s technical advice. This opinion should be provided within two months from the date of receipt of the request from the Commission. In addition, the Commission should consult the European Banking Authority, the European Insurance and Occupational Pensions Authority, the European Environment Agency, the European Union Agency for Fundamental Rights, the European Central Bank, the Committee of European Auditing Oversight Bodies and the Platform on Sustainable Finance to ensure that the sustainability reporting standards are coherent with relevant Union policy and legislation. Where any of those bodies decide to submit an opinion, they shall do so within two months from the date of being consulted by the Commission.	(34) The European Financial Reporting Advisory Group (EFRAG) is a non-profit association established under Belgian law that serves the public interest by providing advice to the Commission on the endorsement of international financial reporting standards. EFRAG has established a reputation as a European centre of expertise on corporate reporting, and is well placed to foster coordination between European sustainability reporting standards and international initiatives that seek to develop standards that are consistent across the world. In March 2021, a multi-stakeholder task force set up by EFRAG published recommendations for the possible development of sustainability reporting standards for the European Union. Those recommendations contain proposals to develop a coherent and comprehensive set of reporting standards, covering all sustainability matters from a double-materiality perspective. Those recommendations also contain a detailed roadmap for developing such standards, and proposals for mutually reinforcing cooperation between global standard-setting initiatives and standard-setting initiatives of the European Union. In March 2021, the EFRAG President published recommendations for possible governance changes to EFRAG if it were to be asked to develop technical advice about sustainability reporting standards. These recommendations include offsetting up within EFRAG a new sustainability reporting pillar while not significantly modifying the existing financial reporting pillar. When adopting sustainability reporting standards, the Commission should take account of technical advice that EFRAG will develop. In order to ensure high-quality standards that contribute to the European public good and meet the needs of undertakings and of users of the information reported, EFRAG’s technical advice should be developed with proper due process, public oversight and transparency, accompanied by cost benefit analyses, and be developed with the expertise of relevant stakeholders. To ensure that Union sustainability reporting standards take account of the views of the Member States of the Union, before adopting the standards the Commission should consult the Member State Expert Group on Sustainable Finance referred to in Article 24 of Regulation (EU) 2020/852 on EFRAG’s technical advice. The European Securities and Markets Authority (ESMA) plays a role in drafting regulatory technical standards pursuant to Regulation (EU) 2019/2088 and there needs to be coherence between those regulatory technical standards and sustainability reporting standards. According to Regulation (EU) No 1095/2010 of the European Parliament and of the Council54, ESMA also plays a role in promoting supervisory converge in the enforcement of corporate reporting by issuers whose securities are listed on EU regulated markets and who will be required to use these sustainability reporting standards. Therefore, ESMA should be required to provide an opinion on EFRAG’s technical advice. This opinion should be provided within two months from the date of receipt of the request from the Commission. In addition, the Commission should consult the European Banking Authority, the European Insurance and Occupational Pensions Authority, the European Environment Agency, the European Union Agency for Fundamental Rights, the European Foundation for the Improvement of Living and Working Conditions, the European Agency for Safety and Health at Work, the European Institute for Gender Equality, the European Central Bank, the Committee of European Auditing Oversight Bodies and the Platform on Sustainable Finance and, where applicable, relevant stakeholders, including trade unions and civil society organisations, to ensure that the sustainability reporting standards are coherent with relevant Union policy and legislation. Where any of those bodies decide to submit an opinion, they shall do so within two months from the date of being consulted by the Commission.
_____________________________	_______________________
54 Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, p. 84).	54 Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, p. 84).

 

Amendment  15

Proposal for a directive

Recital 35

Text proposed by the Commission	Amendment
(35) Sustainability reporting standards should be coherent with other Union legislation. Those standards should in particular be aligned with the disclosure requirements laid down in Regulation (EU) 2019/2088, and they should take account of underlying indicators and methodologies set out in the various delegated acts adopted pursuant to Regulation (EU) 2020/852, disclosure requirements applicable to benchmark administrators pursuant to Regulation (EU) 2016/1011 of the European Parliament and of the Council55 , the minimum standards for the construction of EU climate transition benchmarks and EU Paris-aligned benchmarks; and of any work carried out by the European Banking Authority in the implementation of the Pillar III disclosure requirements of Regulation (EU) No 575/2013. Standards should take account of Union environmental legislation, including Directive 2003/87/EC of the European Parliament and of the Council56 and Regulation (EC) No 1221/2009 of the European Parliament and of the Council57, and should take account of Commission Recommendation 2013/179/EU58 and its annexes, and their updates. Other relevant Union legislation, including Directive 2010/75/EU of the European Parliament and of the Council59 , and requirements laid down in Union law for undertakings as regards directors’ duties and due diligence, should also be taken into account.	(35) Sustainability reporting standards should be coherent with other Union legislation. Those standards should in particular be aligned with the disclosure requirements laid down in Regulation (EU) 2019/2088, and they should take account of underlying indicators and methodologies set out in the various delegated acts adopted pursuant to Regulation (EU) 2020/852, disclosure requirements applicable to benchmark administrators pursuant to Regulation (EU) 2016/1011 of the European Parliament and of the Council55 , the minimum standards for the construction of EU climate transition benchmarks and EU Paris-aligned benchmarks, as well as of the Gender Equality Strategy 2020-2025 and provisions of the future Pay Transparency Directive, and of any work carried out by the European Banking Authority in the implementation of the Pillar III disclosure requirements of Regulation (EU) No 575/2013. Standards should take account of Union environmental legislation, including Directive 2003/87/EC of the European Parliament and of the Council56 and Regulation (EC) No 1221/2009 of the European Parliament and of the Council57, and should take account of Commission Recommendation 2013/179/EU58 and its annexes, and their updates. Other relevant Union legislation, including Directive 2010/75/EU of the European Parliament and of the Council59 , and requirements laid down in Union law for undertakings as regards directors’ duties and due diligence, should also be taken into account.
__________________	__________________
55 Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (OJ L 171, 29.6.2016, p. 1).	55 Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (OJ L 171, 29.6.2016, p. 1).
56 Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32).	56 Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32).
57 Regulation (EC) No 1221/2009 of the European Parliament and of the Council of 25 November 2009 on the voluntary participation by organisations in a Community eco-management and audit scheme (EMAS), repealing Regulation (EC) No 761/2001 and Commission Decisions 2001/681/EC and 2006/193/EC (OJ L 342, 22.12.2009, p. 1).	57 Regulation (EC) No 1221/2009 of the European Parliament and of the Council of 25 November 2009 on the voluntary participation by organisations in a Community eco-management and audit scheme (EMAS), repealing Regulation (EC) No 761/2001 and Commission Decisions 2001/681/EC and 2006/193/EC (OJ L 342, 22.12.2009, p. 1).
58 Commission Recommendation 2013/179/EU of 9 April 2013 on the use of common methods to measure and communicate the life cycle environmental performance of products and organisations (OJ L 124, 4.5.2013, p. 1).	58 Commission Recommendation 2013/179/EU of 9 April 2013 on the use of common methods to measure and communicate the life cycle environmental performance of products and organisations (OJ L 124, 4.5.2013, p. 1).
59 Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control) (OJ L 334, 17.12.2010, p. 17).	59 Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control) (OJ L 334, 17.12.2010, p. 17).

 

Amendment  16

Proposal for a directive

Recital 43

Text proposed by the Commission	Amendment
(43) Sustainability reporting standards should specify the information that undertakings should disclose on social factors, including employee factors and human rights. Such information should cover the impacts of undertakings on people, including on human health. The information that undertakings disclose about human rights should include information about forced labour in their value chains where relevant. Reporting standards that address social factors should specify the information that undertakings should disclose with regard to the principles of the European Pillar of Social Rights that are relevant to businesses, including equal opportunities for all and working conditions. The European Pillar of Social Rights Action Plan adopted in March 2021 calls for stronger requirements on undertakings to report on social issues. The reporting standards should also specify the information that undertakings should disclose with regard to the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the fundamental conventions of the International Labour Organisation, and the Charter of Fundamental Rights of the European Union.	(43) Sustainability reporting standards should specify the information that undertakings should disclose on social factors, including employee factors, labour rights and human rights with a focus on gender equality, diversity and inclusion. Such information should cover the impacts of undertakings on people, including on human health. The information that undertakings disclose about human rights should include information about forced labour in their value chains where relevant. Reporting standards that address social factors should specify the information that undertakings should disclose with regard to the 20 principles of the European Pillar of Social Rights that are relevant to businesses, particularly equal opportunities for all, including gender equality, work life balance and fair working conditions. The European Pillar of Social Rights Action Plan adopted in March 2021 calls for stronger requirements on undertakings to report on social issues. Environmental and social responsibility disclosures are complementary to one another. However, companies that increase environmental disclosures do not necessarily increase social disclosures. Despite this difference in disclosure practice, the capital market generally appears to value higher social disclosures1a. The same level of ambition should be given to the reporting on environmental and social sustainability. The information undertakings disclose about gender equality should include a list of current actions that promote equal opportunities, diversity, work life balance and anti-harassment measures in the workplace, and that ensure equal pay  for equal work regardless of gender, in accordance with, where applicable, the pay reporting requirements to be established by the Pay Transparency Directive. The reporting standards should also specify the information that undertakings should disclose with regard to the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, including the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW), the UN Convention on the Rights of Persons with Disabilities, the UN Declaration on the Rights of Indigenous Peoples, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the fundamental conventions of the International Labour Organisation, the European Convention on Human Rights, the European Social Charter and the Charter of Fundamental Rights of the European Union.
	__________________
	1a German Federal Ministry and Social Affairs – “What is CSR? Benefits for companies”, https://www.csr-in-deutschland.de/EN/What-is-CSR/Benefits-for-Companies/benefits-for-companies-article.html

 

Amendment  17

Proposal for a directive

Recital 43 a (new)

Text proposed by the Commission	Amendment
	(43a) Achieving a gender equal Europe and eliminating structural inequality between women and men require increased commitment by all economic sectors and across supply chains. Anti-discrimination, diversity and gender equality measures should therefore become an integral part of social sustainability reporting standards. Special attention should be given to vulnerable and minority groups and people with disabilities. Social sustainability reporting standards should cover working conditions, including flexible work schedules, maternity, paternity and parental leave as well as gender-equality informed procurement policies, gender-performance audits of suppliers and gender impact assessment of the supply chain. The COVID-19 pandemic and its economic and social consequences make it even more pressing to tackle this issue, given that the crisis has hit female workers especially hard.

 

Amendment  18

Proposal for a directive

Recital 44

Text proposed by the Commission	Amendment
(44) Users need information about governance factors, including information on the role of an undertaking’s administrative, management and supervisory bodies, including with regard to sustainability matters, the composition of such bodies, and an undertaking’s internal control and risk management systems, including in relation to the reporting process. Users also need information about undertakings’ corporate culture and approach to business ethics, including anti-corruption and anti-bribery, and about their political engagements, including lobbying activities. Information about the management of the undertaking and the quality of relationships with business partners, including payment practices relating to the date or period for payment, the rate of interest for late payment or the compensation for recovery costs referred to in Directive 2011/7/EU of the European Parliament and of the Council62 on late payment in commercial transactions, helps users to understand an undertaking’s risks as well as its impacts on sustainability matters. Every year, thousands of businesses, especially SMEs, suffer administrative and financial burdens because they are paid late, or not at all. Ultimately, late payments lead to insolvency and bankruptcy, with destructive effects on entire value chains. Increasing information about payment practices should empower other undertakings to identify prompt and reliable payers, detect unfair payment practices, access information about the businesses they trade with, and negotiate fairer payment terms.	(44) Users need information about governance factors, including information on the role of an undertaking’s administrative, management and supervisory bodies, including with regard to sustainability matters, the composition of such bodies, broken down by gender, particularly with regard to workers' and women's participation, age, ethnic or racial backgrounds and other diversity and intersectional aspects, and an undertaking’s internal control and risk management systems, including in relation to the reporting process. Users also need information about undertakings’ corporate culture, including equal treatment and equal opportunities, inclusion and diversity measures, provisions preventing mobbing, sexual harassment and reducing violence against women, as well as about their approach to business ethics, including anti-corruption and anti-bribery, anti-discrimination and anti-harassment and about their political engagements, including lobbying activities. Information about the management of the undertaking and the quality of relationships with business partners, including payment practices relating to the date or period for payment, the rate of interest for late payment or the compensation for recovery costs referred to in Directive 2011/7/EU of the European Parliament and of the Council62 on late payment in commercial transactions, helps users to understand an undertaking’s risks as well as its impacts on sustainability matters. Every year, thousands of businesses, especially SMEs, suffer administrative and financial burdens because they are paid late, or not at all. Ultimately, late payments lead to insolvency and bankruptcy, with destructive effects on entire value chains. Increasing information about payment practices should empower other undertakings to identify prompt and reliable payers, detect unfair payment practices, access information about the businesses they trade with, and negotiate fairer payment terms.
__________________	__________________
62 Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (OJ L 48, 23.2.2011, p. 1).	62 Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (OJ L 48, 23.2.2011, p. 1).

 

Amendment  19

Proposal for a directive

Recital 48

Text proposed by the Commission	Amendment
(48) Directive 2013/34/EU does not require that the financial statements or the management report are provided in a digital format, which hinders the findability and usability of the reported information. Users of sustainability information increasingly expect such information to be findable and machine-readable in digital formats. Digitalisation creates opportunities to exploit information more efficiently and holds the potential for significant cost savings for both users and undertakings. Undertakings should therefore be required to prepare their financial statements and their management report in XHTML format in accordance with Article 3 of Commission Delegated Regulation (EU) 2019/815,63 and to mark-up sustainability information, including the disclosures required by Article 8 of Regulation (EU) 2020/852, in accordance with that Delegated Regulation. A digital taxonomy to the Union sustainability reporting standards will be necessary to allow for the information reported to be tagged in accordance with those standards. These requirements should feed into the work on digitalisation announced by the Commission in its Communication A European strategy for data64 and in the Digital Finance Strategy for the EU.65 These requirements also complement the creation of a European single access point for public corporate information as envisaged in the capital markets union action plan, which also considers the need for structured data.	(48) Directive 2013/34/EU does not require that the financial statements or the management report are provided in a digital format, which hinders the findability and usability of the reported information. Users of sustainability information increasingly expect such information to be findable and machine-readable in digital formats and fully accessible, including for persons with disabilities. Digitalisation creates opportunities to exploit information more efficiently and holds the potential for significant cost savings for both users and undertakings. Undertakings should therefore be required to prepare their financial statements and their management report in XHTML format in accordance with Article 3 of Commission Delegated Regulation (EU) 2019/815,63 and to mark-up sustainability information, including the disclosures required by Article 8 of Regulation (EU) 2020/852, in accordance with that Delegated Regulation. A digital taxonomy to the Union sustainability reporting standards will be necessary to allow for the information reported to be tagged in accordance with those standards. These requirements should feed into the work on digitalisation announced by the Commission in its Communication A European strategy for data64 and in the Digital Finance Strategy for the EU.65 These requirements also complement the creation of a European single access point for public corporate information as envisaged in the capital markets union action plan, which also considers the need for structured data.
_________________	_________________
63 Commission Delegated Regulation (EU) 2018/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (OJ L 143, 29.5.2019, p. 1).	63 Commission Delegated Regulation (EU) 2018/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (OJ L 143, 29.5.2019, p. 1).
64 https://ec.europa.eu/digital-single-market/en/european-strategy-data	64 https://ec.europa.eu/digital-single-market/en/european-strategy-data
65https://ec.europa.eu/info/publications/200924-digital-finance-proposals_en	65https://ec.europa.eu/info/publications/200924-digital-finance-proposals_en

 

Amendment  20

Proposal for a directive

Recital 49

Text proposed by the Commission	Amendment
(49) To allow for the inclusion of the reported sustainability information in the European single access point, Member States should ensure that undertakings publish the duly approved annual financial statements and the management report in the prescribed electronic format, and ensure that management reports containing sustainability reporting are made available, without delay following their publication, to the relevant officially appointed mechanism referred to in Article 21(2) of Directive 2004/109/EC.	(49) To allow for and ensure the inclusion of the reported sustainability information in the European single access point, Member States should ensure that undertakings publish the duly approved annual financial statements and the management report in the prescribed electronic format, and ensure that management reports containing sustainability reporting are made available, without delay following their publication, to the relevant officially appointed mechanism referred to in Article 21(2) of Directive 2004/109/EC.

 

Amendment  21

Proposal for a directive

Recital 51

Text proposed by the Commission	Amendment
(51) Article 20 of Directive 2013/34/EU requires undertakings with securities listed on regulated markets to include a corporate governance statement in their management report, which has to contain among other information a description of the diversity policy applied by the undertaking in relation to its administrative, management and supervisory bodies. Article 20 of Directive 2013/34/EU leaves flexibility to undertakings to decide what aspects of diversity they report on. It does not explicitly oblige undertakings to include information on any particular aspect of diversity. In order progress towards a more gender-balanced participation in economic decision-making, it is necessary to ensure that undertakings with securities listed on regulated markets always report on their gender diversity policies and the implementation thereof. However, to avoid unnecessary administrative burden, those undertakings should have the possibility to report some of the information required by Article 20 of Directive 2013/34/EU alongside other sustainability-related information.	(51) Article 20 of Directive 2013/34/EU requires undertakings with securities listed on regulated markets to include a corporate governance statement in their management report, which has to contain among other information a description of the diversity policy applied by the undertaking in relation to its administrative, management and supervisory bodies with regard to aspects such as age, gender, or educational and professional backgrounds, the objectives of that diversity policy, how it has been implemented and the results of implementation in the reporting period. Article 20 of Directive 2013/34/EU leaves flexibility to undertakings to decide what aspects of diversity they report on. It does not explicitly oblige undertakings to include information on any particular aspect of diversity. In order progress towards a more gender-balanced participation in economic decision-making, it is necessary to ensure that undertakings with securities listed on regulated markets always report on their gender diversity and gender equality policies and the implementation thereof in particular, with the aim of achieving gender-balanced representation in company boards, compliance with the requirements of a future Pay Transparency Directive, fighting against harassment in the workplace and promoting work-life balance. However, to avoid unnecessary administrative burden, those undertakings should have the possibility to report some of the information required by Article 20 of Directive 2013/34/EU alongside other sustainability-related information.

 

Amendment  22

Proposal for a directive

Recital 71

Text proposed by the Commission	Amendment
(71) Member States are invited to assess the impact of their transposition act on SMEs in order to ensure that they are not disproportionately affected, giving specific attention to micro-enterprises and to the administrative burden, and to publish the results of such assessments. Member States should consider introducing measures to support SMEs in applying the voluntary simplified reporting standards.	(71) The Commission should assess the impact of the transposition acts on SMEs in order to ensure that they are not disproportionately affected, giving specific attention to micro-enterprises and to the administrative burden, and should publish the results of such assessments. Member States should consider introducing measures to support SMEs in applying the voluntary simplified reporting standards. The Commission should create an online tool to facilitate reporting in small and medium-sized enterprises, in order to avoid an excessive administrative burden for SMEs with under 250 employees. Such online tool should be free of charge, easy to use and easily accessible.

Justification

A tool such as Online Interactive Risk Assessment (https://oiraproject.eu/en) with online reporting with adequate tools and instructions.

 

Amendment 23

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point a – point iii b (new)

Text proposed by the Commission	Amendment
	(iiib) the plans of the undertaking to promote gender equality and ensure that gender mainstreaming, and diversity and inclusion policies are implemented, particularly regarding pay gap and pay transparency, with requirements to be established by the Pay Transparency Directive, as well as gender-balanced participation in decision-making and work-life balance.

 

Amendment  24

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point a – point iv

Text proposed by the Commission	Amendment
(iv) how the undertaking’s business model and strategy take account of the interests of the undertaking’s stakeholders and of the impacts of the undertaking on sustainability matters;	(iv) how the undertaking’s business model and strategy ensure decent work and safeguard the rights and interests of the undertaking’s stakeholders, including workers and communities and take account of the impacts of the undertaking on sustainability matters;

 

Amendment 25

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 2 – subparagraph 1 – point e – point i

Text proposed by the Commission	Amendment
(i) the due diligence process implemented with regard to sustainability matters;	(i) the due diligence process implemented with regard to sustainability matters, including regarding gender equality;

 

Amendment 26

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragrah 2 – subparagraph 1 – point e – point ii

Text proposed by the Commission	Amendment
(ii) the principal actual or potential adverse impacts connected with the undertaking’s value chain, including its own operations, its products and services, its business relationships and its supply chain;	(ii) the principal actual or potential adverse impacts connected with the undertaking’s supply and value chain, including its own operations, its products and services, its business relationships and its supply chain, including with regard to all persons affected by those impacts, with particular attention to persons who frequently face intersectional and diverse forms of discrimination or are in a vulnerable situation, such as women, children, LGBTIQ persons, persons with disabilities, persons from ethnic or racial minority backgrounds or persons experiencing poverty, especially the poorest 20% of society, or persons who suffer social exclusion.

 

Amendment  27

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 3 – subparagraph -1 (new)

Text proposed by the Commission	Amendment
	Where possible, the undertaking shall also include the gender-disaggregated data of the information referred to in paragraphs 1 and 2 as a way of incorporating gender mainstreaming in the sustainability reporting.

 

Amendment  28

Proposal for a directive

Article 1 – paragraph 1 – point 3

Directive 2013/34/EU

Article 19a – paragraph 3 – subparagraph 2

Text proposed by the Commission	Amendment
Where appropriate, the information referred to in paragraphs 1 and 2 shall contain information about the undertaking’s value chain, including the undertaking’s own operations, products and services, its business relationships and its supply chain.	Where appropriate, the information referred to in paragraphs 1 and 2 shall contain information about the undertaking’s value chain, including the undertaking’s own operations, products and services, gender equality-informed procurement policies, its business relationships and its supply chain.

 

 

Amendment  29

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 1 – subparagraph 2

Text proposed by the Commission	Amendment
The Commission shall, at least every three years after its date of application, review any delegated act adopted pursuant to this Article, taking into consideration the technical advice of the European Financial Reporting Advisory Group (EFRAG), and where necessary shall amend such delegated act to take into account relevant developments, including developments with regard to international standards.	The Commission shall, at least every three years after its date of application, review any delegated act adopted pursuant to this Article, taking into consideration the technical advice of the European Financial Reporting Advisory Group (EFRAG), the European Foundation for Living and Working Conditions, the European Agency for Safety and Health at Work, the European Institute for Gender Equality, and relevant stakeholders, including trade unions and civil society organisations, and where necessary shall amend such delegated act to take into account relevant developments, including developments with regard to international standards.

 

 

Amendment 30

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point b

Text proposed by the Commission	Amendment
(b) specify the information that undertakings are to disclose about social factors, including information about:	(b) specify the information that undertakings are to disclose about social and gender equality factors, including the undertaking’s information about:

 

Amendment 31

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point b – point i

Text proposed by the Commission	Amendment
(i) equal opportunities for all, including gender equality and equal pay for equal work, training and skills development, and employment and inclusion of people with disabilities;	(i) 1. workforce diversity, equal treatment and opportunities for all, including gender equality, the application of the principle of equal pay for equal work or work of equal value, including the reporting and other obligations laid down in a future Pay transparency Directive;
	2. training and skills development, in particular the percentage of workers participating in training, disaggregated by gender and employment and inclusion of people with disabilities;
	3. gender equality and diversity composition in management positions and measures against harassment in the workplace, in line with, among others, the equality principles and standards established in the Beijing Declaration and the Istanbul Convention;

 

Amendment  32

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point b – point i a (new)

Text proposed by the Commission	Amendment
	(ia) data on wage levels disaggregated according to gender and on pay transparency measures;

 

 

Amendment  33

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point b – point ii

Text proposed by the Commission	Amendment
(ii) working conditions, including secure and adaptable employment, wages, social dialogue, collective bargaining and the involvement of workers, work-life balance, and a healthy, safe and well-adapted work environment;	(ii) working conditions, including secure and adaptable employment, social dialogue, collective bargaining and the involvement of workers, work-life balance, including flexible adaptable working-time, parental leave, paternity and maternity leave, including take-up and return rates, the possibility of teleworking, and a healthy, safe and well-adapted work environment, free from all forms of violence, including, among others, gender-based violence, harassment, including psychological and sexual harassment, approached in an inclusive, integrated and gender-responsive manner;

 

Amendment  34

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point b – point iii

Text proposed by the Commission	Amendment
(iii) respect for the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work and the ILO fundamental conventions and the Charter of Fundamental Rights of the European Union.	(iii) respect for the human rights, fundamental freedoms, democratic principles and standards established in the International Bill of Human Rights and other core UN human rights conventions, such as the CEDAW Convention, the UN Convention on Persons with Disabilities, the UN Declaration on the Rights of Indigenous Peoples, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work and the ILO fundamental conventions and the European Convention on Human Rights, the European Social Charter and the Charter of Fundamental Rights of the European Union.

 

Amendment 35

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point b – point iii a (new)

Text proposed by the Commission	Amendment
	(iiia) human rights and gender equality impact assessments carried out by the undertaking including in supply chains with respect to affected communities, in particular indigenous peoples' rights and the implementation of the undertaking's policy on free, prior and informed consent.

 

Amendment 36

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point c – point i

Text proposed by the Commission	Amendment
(i) the role of the undertaking’s administrative, management and supervisory bodies, including with regard to sustainability matters, and their composition;	(i) the role of the undertaking’s administrative, management and supervisory bodies, including with regard to sustainability matters, and their composition, broken down by gender, including with regard to the intersectional representation of women in leadership and managerial positions;

 

Amendment  37

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point c – point i a (new)

Text proposed by the Commission	Amendment
	(ia) the number of workers and the type of arrangement they are engaged under by the undertaking, including through its operations and business activities, disaggregated by gender;

 

Amendment  38

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 2 – subparagraph 2 – point c – point ii

Text proposed by the Commission	Amendment
(ii) business ethics and corporate culture, including anti-corruption and anti-bribery;	(ii) business ethics and corporate culture, including anti-corruption, anti-bribery, anti-discrimination and anti-harassment;

 

Amendment  39

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 3 – point h a (new)

Text proposed by the Commission	Amendment
	(ha) The future Directive of the European Parliament and of the Council to strengthen the application of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms.

 

Amendment  40Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19b – paragraph 3 – point h b (new)

Text proposed by the Commission	Amendment
	(hb) Directive (EU) 2019/1158 of the European Parliament and of the Council;

Amendment 41

Proposal for a directive

Article 1 – paragraph 1 – point 4

Directive 2013/34/EU

Article 19c – paragraph 1 a (new)

Text proposed by the Commission	Amendment
	The Commission shall create an online tool to facilitate reporting in small and medium-sized enterprises.

Justification

A tool such as Online Interactive Risk Assessment (https://oiraproject.eu/en) with online reporting with adequate tools and instructions.

 

Amendment  42

Proposal for a directive

Article 1 – paragraph 1 – point 5 – point a

Directive 2013/34/EU

Article 20 – paragraph 1 – point g

Text proposed by the Commission	Amendment
(g) a description of the diversity policy applied in relation to the undertaking's administrative, management and supervisory bodies with regard to gender and other aspects such as, age, or educational and professional backgrounds, the objectives of that diversity policy, how it has been implemented and the results in the reporting period. If no such policy is applied, the statement shall contain an explanation as to why this is the case.	(g) a description of the diversity, gender equality and inclusion policies, applied in relation to the undertaking's administrative, management and supervisory bodies with regard to gender equality, anti-discrimination, support for minority and vulnerable groups, and other aspects such as, age, disability or educational and professional backgrounds, as well other intersectional characteristics and discrimination in respect of which protection is provided for under Directives 2000/43/EC and 2000/78/EC, the objectives and indicators of that diversity policy, how it has been implemented and the results in the reporting period. If no such policy is applied, the statement shall contain an explanation as to why this is the case.

 

Amendment  43

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 1

Text proposed by the Commission	Amendment
1. Parent undertakings of a large group shall include in the consolidated management report information necessary to understand the group's impacts on sustainability matters, and information necessary to understand how sustainability matters affect the group's development, performance and position.	1. Parent undertakings of a large group shall include in the consolidated management report information necessary to understand the group's impacts on social, economic and environmental sustainability matters, and information necessary to understand how sustainability matters affect the group's development, performance and position.

 

Amendment  44

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point a – point iii a (new)

Text proposed by the Commission	Amendment
	(iiia) the plans of the undertaking to promote the implementation of anti-discrimination, diversity and gender equality measures, particularly regarding pay gap and pay transparency in line with requirements to be laid down in a future Pay Transparency Directive, gender-equal participation in decision-making and work-life balance;

 

Amendment  45

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point a – point v

Text proposed by the Commission	Amendment
(v) how the group’s strategy has been implemented with regard to sustainability matters;	(v) how the group’s strategy has been implemented with regard to sustainability matters, including gender equality;

 

Amendment 46

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point e – point i

Text proposed by the Commission	Amendment
(i) the due diligence process implemented with regard to sustainability matters;	(i) the due diligence process implemented with regard to sustainability and gender equality matters;

 

Amendment 47

Proposal for a directive

Article 1 – paragraph 1 – point 7

Directive 2013/34/EU

Article 29a – paragraph 2 – subparagraph 1 – point e – point ii

Text proposed by the Commission	Amendment
(ii) the principal actual or potential adverse impacts connected with the group’s value chain, including its own operations, its products and services, its business relationships and its supply chain;	(ii) the principal actual or potential adverse impacts connected with the group’s value chain, including its own operations, its products and services, its business relationships and its supply chain and gender equality procurement policies, with particular attention to persons who frequently face intersectional and diverse forms of discriminations or are in a vulnerable situation, such as women, children, LGBTIQ persons, persons with disabilities, persons from ethnic or racial minority backgrounds or persons experiencing poverty or social exclusion;

 

Amendment 48

Proposal for a directive

Article 2 – paragraph 1 – point 4

Directive 2004/109/EC

Article 28d – paragraph 1

Text proposed by the Commission	Amendment
After consulting the European Environment Agency and the European Union Agency for Fundamental Rights, ESMA shall issue guidelines in accordance with Article 16 of Regulation 1095/2010 on the supervision of sustainability reporting by national competent authorities;	After consulting the European Environment Agency, the European Union Agency for Fundamental Rights, the European Agency for Safety and Health at Work and the European Institute for Gender Equality, and where applicable, relevant stakeholders, including trade unions and civil society organisations, ESMA shall issue guidelines in accordance with Article 16 of Regulation 1095/2010 on the supervision of sustainability reporting by national competent authorities.

 

PROCEDURE – COMMITTEE ASKED FOR OPINION

Title	Amending Directive 2013/34/EU, Directive 2004/109/EC, Directive 2006/43/EC and Regulation (EU) No 537/2014, as regards corporate sustainability reporting
References	COM(2021)0189 – C9-0147/2021 – 2021/0104(COD)
Committee responsible  Date announced in plenary	JURI 23.6.2021
Opinion by  Date announced in plenary	FEMM 23.6.2021
Rapporteur for the opinion  Date appointed	Robert Biedroń 7.6.2021
Discussed in committee	9.12.2021	25.1.2022
Date adopted	10.2.2022
Result of final vote	+: –: 0:	28 7 1
Members present for the final vote	Isabella Adinolfi, Simona Baldassarre, Robert Biedroń, Vilija Blinkevičiūtė, Annika Bruna, Margarita de la Pisa Carrión, Rosa Estaràs Ferragut, Frances Fitzgerald, Cindy Franssen, Heléne Fritzon, Lina Gálvez Muñoz, Lívia Járóka, Arba Kokalari, Alice Kuhnke, Elżbieta Katarzyna Łukacijewska, Radka Maxová, Andżelika Anna Możdżanowska, Maria Noichl, Sandra Pereira, Pina Picierno, Sirpa Pietikäinen, Samira Rafaela, Evelyn Regner, Terry Reintke, Diana Riba i Giner, Eugenia Rodríguez Palop, María Soraya Rodríguez Ramos, Christine Schneider, Sylwia Spurek, Jessica Stegrud, Isabella Tovaglieri, Hilde Vautmans, Elissavet Vozemberg-Vrionidi, Chrysoula Zacharopoulou, Marco Zullo
Substitutes present for the final vote	Sylvie Brunet

 

 

 

FINAL VOTE BY ROLL CALL IN COMMITTEE ASKED FOR OPINION

28	+
PPE	Isabella Adinolfi, Rosa Estaràs Ferragut, Frances Fitzgerald, Cindy Franssen, Sirpa Pietikäinen, Christine Schneider, Elissavet Vozemberg‑Vrionidi, Elżbieta Katarzyna Łukacijewska
Renew	Sylvie Brunet, Samira Rafaela, María Soraya Rodríguez Ramos, Hilde Vautmans, Chrysoula Zacharopoulou, Marco Zullo
S&D	Robert Biedroń, Vilija Blinkevičiūtė, Heléne Fritzon, Lina Gálvez Muñoz, Radka Maxová, Maria Noichl, Pina Picierno, Evelyn Regner
The Left	Sandra Pereira, Eugenia Rodríguez Palop
Verts/ALE	Alice Kuhnke, Terry Reintke, Diana Riba i Giner, Sylwia Spurek

 

7	-
ECR	Andżelika Anna Możdżanowska, Jessica Stegrud, Margarita de la Pisa Carrión
ID	Simona Baldassarre, Annika Bruna, Isabella Tovaglieri
PPE	Arba Kokalari

 

1	0
NI	Lívia Járóka

 

Key to symbols:

+ : in favour

- : against

0 : abstention

 

 

PROCEDURE – COMMITTEE RESPONSIBLE

Title	Amending Directive 2013/34/EU, Directive 2004/109/EC, Directive 2006/43/EC and Regulation (EU) No 537/2014, as regards corporate sustainability reporting
References	COM(2021)0189 – C9-0147/2021 – 2021/0104(COD)
Date submitted to Parliament	22.4.2021
Committee responsible  Date announced in plenary	JURI 23.6.2021
Committees asked for opinions  Date announced in plenary	AFET 23.6.2021	DEVE 8.7.2021	ECON 23.6.2021	EMPL 23.6.2021
	ENVI 23.6.2021	ITRE 23.6.2021	FEMM 23.6.2021
Associated committees  Date announced in plenary	ENVI 16.12.2021	EMPL 16.12.2021	ECON 16.12.2021
Rapporteurs  Date appointed	Pascal Durand 21.5.2021
Discussed in committee	28.10.2021	1.12.2021	2.12.2021	10.1.2022
Date adopted	15.3.2022
Result of final vote	+: –: 0:	22 1 0
Members present for the final vote	Pascal Arimont, Manon Aubry, Gunnar Beck, Ilana Cicurel, Geoffroy Didier, Pascal Durand, Jean-Paul Garraud, Gilles Lebreton, Sabrina Pignedoli, Jiří Pospíšil, Franco Roberti, Raffaele Stancanelli, Marie Toussaint, Adrián Vázquez Lázara, Axel Voss, Marion Walsmann, Tiemo Wölken, Lara Wolters, Javier Zarzalejos
Substitutes present for the final vote	Patrick Breyer, Daniel Buda, Caterina Chinnici, Heidi Hautala, René Repasi, Nacho Sánchez Amor, Stéphane Séjourné
Date tabled	22.3.2022

 

 

FINAL VOTE BY ROLL CALL IN COMMITTEE RESPONSIBLE

22	+
ECR	Raffaele Stancanelli
ID	Jean-Paul Garraud, Gilles Lebreton
PPE	Pascal Arimont, Daniel Buda, Geoffroy Didier, Jiří Pospíšil, Axel Voss, Marion Walsmann, Javier Zarzalejos
Renew	Ilana Cicurel, Pascal Durand, Stéphane Séjourné, Adrián Vázquez Lázara
S&D	René Repasi, Franco Roberti, Nacho Sánchez Amor, Tiemo Wölken, Lara Wolters
The Left	Manon Aubry
Verts/ALE	Patrick Breyer, Marie Toussaint

 

1	-
ID	Gunnar Beck

 

0	0

 

Key to symbols:

+ : in favour

- : against

0 : abstention

 

 

• [1] OJ C 446, 3.11.2021, p. 2.
• [2] Not yet published in the Official Journal.
• [3] A9-0240/2020 (INI)
• [4] Directive 2014/95/EU (‘NFDR’).
• [5] The International Financial Reporting Standards Foundation.
• [6] Directive 2013/34/EU