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PB 8/2021: Why it would be important to expand the scope of the Corporate Sustainability Reporting Directive and make it work for SMEs
- Since the introduction of the NFRD in 2014, demand for sustainability information has significantly increased, but actual sustainability reporting has not kept up.
- Thus, the Corporate Sustainability Reporting Directive (CSRD) has been proposed to significantly improve the availability of sustainability information.
- A key aspect is the extension of the scope of coverage from 11,000 companies under the NFRD to 50,000 companies under the CSRD.
- This extension is sufficient to cover around 80% of economic activity in certain heavy industry sectors like energy production.
- However, only 30% of economic activity is covered in sectors like agriculture or land transportation, despite them being major contributors to sustainability-related problems, especially climate change.
- These sectors are dominated by SMEs and an extension of the CSRD is required to capture their negative sustainability impacts.
- A guided and proportionate approach to SME reporting under the CSRD can improve the competitiveness of SMEs while limiting additional reporting burden.