CSRD: can you postpone your sustainability report?
Summary
The CSRD requires European companies to produce sustainability reports from January 2024.
These reports are not only a regulatory obligation, but also an essential strategy for strengthening the legitimacy and long-term resilience of companies. They influence investor and stakeholder confidence, as well as access to finance. However, certain exceptional circumstances, such as technical difficulties, structural changes or crises, may justify a postponement, although this may have legal, financial and reputational consequences.
Ultimately, meeting reporting deadlines is crucial not only for compliance, but also for demonstrating commitment to a sustainable economy.
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Introduction
From January 2024, many European companies will be subject to the obligation to produce a sustainability report. As a result, more and more organizations are asking themselves whether it is possible to postpone their CSRD sustainability report.
Find out in this article under what circumstances a sustainability report can be postponed and what are the consequences of not publishing a report in the context of the CSRD.
CSRD: Why is it important to submit your sustainability report?
Submitting a sustainability report in accordance with the CSRD is not just a matter of regulatory compliance, it is a comprehensive strategy that strengthens the legitimacy, accountability, and resilience of the business in the long term.
Thus, a sustainability report allows an organization to demonstrate its commitment to more sustainable practices. In addition, regulators, investors, business partners, and customers now clearly expect a company to present its sustainability report.
The information contained in the sustainability report significantly influences the confidence of investors and stakeholders. By disclosing sustainability risks and the steps taken to mitigate them, companies can not only attract more responsible capital but also benefit from potentially more favorable financing conditions.
Finally, today's consumers are increasingly sensitive to sustainability issues. A company that can demonstrate, through its sustainability report, a genuine commitment and concrete actions in favor of sustainable development, attracts more customers. The sustainability report thus becomes a powerful marketing tool, allowing the company to differentiate itself in an increasingly competitive market.
Under what circumstances can a company consider postponing its report?
In certain circumstances, an organization may postpone the publication of its CSRD sustainability report. Technical or operational difficulties may be a valid reason for postponement. As a result, implementing adequate information systems to collect, manage, and analyze ESG data can be challenging. If technical problems prevent reliable data collection or if the necessary systems are not yet in place, a company may need more time to prepare an accurate sustainability report that meets the required standards.
Major structural changes such as mergers, acquisitions, or restructurings are also valid reasons for postponement. These events can result in a significant revaluation of assets and corporate strategies, necessitating an adjustment period.
Finally, exceptional situations such as economic crises, global pandemics, or natural disasters can create an environment where companies find themselves unable to meet reporting deadlines.
It is essential to note that, while these circumstances may warrant a postponement, they do not relieve companies of the obligation to report even if it is done too late. Regulators expect companies to clearly state the reasons for the postponement and set a new timeline for the submission of their sustainability report.
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Submitting your sustainability report on time: a necessity for legitimacy, resilience and trust.
CSRD: The consequences of postponing its sustainability report
Postponing the CSRD sustainability report can have several consequences for a company. Failure to comply with these requirements can expose an organization to legal consequences, such as warnings, subpoenas to disclose certain information or legal action. The EU regulatory framework requires Member States to establish effective, proportionate, and dissuasive penalties for non-compliance.
In addition, financial penalties may be imposed on companies that fail to meet CSRD reporting deadlines. These penalties not only include monetary penalties, but they can also take the form of increased compliance costs.
Beyond the legal implications, delaying the publication of the sustainability report can damage the company's reputation. Indeed, the delay or omission in reporting sustainability performance can be interpreted as a lack of commitment to ethical and responsible business practices.
Investors and other stakeholders use sustainability reports to assess the risks and opportunities associated with a company's sustainability. A postponement can lead to an erosion of confidence and influence investment decisions, which can result in higher funding costs or loss of investment capital.
Sustainability report: Are there any formal exceptions or derogations?
The CSRD recognizes that certain extraordinary situations may justify a postponement of the publication of sustainability reports. These conditions are usually strict and are intended to prevent unjustified abuse or delay. An organization can thus benefit from a waiver in the event of unforeseen and significant circumstances that prevent the company from gathering the necessary information or exceptional events that have a significant impact on the company's operations.
Companies wishing to obtain a derogation for the postponement of their sustainability report must follow a formal procedure. This process involves submitting a detailed application to the relevant regulatory authorities, explaining the reasons for the request and how the exceptional conditions have affected the company's ability to comply. Businesses must provide substantial evidence to support their claim and demonstrate that they have taken all reasonable steps to avoid the delay.
The postponement of the publication of a sustainability report, although subject to specific exceptions in the CSRD, must remain exceptional. Indeed, in a world where sustainability has become an essential criterion of business performance, the ability to communicate transparently and punctually on these issues is crucial. Thus, meeting reporting deadlines is not only a matter of compliance but also an expression of a company's commitment to a more sustainable and responsible economy.
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