Executive Summary
The Society welcomes the EU’s ambition to become the first carbon neutral continent by 2050 as set out in the European Green Deal. As such, European Union regulations, including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the Taxonomy Regulation, are very important milestones on the road towards climate neutrality.
However, as these pieces of law continue to evolve and expand, global companies operating in the EU are facing increased reporting, governance, and due diligence requirements and associated compliance costs. While the overall goal of these regulations—improving transparency and accountability in sustainability matters—aligns in many ways with global corporate trends, the current regulatory and economic landscape has created a significant burden on businesses seeking to invest and do business in the EU, particularly for small and medium-sized companies, including those not headquartered in the EU, that are subject to reporting requirements in multiple jurisdictions.
Founded in 1946, the Society is a professional membership association of approximately 3,800 corporate and assistant secretaries, in-house counsel, outside counsel, and other governance professionals who serve approximately 1,600 entities, including 1,000 public, private, and nonprofit organizations of almost every size and industry. Our organization has more than 75 years of experience empowering professionals to shape and advance corporate governance within their organizations, in part through providing the knowledge and tools they need to advise their boards and executive management on corporate governance; regulatory and legal developments; and sustainability issues, including climaterelated governance, risk management, and disclosure.
We have a robust track record of constructive engagement with regulators and other standard setters on climate and other sustainability-related legal frameworks. For example:
- We and our members have engaged with the IFRS Foundation (which has representation among our membership via the Foundation’s Director of Corporate Outreach, who regularly engages with and educates the Society and our members on IFRS activities) in conjunction with the ISSB exposure drafts on climate-related and general sustainability-related disclosures and continue to engage with the IFRS Foundation on its initial standards as well as the ISSB’s biodiversity, ecosystems, and ecosystem services (BEES) and human capital standards research projects.
- We have engaged extensively with the U.S. Securities and Exchange Commission in connection with its climate disclosure rulemaking, providing a detailed comment letter with seasoned insights and robust quantitative data that was cited more than 100 times in the SEC’s final rule.
- We are currently engaging with California policy makers on the state’s climate disclosure laws and regulations, which encompasses, among other things, our creation of an approximately 50-member working group to shape and support with qualitative and quantitative data the Society’s feedback to the California Air Resource Board’s Information Solicitation to inform the implementation of the state’s climate disclosure legislation.
In this context, we are delighted to provide our perspective to the Commission with respect to the CSRD, CSDDD, and Taxonomy Regulation informed by the practical insights of our corporate members based on their preparations for compliance with and implementation of the above frameworks. This document does not advise on and is subject to the EU procedural and legal requirements for reforms to the CSRD, CSDDD and Taxonomy Regulation. This paper identifies and summarizes key proposals that could help streamline and reduce the reporting requirements, administrative burdens, and compliance costs associated with these regulations, without compromising the intent or integrity of the sustainability reporting framework.