### (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. however , the current structure , governance and functioning of efrag does not provide for the adequate involvement of workers’ representatives and civil society organisations. for example , efrag currently requires stakeholders to pay a fee in order to participate in its work which is a barrier for the participation of some stakeholder and entails a risk of conflict of interests with others. important changes regarding the governance of efrag are necessary in order to guarantee its independence , prevent all conflicts of interests and allow for the inclusion of non-corporate stakeholders. 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 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 commission should guarantee the inclusion of trade unions in the development of sustainability reporting standards , and include other relevant stakeholders. 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 may take into account the technical advice that efrag develops , provided that the technical advisory body responsible for the advice and the process give sufficient guarantees of inclusion of trade unions and other stakeholders , as well as guarantees of due process , transparency , expertise and prevention of conflicts of interests. 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 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 commission should guarantee the inclusion of trade unions in the development of sustainability reporting standards , and include other relevant stakeholders. the commission may rely partly on the technical advice of 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. however , the current structure , governance and functioning of efrag does not provide for the involvement of workers’ representatives and civil society organisations. for example , efrag currently requires stakeholders to pay a fee in order to participate in its work which is a barrier for the participation of some stakeholder and entails a risk of conflict of interests with others. important changes regarding the governance of efrag are necessary in order to prevent all conflicts of interests and guarantee the inclusion of non-corporate stakeholders. when adopting sustainability reporting standards technical advice from efrag should thus be sought only as part of a broader consultation that provides for the meaningful participation of non-corporate stakeholders. 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.


### (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 , in particular reporting on payments to governments by undertakings active in the extractive industry and the logging of forests , as well as other reporting requirement 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.


### (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). 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 support and contribute to the process to develop standards by the international sustainability standards board.


### (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.


### (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 partners’ involvement , collective bargaining , trade union and human rights. such information should be disclosed on a country-by-country basis , with close involvement of social partners and easily accessible to trade unions and civil society organisations for reporting and auditing requirements. such information should cover the impacts of undertakings on workers and people , including on human health , affected communities , consumers and end-users. the information that undertakings disclose about human rights , fundamental freedoms and democratic principles should include information about forced labour , child labour , freedom of expression , access to clean water and sanitation , adequate housing , privacy , freedom of association and collective bargaining in their value 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. these reporting standards should refer to equal opportunities for all , including gender equality and equal pay for equal work , training and skills development , employment and inclusion of people with disabilities , as well as and working conditions , with a focus on secure employment , wages , social dialogue , collective bargaining , respect for trade union rights and respect of workers’ right to be informed and consulted prior to final decisions on matters of significance importance to the workforce. 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 as well as other conventions such as on collective bargaining , on workers' representation , working time , minimum wage protection , occupational heath and safety and labour inspection services and the ilo´s tripartite declaration of principles concerning multinational enterprises and social policy and the european convention on human rights and the european social charter (revised) of the council of europe , the oecd guidelines for multinational enterprises , and the charter of fundamental rights of the european union. sustainability and social reporting should be carried out in close cooperation with appropriate worker representative bodies , according to eu labour law acquis and national law and practice , at relevant steps , for design , control and audit purposes. workers’ representatives , and their trade unions , are to be provided with the necessary means and resources , including support of an expert , to enforce rights and obligations arising from this directive; the social standards of the global reporting initiative which are already used should be included in this directive as one source of minimum standards in particular gr-401 till gr-407;


### (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 , human rights , 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 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 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 information that undertakings disclose about human rights should include information about the impacts on human rights and workers’ rights in their value chains , including but not limited to 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 organisation 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.


### (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 and per deciles , 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 information about the impacts on human rights and workers’ rights in their value chains , including but not limited to forced labour and living wages 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 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 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 organisation 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.


### (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 and per deciles , 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 information about the impacts on human rights and workers’ rights in their value chains , including but not limited to forced labour and living wages 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 organisation and in particular 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 , the united nations guiding principles on business and human rights and the oecd guidelines for multinational enterprises.


### (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 mechanism and risk management systems , including in relation to the reporting process. users also need information about undertakings’ corporate culture and anti-corruption and anti-bribery risk assessments and programmes , and about their political engagements , including details about direct and indirect lobbying activities. the undertaking should also provide information on beneficial ownership and organisational structure. 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. 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’ anti-corruption and anti-bribery programmes , and about their political engagements , including details about their lobbying activities. the undertaking should also provide information on beneficial ownership and organisational structure. 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.


### (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. the commission should prioritise the adoption of standards specific to high-risk sectors and high-risk areas. the commission should review the standards every 3 years to take account of relevant developments , including the development of international standards.


### (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.


### (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 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.


### (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.


### (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.


### 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 and the undertakings defined in article 19a(1) regardless of their legal form:


### 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. ### deleted


### 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 and the undertakings defined in article 19a(1) of this directive regardless of their legal form:


### (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.


### 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 as of 1 january 2026 , small and medium-sized undertakings operating in high-risk sectors or high-risk areas listed in annex , and undertakings meeting those criteria that operate in the single market without being established in the european 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.


### (ii) the opportunities for the undertaking related to sustainability matters; ### (ii) the opportunities and risks for the undertaking related to sustainability matters;


### (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;


### how the undertaking’s strategy has been implemented with regard to sustainability matters; ### how sustainability matters and related targets , in connection with principal risks , opportunities , and severe impacts , have been integrated into the undertaking’s strategy;


### 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; ### a description of the science-based and time-bound short-term , mid-term and long-term targets set by the undertaking to address the principal risks , opportunities and impacts of its activities with regards to sustainability matters , along with corresponding evidence;


### a description of the role of the administrative , management and supervisory bodies with regard to sustainability matters; ### a description of the role of the administrative , management and supervisory bodies with regard to sustainability matters , including with regard to:


### a description of the undertaking’s policies in relation to sustainability matters; ### 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;


### the due diligence process implemented with regard to sustainability matters; ### the due diligence process implemented with regard to sustainability matters in line with applicable eu legislation on due diligence [directive xxx];


### (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 subsidiaries , its business relationships and its supply chain , including information on people affected by those impacts;


### (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;


### 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 that is useful in order to understand the impacts and risks related to sustainability matters for the undertaking.


### 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 under standing 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 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


### 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. ### deleted


### 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 governing a subsidiary of an undertaking referred to in paragraph 1 may require that the consolidated management report of that 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.


### 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 subjected to the obligations set out in paragraphs 1 to 4 shall contain all of the following information:


### the fact that the undertaking is exempted from the obligations set out in paragraphs 1 to 4 of this article. ### deleted


### the due diligence process implemented with regard to sustainability matters; ### the due diligence process implemented with regard to sustainability matters , including a gender-responsive due diligence approach;


### 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 , small and medium-sized undertakings which are undertakings referred to in article 2 , point (1) , point (a) and small and medium-sized undertakings which are high-impact undertakings which exceed on their balance sheet data the criterion of the average number of 10 employees during the financial year , 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.


### (ii) the opportunities for the undertaking related to sustainability matters; ### (ii) the opportunities and risks for the undertaking related to sustainability matters;


### (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 including a transition pathway , comprising of short-term and medium-term absolute emission reduction targets for 2025 and 2030 to achieve carbon neutrality by 2050 at the latest , and implementing actions and related financial and investment plans , 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; with no or limited overshoot and recourse to compensation technologies , and pursuant to the latest recommendations of the ipcc;


### how the undertaking’s strategy has been implemented with regard to sustainability matters; ### how sustainability matters and related targets , in connection with principal risks , opportunities , and severe impacts , have been integrated into the undertaking’s strategy


### 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; ### a description of the time-bound short-term , mid-term and long-term targets set by the undertaking with respect to the principal risks , opportunities , severe impacts and timely alignment with relevant public goals , whether such targets are science-based alongside corresponding evidence , implementing actions and related investment plans and of the progress the undertaking has made towards achieving those targets;


### indicators relevant to the disclosures referred to in points (a) to (f). ### 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.


### 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 , small and medium-sized undertakings operating in high-risk sectors or high-risk areas listed in annex , and undertakings meeting those criteria that operate in the single market without being established in the european 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.


### how the undertaking’s strategy has been implemented with regard to sustainability matters; ### how the undertaking has integrated sustainability matters and related targets in connection with principal risks , opportunities , and severe impacts , into its strategy;


### 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; ### a description of the time-bound short-term , mid-term , and long-term targets set by the undertaking to address the principal risks , opportunities and impacts of its activities with regards to sustainability matters. in all cases possible , those targets should be science-based and presented along with corresponding evidence;


### a description of the role of the administrative , management and supervisory bodies with regard to sustainability matters; ### a description of the role of the administrative , management and supervisory bodies with regard to sustainability matters , including with regard to:


### a description of the role of the administrative , management and supervisory bodies with regard to sustainability matters; ### a description of the composition , role and responsibilities of the administrative , management and supervisory bodies with regard to sustainability matters , including the link between executive and non-executive directors’ variable remuneration and the achievement of sustainability targets;


### a description of the role of the administrative , management and supervisory bodies with regard to sustainability matters; ### a description of the composition , role and responsibilities of the administrative , management and supervisory bodies with regard to sustainability matters , including employee representation in such bodies;


### a description of the undertaking’s policies in relation to sustainability matters; ### 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;


### the due diligence process implemented with regard to sustainability matters; ### the due diligence process implemented with regard to sustainability matters in line with applicable eu legislation on due diligence [directive xxx];


### (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 subsidiaries , its business relationships and its supply chain , including information on people affected by those impacts;


### (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;


### 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 that is useful in order to understand the impacts and risks related to sustainability matters for the undertaking.


### 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 under standing 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 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.


### 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. 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 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 subsidiary is subjected to the obligations set out 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 by which a subsidiary of a parent undertaking subjected to the obligations set out in paragraphs 1 to 4 is governed , may require that the consolidated management report of the 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.


### 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 subjected to the obligations set out in paragraphs 1 to 4 shall contain all of the following information:


### the fact that the undertaking is exempted from the obligations set out in paragraphs 1 to 4 of this article. ### deleted


### 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 small and medium-sized undertakings which are undertakings operating in high-risk sectors or high-risk areas listed in annex iia , and undertakings meeting those criteria that operate in the single market without being established 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.


### (ii) the opportunities for the undertaking related to sustainability matters; ### (ii) the opportunities and risks for the undertaking related to sustainability matters;


### how the undertaking’s strategy has been implemented with regard to sustainability matters; ### how sustainability matters and related targets , in connection with principal risks , opportunities , and severe impacts , have been integrated into the undertaking’s strategy;