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


### (9) there has been a very significant increase in demand for corporate sustainability information in recent years , especially on the part of the investment community. that increase in demand is driven by the changing nature of risks to undertakings and growing investor awareness of the financial implications of these risks. that is especially the case for climate-related financial risks. awareness of the risks to undertakings and to investments resulting from other environmental issues and from social issues , including health issues , is also growing. the increase in demand for sustainability information is also driven by the growth in investment products that explicitly seek to meet certain sustainability standards or achieve certain sustainability objectives. part of that increase is the logical consequence of previously adopted union legislation , notably regulation (eu) 2019/2088 and regulation (eu) 2020/852. some of the increase would have happened in any case , due to fast-changing citizen awareness , consumer preferences and market practices. the covid-19 pandemic will further accelerate the increase in users’ information needs , in particular as it has exposed the vulnerabilities of workers and of undertaking’s value chains. information on environmental impacts is also relevant in the context of mitigating future pandemics with human disturbance of ecosystems increasingly linked to the occurrence and spread of diseases. ### (9) there has been a very significant increase in demand for corporate sustainability information in recent years , especially on the part of the investment community. that increase in demand is driven by the changing nature of risks to undertakings and growing investor awareness of the financial implications of these risks. that is especially the case for climate-related financial risks. awareness of the risks to undertakings and to investments resulting from other environmental issues and from social issues , including health issues , inclusion and gender equality , is also growing. the increase in demand for sustainability information is also driven by the growth in investment products that explicitly seek to meet certain sustainability standards or achieve certain sustainability objectives. part of that increase is the logical consequence of previously adopted union legislation , notably regulation (eu) 2019/2088 and regulation (eu) 2020/852. some of the increase would have happened in any case , due to fast-changing citizen awareness , consumer preferences and market practices. the covid-19 pandemic will further accelerate the increase in users’ information needs , in particular as it has exposed the vulnerabilities of workers and of undertaking’s value chains. information on environmental impacts is also relevant in the context of mitigating future pandemics with human disturbance of ecosystems increasingly linked to the occurrence and spread of diseases.


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


### (10) undertakings themselves stand to benefit from carrying out high quality reporting on sustainability matters. the growth in the number of investment products that aim to pursue sustainability objectives means that good sustainability reporting can enhance an undertaking’s access to financial capital. sustainability reporting can help undertakings to identify and manage their own risks and opportunities related to sustainability matters. it can provide a basis for better dialogue and communication between undertakings and their stakeholders , and can help undertakings to improve their reputation. ### (10) undertakings themselves stand to benefit from carrying out high quality reporting on sustainability matters. the growth in the number of investment products that aim to pursue sustainability objectives means that good sustainability reporting can enhance an undertaking’s access to financial capital. sustainability reporting can help undertakings to identify and manage their own risks and opportunities related to sustainability matters. it can provide a basis for better dialogue and communication between undertakings and their stakeholders , and can help undertakings to improve their reputation. the union also benefits from high quality reporting on sustainability matters as it informs the union's policies on priority issues such as gender equality in the workplace.


### (12) in the absence of policy action , the gap between users’ information needs and the sustainability information reported by undertakings is expected to grow. this gap has significant negative consequences. investors are unable to take sufficient account of sustainability-related risks and opportunities in their investment decisions. the aggregation of multiple investment decisions that do not take adequate account of sustainability-related risks has the potential to create systemic risks that threaten financial stability. the european central bank and international organisations such as the financial stability board have drawn attention to those systemic risks , in particular in the case of climate. investors are also less able to channel financial resources to undertakings and economic activities that address and do not exacerbate social and environmental problems , which undermines the objectives of the european green deal and the action plan on financing sustainable growth. non-governmental organisations , social partners , communities affected by undertakings’ activities , and other stakeholders are less able to hold undertakings accountable for their impacts on people and the environment. this creates an accountability deficit , and may contribute to lower levels of citizen trust in businesses , which in turn may have negative impacts on the efficient functioning of the social market economy. the lack of generally accepted metrics and methods for measuring , valuing , and managing sustainability-related risks is also an obstacle to the efforts of undertakings to ensure that their business models and activities are sustainable. ### (12) in the absence of policy action , the gap between users’ information needs and the sustainability information reported by undertakings is expected to grow. this gap has significant negative consequences. investors are unable to take sufficient account of sustainability-related risks and opportunities in their investment decisions. the aggregation of multiple investment decisions that do not take adequate account of sustainability-related risks has the potential to create systemic risks that threaten financial stability. the european central bank and international organisations such as the financial stability board have drawn attention to those systemic risks , in particular in the case of climate. investors are also less able to channel financial resources to undertakings and economic activities that address and do not exacerbate social and environmental problems , which undermines the objectives of the european green deal and the action plan on financing sustainable growth. non-governmental organisations , social partners , communities affected by undertakings’ activities , and other stakeholders are less able to hold undertakings accountable for their adverse impacts on people , the environment and on the rule of law and good governance systems , especially in developing countries where the institutions that are in charge of defending and protecting those organisations , social partners , communities and other stakeholders are often lacking in capacities. this creates an accountability deficit , and may contribute to lower levels of citizen trust in businesses , which in turn may have negative impacts on the efficient functioning of the social market economy. the lack of generally accepted metrics and methods for measuring , valuing , and managing sustainability-related risks is also an obstacle to the efforts of undertakings to ensure that their business models and activities are sustainable.


### (15) articles 19a and 29a of directive 2013/34/eu apply to large undertakings that are public-interest entities with an average number of employees in excess of 500 , and to public-interest entities that are parent undertakings of a large group with an average number of employees in excess of 500 on a consolidated basis , respectively. in view of the growth of users’ needs for sustainability information , additional categories of undertakings should be required to report such information. it is therefore appropriate to require all large undertakings and all undertakings listed on regulated markets , except micro undertakings , to report detailed sustainability information. in addition , all undertakings that are parent undertakings of large groups should prepare sustainability reporting at group level. ### (15) articles 19a and 29a of directive 2013/34/eu apply to large undertakings that are public-interest entities with an average number of employees in excess of 500 , and to public-interest entities that are parent undertakings of a large group with an average number of employees in excess of 500 on a consolidated basis , respectively. in view of the growth of users’ needs for sustainability information , additional categories of undertakings should be required to report such information. it is therefore appropriate to require all large undertakings and all undertakings listed on regulated markets , except micro undertakings , all small and medium sized undertakings operating in high risk sectors as well as undertakings established outside the union , but operating in the internal market , to report detailed sustainability information.


### (18) considering the growing relevance of sustainability-related risks and taking into account that small and medium-sized enterprises (smes) listed on regulated markets comprise a significant proportion of all listed undertakings in the union , in order to ensure investor protection it is appropriate to require that also those smes disclose information on sustainability matters. the introduction of this requirement will help to ensure that financial market participants can include smaller listed undertakings in investment portfolios on the basis that they report the sustainability information that financial market participants need. it will therefore help to protect and enhance the access of smaller listed undertakings to financial capital , and avoid discrimination against such undertakings on the part of financial market participants. the introduction of this requirement is also necessary to ensure that financial market participants have the information they need from investee undertakings to be able to comply with their own sustainability disclosure requirements laid down in regulation (eu) 2019/2088. smes listed on regulated markets should , however , be provided with sufficient time to prepare for the application of the requirement to report sustainability information , due to their smaller size and more limited resources , and taking account of the difficult economic circumstances created by the covid-19 pandemic. they should also be given the possibility to report according to standards that are proportionate to the capacities and resources of smes. non-listed smes can also choose to use these proportionate standards on a voluntary basis. the sme standards will set a reference for undertakings that are within the scope of the directive regarding the level of sustainability information that they could reasonably request from sme suppliers and clients in their value chains. ### deleted


### (18) considering the growing relevance of sustainability-related risks and taking into account that small and medium-sized enterprises (smes) listed on regulated markets comprise a significant proportion of all listed undertakings in the union , in order to ensure investor protection it is appropriate to require that also those smes disclose information on sustainability matters. the introduction of this requirement will help to ensure that financial market participants can include smaller listed undertakings in investment portfolios on the basis that they report the sustainability information that financial market participants need. it will therefore help to protect and enhance the access of smaller listed undertakings to financial capital , and avoid discrimination against such undertakings on the part of financial market participants. the introduction of this requirement is also necessary to ensure that financial market participants have the information they need from investee undertakings to be able to comply with their own sustainability disclosure requirements laid down in regulation (eu) 2019/2088. smes listed on regulated markets should , however , be provided with sufficient time to prepare for the application of the requirement to report sustainability information , due to their smaller size and more limited resources , and taking account of the difficult economic circumstances created by the covid-19 pandemic. they should also be given the possibility to report according to standards that are proportionate to the capacities and resources of smes. non-listed smes can also choose to use these proportionate standards on a voluntary basis. the sme standards will set a reference for undertakings that are within the scope of the directive regarding the level of sustainability information that they could reasonably request from sme suppliers and clients in their value chains. ### (18) considering the growing relevance of sustainability-related risks and taking into account that small and medium-sized enterprises (smes) listed on regulated markets comprise a significant proportion of all listed undertakings in the union , in order to ensure investor protection as well as due diligence with regard to the environment , human rights and good governance , it is appropriate to require that also those smes disclose information on sustainability matters. it is also appropriate to require all smes operating in high risk sectors of economic activity to carry out sustainability reporting , defined as those sectors with a significant impact on human rights , the environment and good governance. the introduction of this requirement will help to ensure that financial market participants can include smaller listed undertakings in investment portfolios on the basis that they report the sustainability information that financial market participants need. it will therefore help to protect and enhance the access of smaller listed undertakings to financial capital , and avoid discrimination against such undertakings on the part of financial market participants. the introduction of this requirement is also necessary to ensure that financial market participants have the information they need from investee undertakings to be able to comply with their own sustainability disclosure requirements laid down in regulation (eu) 2019/2088. smes listed on regulated markets should , however , be provided with sufficient time to prepare for the application of the requirement to report sustainability information , due to their smaller size and more limited resources , and taking account of the difficult economic circumstances created by the covid-19 pandemic. they should also be given the possibility to report according to standards that are proportionate to the capacities and resources of smes. smes not carrying out high risk economic activities and non-listed smes can also choose to use these proportionate standards on a voluntary basis. the sme standards will set a reference for undertakings that are within the scope of the directive regarding the level of sustainability information that they could reasonably request from sme suppliers and clients in their value chains


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


### (24) the list of sustainability matters on which undertakings are required to report should be as coherent as possible with the definition of ‘sustainability factors’ laid down in regulation (eu) 2019/2088. that list should also correspond to the needs and expectations of users and undertakings themselves , who often use the terms ‘environmental’ , ‘social’ and ‘governance’ as a means to categorise the three main sustainability matters. the list of sustainability factors laid down in regulation (eu) 2019/2088 does not explicitly include governance matters. the definition of sustainability matters in directive 2013/34/eu should therefore be based on the definition of ‘sustainability factors’ laid down in regulation (eu) 2019/2088 , but with the addition of governance matters. ### (24) the list of sustainability matters on which undertakings are required to report should be built on the definition of ‘sustainability factors’ laid down in regulation (eu) 2019/2088. that list should also correspond to the needs and expectations of users and undertakings themselves , who often use the terms ‘environmental’ , ‘social’ and ‘governance’ as a means to categorise the three main sustainability matters. the list of sustainability factors laid down in regulation (eu) 2019/2088 does not explicitly include governance matters. the definition of sustainability matters in directive 2013/34/eu should therefore be based on the definition of ‘sustainability factors’ laid down in regulation (eu) 2019/2088 , but with the addition of governance matters. that definition should also be fully aligned with the international definition of ‘due diligence’ in the un guiding principles on business and human rights and oecd guidelines for multinational enterprises and corresponding guidance that this directive assumes and should take into account the definitions provided by the parliament in its resolution of 10 march 2021 on corporate due diligence and corporate accountability. the due diligence requirements provided for in this directive should be adapted so that they are in line with future legislation on sustainable corporate governance and due diligence.


### (27) to ensure consistency with international instruments such as the un guiding principles on business and human rights and the oecd due diligence guidance for responsible business conduct , the due diligence disclosure requirements should be specified in greater detail than is the case in article 19a(1) , point (b) , and article 29a(1) , point (b) of directive 2013/34/eu. due diligence is the process that undertakings carry out to identify , prevent , mitigate and remediate the principal actual and potential adverse impacts connected with their activities and identifies how they address those adverse impacts. impacts connected with an undertaking’s activities include impacts directly caused by the undertaking , impacts to which the undertaking contributes , and impacts which are otherwise linked to the undertaking’s value chain. the due diligence process concerns the whole value chain of the undertaking including its own operations , its products and services , its business relationships and its supply chains. in alignment with the un guiding principles on business and human rights , an actual or potential adverse impact is to be considered principal where it measures among the greatest impacts connected with the undertaking’s activities based on: the gravity of the impact on people or the environment; the number of individuals that are or could be affected , or the scale of damage to the environment; and the ease with which the harm could be remediated , restoring the environment or affected people to their prior state. ### (27) to ensure consistency with international instruments such as the un guiding principles on business and human rights and the oecd due diligence guidance for responsible business conduct , the due diligence disclosure requirements should be specified in greater detail than is the case in article 19a(1) , point (b) , and article 29a(1) , point (b) of directive 2013/34/eu. due diligence is the process that undertakings carry out to identify , prevent , mitigate and remediate the principal actual and potential adverse impacts connected with their activities and identifies how they address those adverse impacts. impacts connected with an undertaking’s activities include impacts directly caused by the undertaking , impacts to which the undertaking contributes , and impacts which are otherwise linked to the undertaking’s value chain. the due diligence process concerns the whole value chain of the undertaking including its own operations , its products and services , its business relationships and its supply chains. in alignment with the un guiding principles on business and human rights , an actual or potential adverse impact is to be considered principal where it measures among the greatest impacts connected with the undertaking’s activities based on: the gravity of the impact on people or the environment; the number of individuals that are or could be affected , or the scale of damage to the environment; and the ease with which the harm could be remediated , restoring the environment or affected people to their prior state. guidance to business on respecting human rights should also advise on appropriate methods , including human rights due diligence , and consider effectively issues of gender as well as recognising the specific challenges that may be faced by women with an intersectional perspective1a.


### (27) to ensure consistency with international instruments such as the un guiding principles on business and human rights and the oecd due diligence guidance for responsible business conduct , the due diligence disclosure requirements should be specified in greater detail than is the case in article 19a(1) , point (b) , and article 29a(1) , point (b) of directive 2013/34/eu. due diligence is the process that undertakings carry out to identify , prevent , mitigate and remediate the principal actual and potential adverse impacts connected with their activities and identifies how they address those adverse impacts. impacts connected with an undertaking’s activities include impacts directly caused by the undertaking , impacts to which the undertaking contributes , and impacts which are otherwise linked to the undertaking’s value chain. the due diligence process concerns the whole value chain of the undertaking including its own operations , its products and services , its business relationships and its supply chains. in alignment with the un guiding principles on business and human rights , an actual or potential adverse impact is to be considered principal where it measures among the greatest impacts connected with the undertaking’s activities based on: the gravity of the impact on people or the environment; the number of individuals that are or could be affected , or the scale of damage to the environment; and the ease with which the harm could be remediated , restoring the environment or affected people to their prior state. ### (27) to ensure consistency with international instruments such as the un guiding principles on business and human rights , including the ungps 10+ , and the oecd due diligence guidance for responsible business conduct , as well as other regional instruments such as the inter-american standards for business and human rights , the due diligence disclosure requirements should be specified in greater detail than is the case in article 19a(1) , point (b) , and article 29a(1) , point (b) of directive 2013/34/eu. due diligence is the process that undertakings carry out to identify , prevent , mitigate and remediate the principal actual and potential adverse impacts connected with their activities and identifies how they address those adverse impacts. impacts connected with an undertaking’s activities include impacts directly caused by the undertaking , impacts to which the undertaking contributes , and impacts which are otherwise linked to the undertaking’s supply and value chain. the due diligence process concerns the whole value chain of the undertaking including its own operations , its products and services , its business relationships and its supply chains. in alignment with the un guiding principles on business and human rights , an actual or potential adverse impact is to be considered principal where it measures among the greatest impacts connected with the undertaking’s activities based on: the gravity of the impact on people or the environment; the number of individuals that are or could be affected , or the scale of damage to the environment; and the ease with which the harm could be remediated , restoring the environment or affected people to their prior state. with regard to the impacts on the rule of law and governance systems of the country where the undertaking and its value and supply chains are operating , consistency and coherence should also be pursued with other international and regional instruments , such as the un convention against corruption , section vii of the oecd guidelines for multinational enterprises and the principles of the oecd convention on combating bribery of foreign public officials in international business transactions and related recommendations.


### (33) no existing standard or framework satisfies the union’s needs for detailed sustainability reporting by itself. information required by directive 2013/34/eu needs to cover information relevant from each of the materiality perspectives , needs to cover all sustainability matters and needs to be aligned , where appropriate , with other obligations under union law to disclose sustainability information , including obligations laid down in regulation (eu) 2020/852 and regulation (eu) 2019/2088. in addition , mandatory sustainability reporting standards for union undertakings must be commensurate with the level of ambition of the european green deal and the union’s climate-neutrality objective for 2050. it is therefore necessary to empower the commission to adopt union sustainability reporting standards , enabling their rapid adoption and ensuring that the content of sustainability reporting standards are consistent with the union’s needs. ### (33) no existing standard or framework satisfies the union’s needs for detailed sustainability reporting by itself. information required by directive 2013/34/eu needs to cover information relevant from each of the materiality perspectives , needs to cover all sustainability matters and needs to be aligned , where appropriate , with other obligations under union law to disclose sustainability information , including obligations laid down in regulation (eu) 2020/852 and regulation (eu) 2019/2088. in addition , mandatory sustainability reporting standards for union undertakings must be commensurate with the level of ambition of the european green deal , the union’s climate-neutrality objective for 2050 and the principles of the european pillar of social rights. it is therefore necessary to empower the commission to adopt union sustainability reporting standards , enabling their rapid adoption and ensuring that the content of sustainability reporting standards are consistent with the union’s needs.


### (33) no existing standard or framework satisfies the union’s needs for detailed sustainability reporting by itself. information required by directive 2013/34/eu needs to cover information relevant from each of the materiality perspectives , needs to cover all sustainability matters and needs to be aligned , where appropriate , with other obligations under union law to disclose sustainability information , including obligations laid down in regulation (eu) 2020/852 and regulation (eu) 2019/2088. in addition , mandatory sustainability reporting standards for union undertakings must be commensurate with the level of ambition of the european green deal and the union’s climate-neutrality objective for 2050. it is therefore necessary to empower the commission to adopt union sustainability reporting standards , enabling their rapid adoption and ensuring that the content of sustainability reporting standards are consistent with the union’s needs. ### (33) no existing standard or framework satisfies the union’s needs for detailed sustainability reporting by itself. information required by directive 2013/34/eu needs to cover information relevant from each of the materiality perspectives , needs to cover all sustainability matters and needs to be aligned , where appropriate , with other obligations under union law to disclose sustainability information , including obligations laid down in regulation (eu) 2020/852 and regulation (eu) 2019/2088. in addition , mandatory sustainability reporting standards for union undertakings must be commensurate with the level of ambition of the european green deal 2030 targets and the union’s climate-neutrality objective for 2050. it is therefore necessary to empower the commission to adopt union sustainability reporting standards , enabling their rapid adoption and ensuring that the content of sustainability reporting standards are consistent with the union’s needs.


### (34) the european financial reporting advisory group (efrag) is a non-profit association established under belgian law that serves the public interest by providing advice to the commission on the endorsement of international financial reporting standards. efrag has established a reputation as a european centre of expertise on corporate reporting , and is well placed to foster coordination between european sustainability reporting standards and international initiatives that seek to develop standards that are consistent across the world. in march 2021 , a multi-stakeholder task force set up by efrag published recommendations for the possible development of sustainability reporting standards for the european union. those recommendations contain proposals to develop a coherent and comprehensive set of reporting standards , covering all sustainability matters from a double-materiality perspective. those recommendations also contain a detailed roadmap for developing such standards , and proposals for mutually reinforcing cooperation between global standard-setting initiatives and standard-setting initiatives of the european union. in march 2021 , the efrag president published recommendations for possible governance changes to efrag if it were to be asked to develop technical advice about sustainability reporting standards. these recommendations include offsetting up within efrag a new sustainability reporting pillar while not significantly modifying the existing financial reporting pillar. when adopting sustainability reporting standards , the commission should take account of technical advice that efrag will develop. in order to ensure high-quality standards that contribute to the european public good and meet the needs of undertakings and of users of the information reported , efrag’s technical advice should be developed with proper due process , public oversight and transparency , accompanied by cost benefit analyses , and be developed with the expertise of relevant stakeholders. to ensure that union sustainability reporting standards take account of the views of the member states of the union , before adopting the standards the commission should consult the member state expert group on sustainable finance referred to in article 24 of regulation (eu) 2020/852 on efrag’s technical advice. the european securities and markets authority (esma) plays a role in drafting regulatory technical standards pursuant to regulation (eu) 2019/2088 and there needs to be coherence between those regulatory technical standards and sustainability reporting standards. according to regulation (eu) no 1095/2010 of the european parliament and of the council54 , esma also plays a role in promoting supervisory converge in the enforcement of corporate reporting by issuers whose securities are listed on eu regulated markets and who will be required to use these sustainability reporting standards. therefore , esma should be required to provide an opinion on efrag’s technical advice. this opinion should be provided within two months from the date of receipt of the request from the commission. in addition , the commission should consult the european banking authority , the european insurance and occupational pensions authority , the european environment agency , the european union agency for fundamental rights , the european central bank , the committee of european auditing oversight bodies and the platform on sustainable finance to ensure that the sustainability reporting standards are coherent with relevant union policy and legislation. where any of those bodies decide to submit an opinion , they shall do so within two months from the date of being consulted by the commission. ### (34) the european financial reporting advisory group (efrag) is a non-profit association established under belgian law that serves the public interest by providing advice to the commission on the endorsement of international financial reporting standards. efrag has established a reputation as a european centre of expertise on corporate reporting , and is well placed to foster coordination between european sustainability reporting standards and international initiatives that seek to develop standards that are consistent across the world. in march 2021 , a multi-stakeholder task force set up by efrag published recommendations for the possible development of sustainability reporting standards for the european union. those recommendations contain proposals to develop a coherent and comprehensive set of reporting standards , covering all sustainability matters from a double-materiality perspective. those recommendations also contain a detailed roadmap for developing such standards , and proposals for mutually reinforcing cooperation between global standard-setting initiatives and standard-setting initiatives of the european union. in march 2021 , the efrag president published recommendations for possible governance changes to efrag if it were to be asked to develop technical advice about sustainability reporting standards. these recommendations include offsetting up within efrag a new sustainability reporting pillar while not significantly modifying the existing financial reporting pillar. when adopting sustainability reporting standards , the commission should take account of technical advice that efrag will develop. in order to ensure high-quality standards that contribute to the european public good and meet the needs of undertakings and of users of the information reported , efrag’s technical advice should be developed with proper due process , public oversight and transparency , accompanied by cost benefit analyses , and be developed with the expertise of relevant stakeholders. to ensure that union sustainability reporting standards take account of the views of the member states of the union , before adopting the standards the commission should consult the member state expert group on sustainable finance referred to in article 24 of regulation (eu) 2020/852 on efrag’s technical advice. the european securities and markets authority (esma) plays a role in drafting regulatory technical standards pursuant to regulation (eu) 2019/2088 and there needs to be coherence between those regulatory technical standards and sustainability reporting standards. according to regulation (eu) no 1095/2010 of the european parliament and of the council54 , esma also plays a role in promoting supervisory converge in the enforcement of corporate reporting by issuers whose securities are listed on eu regulated markets and who will be required to use these sustainability reporting standards. therefore , esma should be required to provide an opinion on efrag’s technical advice. this opinion should be provided within two months from the date of receipt of the request from the commission. in addition , the commission should consult the european banking authority , the european insurance and occupational pensions authority , the european environment agency , the european union agency for fundamental rights , the european institute for gender equality , 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 european financial reporting advisory group (efrag) is a non-profit association established under belgian law that serves the public interest by providing advice to the commission on the endorsement of international financial reporting standards. efrag has established a reputation as a european centre of expertise on corporate reporting , and is well placed to foster coordination between european sustainability reporting standards and international initiatives that seek to develop standards that are consistent across the world. in march 2021 , a multi-stakeholder task force set up by efrag published recommendations for the possible development of sustainability reporting standards for the european union. those recommendations contain proposals to develop a coherent and comprehensive set of reporting standards , covering all sustainability matters from a double-materiality perspective. those recommendations also contain a detailed roadmap for developing such standards , and proposals for mutually reinforcing cooperation between global standard-setting initiatives and standard-setting initiatives of the european union. in march 2021 , the efrag president published recommendations for possible governance changes to efrag if it were to be asked to develop technical advice about sustainability reporting standards. these recommendations include offsetting up within efrag a new sustainability reporting pillar while not significantly modifying the existing financial reporting pillar. when adopting sustainability reporting standards , the commission should take account of technical advice that efrag will develop. in order to ensure high-quality standards that contribute to the european public good and meet the needs of undertakings and of users of the information reported , efrag’s technical advice should be developed with proper due process , public oversight and transparency , accompanied by cost benefit analyses , and be based on and developed with a broad consultation involving social partners , consumer organisations , ngos and other relevant stakeholders such as international organisations or governments from countries where the undertaking or its value and supply chain will operate in order to represent the interests of both groups of users referred to in recital 8 of this directive. 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 , including the kpis already featured in the guidelines. they should also take account of other reporting requirements in directive 2013/34/eu not directly related to sustainability , with the aim of providing the users of the reported information with a better understanding of the development , performance , position and impact of the undertaking , by maximising the links between the sustainability information and other information reported in accordance with directive 2013/34/eu.


### (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 contribute to the process of convergence of sustainability reporting standards at global level , in particular by seeking alignment with the standards of the international sustainability standards board.


### (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


### (39) sustainability reporting standards should also take account of internationally recognised principles and frameworks on responsible business conduct , corporate social responsibility , and sustainable development , including the un sustainable development goals , the un guiding principles on business and human rights , the oecd guidelines for multinational enterprises , the oecd due diligence guidance for responsible business conduct and related sectoral guidelines , the un global compact , the tripartite declaration of principles of the international labour organisation concerning multinational enterprises and social policy , the iso 26000 standard on social responsibility , and the un principles for responsible investment. ### (39) sustainability reporting standards should also take account of internationally recognised principles and frameworks on responsible business conduct , corporate social responsibility , and sustainable development , including the un sustainable development goals , the un guiding principles on business and human rights , and its guidance on ensuring that the activities of human rights defenders are not obstructed , the oecd guidelines for multinational enterprises , the oecd due diligence guidance for responsible business conduct and related sectoral guidelines , the un global compact , the tripartite declaration of principles of the international labour organisation concerning multinational enterprises and social policy , the iso 26000 standard on social responsibility , and the un principles for responsible investment. other frameworks such as the un convention against corruption , section vii of the oecd guidelines for multinational enterprises , the principles of the oecd convention on combating bribery of foreign public officials in international business transactions and related recommendations should also be taken into account.


### (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 workers' social and labour rights , equality , diversity and inclusion as well as human rights. such information should cover the impacts of undertakings on its workers , 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 fair working conditions. the european pillar of social rights action plan adopted in march 2021 calls for stronger requirements on undertakings to report on social issues. the reporting standards should also specify the information that undertakings should disclose with regard to the human rights , fundamental freedoms , democratic principles and standards established in the international bill of human rights and other core un human rights conventions , 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 such as the convention on the rights of persons with disabilities , 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 on social factors is complementary to the reporting on environmental factors and pursues the same goal of sustainability. the same level of ambition must be given to the reporting on environmental and social sustainability , including gender equality , of undertakings. sustainability reporting standards should specify the information that undertakings should disclose on social factors , including workers' social and labour rights , gender equality , diversity and inclusion as well as 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 gender equality , equal opportunities for all and fair working conditions. the european pillar of social rights action plan adopted in march 2021 calls for stronger requirements on undertakings to report on social issues. the reporting standards should also specify the information that undertakings should disclose with regard to the human rights , fundamental freedoms , democratic principles and standards established in the international bill of human rights and other core un human rights conventions , the international labour organization’s declaration on fundamental principles and rights at work , the fundamental conventions of the international labour organisation , the charter of fundamental rights of the european union , the european convention of human rights , and the european social charter.


### (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 and child labour in their value and supply chains. reporting standards that address social factors should specify the information that undertakings should disclose with regard to the principles of the european pillar of social rights that are relevant to businesses , including equal opportunities for all and working conditions. the european pillar of social rights action plan adopted in march 2021 calls for stronger requirements on undertakings to report on social issues. the reporting standards should also specify the information that undertakings should disclose with regard to the human rights , fundamental freedoms , democratic principles and standards established in the international bill of human rights and other core un human rights conventions , such as the convention on the rights of the child and the un declaration on the rights of indigenous peoples , the international labour organization’s declaration on fundamental principles and rights at work , the fundamental conventions of the international labour organisation , and the charter of fundamental rights of the european union. .


### (44) users need information about governance factors , including information on the role of an undertaking’s administrative , management and supervisory bodies , including with regard to sustainability matters , the composition of such bodies , and an undertaking’s internal control and risk management systems , including in relation to the reporting process. users also need information about undertakings’ corporate culture and approach to business ethics , including anti-corruption and anti-bribery , and about their political engagements , including lobbying activities. information about the management of the undertaking and the quality of relationships with business partners , including payment practices relating to the date or period for payment , the rate of interest for late payment or the compensation for recovery costs referred to in directive 2011/7/eu of the european parliament and of the council62 on late payment in commercial transactions , helps users to understand an undertaking’s risks as well as its impacts on sustainability matters. every year , thousands of businesses , especially smes , suffer administrative and financial burdens because they are paid late , or not at all. ultimately , late payments lead to insolvency and bankruptcy , with destructive effects on entire value chains. increasing information about payment practices should empower other undertakings to identify prompt and reliable payers , detect unfair payment practices , access information about the businesses they trade with , and negotiate fairer payment terms. ### (44) users need information about governance factors , including information on the role of an undertaking’s administrative , management and supervisory bodies , including with regard to sustainability matters , the composition of such bodies , broken down by gender , 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 , anti-bribery , anti-discrimination and anti-harassment , and about their political engagements , including lobbying activities. information about the management of the undertaking and the quality of relationships with business partners , including payment practices relating to the date or period for payment , the rate of interest for late payment or the compensation for recovery costs referred to in directive 2011/7/eu of the european parliament and of the council62 on late payment in commercial transactions , helps users to understand an undertaking’s risks as well as its impacts on sustainability matters. every year , thousands of businesses , especially smes , suffer administrative and financial burdens because they are paid late , or not at all. ultimately , late payments lead to insolvency and bankruptcy , with destructive effects on entire value chains. increasing information about payment practices should empower other undertakings to identify prompt and reliable payers , detect unfair payment practices , access information about the businesses they trade with , and negotiate fairer payment terms.


### (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 including but not limited to climate change and biodiversity 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 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. standards for undertakings active in high risk sectors that have severe impacts as regards sustainability factors should be developed as a priority. the commission should review the standards every 3 years to take account of relevant developments , including the development of international standards. a one-off review of the standards should take place following the adoption of the due diligence legislation , in order to ensure as close as possible alignment between corporate sustainability reporting and due diligence.


### (48) directive 2013/34/eu does not require that the financial statements or the management report are provided in a digital format , which hinders the findability and usability of the reported information. users of sustainability information increasingly expect such information to be findable and machine-readable in digital formats. digitalisation creates opportunities to exploit information more efficiently and holds the potential for significant cost savings for both users and undertakings. undertakings should therefore be required to prepare their financial statements and their management report in xhtml format in accordance with article 3 of commission delegated regulation (eu) 2019/815 ,63 and to mark-up sustainability information , including the disclosures required by article 8 of regulation (eu) 2020/852 , in accordance with that delegated regulation. a digital taxonomy to the union sustainability reporting standards will be necessary to allow for the information reported to be tagged in accordance with those standards. these requirements should feed into the work on digitalisation announced by the commission in its communication a european strategy for data64 and in the digital finance strategy for the eu.65 these requirements also complement the creation of a european single access point for public corporate information as envisaged in the capital markets union action plan , which also considers the need for structured data. ### (48) directive 2013/34/eu does not require that the financial statements or the management report are provided in a digital format , which hinders the findability and usability of the reported information. users of sustainability information increasingly expect such information to be findable and machine-readable in digital formats and fully accessible , including for persons with disabilities , as per the directive 2019/882 on the accessibility requirements for products and services. digitalisation creates opportunities to exploit information more efficiently and holds the potential for significant cost savings for both users and undertakings. undertakings should therefore be required to prepare their financial statements and their management report in xhtml format in accordance with article 3 of commission delegated regulation (eu) 2019/815 ,63 and to mark-up sustainability information , including the disclosures required by article 8 of regulation (eu) 2020/852 , in accordance with that delegated regulation. a digital taxonomy to the union sustainability reporting standards will be necessary to allow for the information reported to be tagged in accordance with those standards. these requirements should feed into the work on digitalisation announced by the commission in its communication a european strategy for data64 and in the digital finance strategy for the 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.


### (51) article 20 of directive 2013/34/eu requires undertakings with securities listed on regulated markets to include a corporate governance statement in their management report , which has to contain among other information a description of the diversity policy applied by the undertaking in relation to its administrative , management and supervisory bodies. article 20 of directive 2013/34/eu leaves flexibility to undertakings to decide what aspects of diversity they report on. it does not explicitly oblige undertakings to include information on any particular aspect of diversity. in order progress towards a more gender-balanced participation in economic decision-making , it is necessary to ensure that undertakings with securities listed on regulated markets always report on their gender diversity policies and the implementation thereof. however , to avoid unnecessary administrative burden , those undertakings should have the possibility to report some of the information required by article 20 of directive 2013/34/eu alongside other sustainability-related information. ### (51) article 20 of directive 2013/34/eu requires undertakings with securities listed on regulated markets to include a corporate governance statement in their management report , which has to contain among other information a description of the diversity policy applied by the undertaking in relation to its administrative , management and supervisory bodies with regard to aspects such as , for instance , age , gender , or educational and professional backgrounds , the objectives of that diversity policy , how it has been implemented and the results in the reporting period. article 20 of directive 2013/34/eu leaves flexibility to undertakings to decide what aspects of diversity they report on. it does not explicitly oblige undertakings to include information on any particular aspect of diversity. in order progress towards a more gender-balanced participation in economic decision-making , it is necessary to ensure that undertakings with securities listed on regulated markets always report on their gender diversity and gender equality policies and the implementation thereof. however , to avoid unnecessary administrative burden , those undertakings should have the possibility to report some of the information required by article 20 of directive 2013/34/eu alongside other sustainability-related information.


### (71) member states are invited to assess the impact of their transposition act on smes in order to ensure that they are not disproportionately affected , giving specific attention to micro-enterprises and to the administrative burden , and to publish the results of such assessments. member states should consider introducing measures to support smes in applying the voluntary simplified reporting standards. ### (71) member states are invited to assess the impact of their transposition act on smes in order to ensure that they are not disproportionately affected , giving specific attention to micro-enterprises and to the administrative burden , and to publish the results of such assessments. member states should introduce measures to support undertakings in applying the 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 , provided that they meet the criteria laid down in article 19a(1) , regardless of their legal form:


### 3. the coordination measures prescribed by articles 19a , 19d , 29a , 30 and 33 , article 34(1) , second subparagraph , point (aa) , paragraphs 2 and 3 of article 34 , and article 51 of this directive shall also apply to the laws , regulations and administrative provisions of the member states relating to the following undertakings regardless of their legal form: ### 3. the coordination measures prescribed by articles 19a , 19d , 29a , 30 and 33 , article 34(1) , second subparagraph , point (aa) , paragraphs 2 and 3 of article 34 , and article 51 of this directive shall also apply to the laws , regulations and administrative provisions of the member states relating to the following undertakings , provided that they meet the criteria laid down in article 19a(1) of this directive , regardless of their legal form:


### (17) ‘sustainability matters’ means sustainability factors as defined in article 2 , point (24) of regulation (eu) 2019/2088 of the european parliament and of the council\*4 , and governance factors; ### (17) ‘sustainability matters’ means sustainability factors as defined in article 2 , point (24) of regulation (eu) 2019/2088 of the european parliament and of the council\*4 , namely respect for environmental , social and employee issues , human rights and governance factors;


### 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 undertakings referred to in article 3(7) which are governed by the law of a third country and are not established in the territory of the union when they operate in the internal market selling goods or providing services under the arrangements set out in article 19b(1) , and , as of 1 january 2026 , small and medium-sized undertakings which are undertakings referred to in article 2 , point (1) , point (a) , and medium-sized undertakings referred to in article 3(3) which operate in one or more of the high-risk economic activities referred to in article 19a(8) , shall include in the management report information necessary to understand the undertaking’s impacts on sustainability matters , and information necessary to understand how sustainability matters affect the undertaking’s development , performance and position.


### 1. large undertakings and , as of 1 january 2026 , small and medium-sized undertakings which are undertakings referred to in article 2 , point (1) , point (a) , shall include in the management report information necessary to understand the undertaking’s impacts on sustainability matters , and information necessary to understand how sustainability matters affect the undertaking’s development , performance and position. ### 1. large undertakings and , as of 1 january 2026 , small and medium-sized undertakings which are undertakings referred to in article 2 , point (1) , point (a) , and medium-sized undertakings which are operating certain economic activities in high-impact sectors shall include in the management report information necessary to understand the undertaking’s impacts on sustainability matters , and information necessary to understand how sustainability matters affect the undertaking’s development , performance and position.


### 1. large undertakings and , as of 1 january 2026 , small and medium-sized undertakings which are undertakings referred to in article 2 , point (1) , point (a) , shall include in the management report information necessary to understand the undertaking’s impacts on sustainability matters , and information necessary to understand how sustainability matters affect the undertaking’s development , performance and position. ### 1. large undertakings and , as of 1 january 2024 , small and medium-sized undertakings which are undertakings referred to in article 2 , point (1) , point (a) , and as of 1 january 2025 , small and medium-sized undertakings which are high-impact undertakings , shall include in the management report information necessary to understand the undertaking’s impacts on sustainability matters , and information necessary to understand how sustainability matters affect the undertaking’s development , performance and position.


### the resilience of the undertaking's business model and strategy to risks related to sustainability matters; ### the resilience of the undertaking's business model and strategy to risks related to sustainability matters including whether the resilience of the business model(s) has been verified by using a range of climate scenarios;


### (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 plan with implementing actions and related financial and investment plans , to ensure that its business model and strategy are aligned with the intermediate objectives for 2030 and 2040 laid out in the european climate law - regulation (eu) 2021/1119 and with the objective to achieve carbon neutrality by 2050 at the latest and 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 taking into account the entire value chain , including suppliers and sub-contractors; and where relevant the degree of exposure of the undertaking to sectors listed in divisions 05 , 06 ,09 , 19 , 35 , 46.71 , 73.1 of annex i to regulation (ec) no 1893/2006 insofar as they relate to coal , oil , gas-related activities.


### (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 pathway comprising of short-term and medium-term absolute emission reduction targets for 2025 and 2030 , reviewed every five years up to 2050 , to achieve climate 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;


### 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 for the main impacts of its business model on sustainability matters , whether such targets are science-based 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 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 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.


### 5. by way of derogation from article 19a , paragraphs 1 to 4 , small and medium sized undertakings referred to in article 2 , point (1) , point (a) , may report in accordance with the sustainability reporting standards for small and medium sized undertakings referred to in article 19c. ### 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 and undertakings referred to in article 3(7) which are governed by the law of a third country and are not established in the territory of the union when they operate in the internal market selling goods or providing services under the arrangements set out in article 19b(1) , and , as of 1 january 2026 , small and medium-sized undertakings which are undertakings referred to in article 2 , point (1) , point (a) , and small and medium-sized undertakings referred to in article 3(3) which operate in one or more of the high risk economic activities referred to in article 19a (8) , 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.


### a brief description of the undertaking's business model and strategy , including: ### a brief description of the undertaking's business model and strategy and its implementation , including:


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


### (iv) how the undertaking’s business model and strategy take account of the interests of the undertaking’s stakeholders and of the impacts of the undertaking on sustainability matters; ### (iv) how the undertaking’s business model and strategy take account of the interests and needs of the undertaking’s stakeholders and risk management and of the principal actual or potential adverse impacts of the undertaking on sustainability matters along the entire supply and value chain;


### how the undertaking’s strategy has been implemented with regard to sustainability matters; ### how the undertaking’s sustainability strategy has been implemented and the results achieved with regard to sustainability matters;


### 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 targets related to sustainability matters set by the undertaking , the actions to be taken to successfully achieve those targets , the progress the undertaking has made towards achieving those targets and where relevant , an analysis of the lack of progress in relation to those targets and corrective measures;