Malaysia should engage with the European Union (EU) on the EU’s new Corporate Sustainability Reporting Directive (CSRD) and any future rules that will have a significant impact on a broad range of companies operating in the world’s largest trading bloc, the Malaysian Palm Oil Council (MPOC) said.
Companies should prepare to ensure compliance with the new reporting obligations, it added.
“Following the entry into force of the new CSRD, the new rules will only start applying in stages: In 2024 for companies already subject to the current reporting obligations, in 2025 for large companies currently not subject to the reporting obligations, and, in 2026, for small and medium enterprises (SMEs),” the council said in a statement.
The MPOC said companies covered by the CSRD would have to comply with the forthcoming European Sustainability Reporting Standards, which are still being developed by the European Financial Reporting Advisory Group.
It would require “covered” companies to report on corporate sustainability in a dedicated section of the company’s management report, which must be made publicly available.
The European Parliament and the Council of the EU this month are adopting this month the EU’s new CSRD, which would significantly enhance and expand sustainability reporting obligations for a broader range of companies.
The covered companies are required to include in their management reports a non-financial statement containing information on the policies they implement in relation to “environmental, social and employee matters, respect for human rights, anti – corruption, and bribery matters.”
The new CSRD will apply to all large EU companies, including EU subsidiaries of non – EU parent companies, and SMEs listed on regulated markets.
Importantly, the CSRD will also have an impact on non – EU undertakings with annual EU – generated revenues in excess of €150 million (RM705.26 million) and that have either a large or listed EU subsidiary or a significant EU branch generating a net turnover of more than €40 million in the EU.
Last year the European Commission published its proposal for the CSRD with the objective of revising and strengthening the rules of the EU’s current Non – Financial Reporting Directive (NFRD).
Currently, the NFRD provides rules on the disclosure of non-financial and diversity information that must be complied with by large companies listed in the NFRD, banks, and insurance companies with more than 500 employees.