German Bundestag discusses implementing CSRD into national law

Sustainability Reporting: Plans of the German Government

On September 26, 2024, the German Bundestag conducted its first reading of the government’s draft CSRD Implementation Act. Following approval, the draft was submitted to the Committee on Legal Affairs for further examination. The German government seeks to mandate sustainability reporting for large corporations and small to medium-sized, publicly listed companies, as specified by accounting law.

EU Commission Enforces Timely Implementation of EU Directives

While the Bundestag debated integrating the CSRD into national law, the EU Commission initiated infringement proceedings against 17 member states, including Germany, for not fully implementing the CSRD by the July 6, 2024, deadline. These countries now have two months to respond to formal notices and complete implementation. If they fail, the case could proceed to the European Court of Justice, potentially resulting in penalties.

Federal Council’s Position

On September 27, 2024, the Federal Council also reviewed the bill. While supporting the adoption of EU Directive 2022/2464 (CSRD), the Council raised concerns about the significant additional burden on businesses, especially small and medium-sized enterprises (SMEs). They called for simplified reporting requirements and the elimination of unnecessary duplications from overlapping regulations. The Council also proposed a "Value-Chain Reporting Cap" to protect SMEs and recommended expanding the pool of accredited assurance providers to avoid capacity issues.

Key Provisions of the Draft Bill

The EU directive mandates that member states establish sustainability reporting for certain companies by July 6, 2024, with these reports requiring mandatory assurance. The law is designed to support Goal 12 of the UN Agenda 2030, promoting sustainable consumption and production patterns.

Implementation also involves a review and adjustment of the existing legal framework. Updates to the Commercial Code, the Securities Trading Act, and the Auditor Regulation will be necessary to meet the new requirements.

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