The rules will apply to businesses based outside the EU including:
• Companies that have listed securities, such as stocks or bonds, on a regulated market in the European Union
• Companies that have annual EU revenue of more than €150 million, or about $163 million, and an EU branch with net revenue of more than €40 million
• Companies with an EU subsidiary that is a large company, defined as meeting at least two of these three criteria: more than 250 EU-based employees, a balance sheet above €20 million or local revenue of more than €40 million
The draft includes 82 annual disclosure requirements, each of which can involve separate metrics and explanations. The rules include disclosures on greenhouse-gas emissions and plans aligned with the 2015 Paris agreement to reduce those emissions, as well as things like pollution entering waterways and gender pay differences. Depending on industry-specific standards that are still being developed, companies will have to report different types of data. Companies will also need to have a third party audit their data.
The European requirements will likely be more demanding than frameworks being developed by the U.S. Securities and Exchange Commission and the International Sustainability Standards Board. Unlike those two sets of standards, the latest EU draft requires companies to include information important from a sustainability perspective, even if it is financially immaterial.