Starting next year, the European Union will require companies to share details on their Environmental, Social, and Governance (ESG) practices, with a particular focus on the impact on human health and the environment. 

The Corporate Sustainability Reporting Directive (CSRD) — as it is called — will set a much higher standard for sustainability reporting. It will cover a total of 12 ESG topics, including not only the climate aspect but also, for example, pollution, water, waste, and biodiversity.

“The new reporting requirements provide some much-needed transparency”

Sonja Haider

The new requirements are something investors have been wanting for years as they need more transparency from companies to make sure their investments are truly sustainable and to minimise financial risks.

This broad approach means that chemicals will play a much more important role in sustainability reporting than they ever have before. Companies will be obliged to report on everything related to harmful chemicals, including use, production, sales, distribution, emissions, and so on. 

“The lack of transparency has been a significant frustration for investors for years. Without access to comprehensive data on companies’ chemical production and use, they’ve been unable to fully assess the risks. The new reporting requirements are a welcome change, providing some much-needed transparency”, says Sonja Haider, Senior Business and Investors Advisor at ChemSec.

But, the new directive has one major shortcoming. It totally misses the mark on PFAS.

Tens of thousands of PFAS are left out of the reporting requirements

They say the devil is in the details and in this case that’s true.

The fine print reveals that for a substance to be included in the new reporting requirements, it needs to fall under a harmonised classification in the CLP (Classification, Labelling and Packaging) regulation.

“The EU Commission should investigate the possibility of including this group”

Sonja Haider

Since the vast majority of PFAS chemicals do not have harmonised classification, companies would not be required to report on them. Essentially, out of the tens of thousands of PFAS substances on the market, only a handful would be included in the reporting.

“This is a real shame on an otherwise really good and interesting policy initiative. Given the severity and urgency of the PFAS crisis and the need to minimise the use of these chemicals, the EU Commission should investigate the possibility of including this group of substances in the directive”, comments Sonja Haider.