In Europe, I’ve been tracking the passage of a set of reporting standards that a significant law, the Corporate Sustainability Reporting Directive (CSRD) uses to layout precisely what a information large companies have to disclose. Even after an effort to gut reporting laws, it looks like companies STILL have to report their revenue from the oil and gas sector – something important in a time of AI being used for accellerated oil and gas extraction. Here’s what I’ve found.
Context – prior reading to understand why this is a big deal
I wrote at the beginning of the year about this already, with an explicit reference to Microsoft and their work to accellerate oil and gas extraction, and also to the laws that are currently active.
December is also the month of Microsoft’s annual general meeting – according to the CSRD law, 2025 is the year Microsoft has to report specific information as a condition of operating in Europe, and the current, active version of standards are pretty clear.
So we would expect to see it disclosed.
The efforts to take a chainsaw to transparency laws in Europe
At the same time, there has been a massive effort to push back the scope of the CSRD, and in general, make it less useful for understanding the risks associated with current corporate behaviour, often referred to as a ‘simplification’ agenda, and with laws changed under a special Omibus mechanism intended to be able to change lots of laws at the same time.
One consequence has been to pare back the existing reporting standards that layout what companies need to disclose, and this year, EFRAG, the steward of these standards agreed to revise the existing European Sustainability Reporting Standard (the ESRS).
A smaller chainsaw than expected
However, this week EFRAG shared the results of its work to revise down the standards after a consultation period. Lots of datapoints have been removed but from what I can see companies still need to report their revenue from the oil and gas sector.
Below is the screenshot of the draft standards after the changes, for Disclosure Requirement E1-11 – Anticipated financial effects from material physical and transition risks.
It’s a long disclosure requirement, but here’s point 39 – it looks like they still need to report it:
Here’s the link directly to the draft standards, which now need to be approved by the commission, who initially requested the changes.
What does this mean?
For convenience I’ll post a section from my earlier post:
As I understand it, Microsoft would be covered by the scope of the CSRD, and the first year of publishing for companies of its size would be this year, 2025, for activity in 2024.
The CSRD disclosures should be disclosed along with the annual management reports, and if Microsoft has its annual shareholder meeting in December, that would be when I expect it to be published.
Over the year, I was a bit worried about this requirement getting killed off, but it seems to have survived the chainsaw-fest.
I am not a corporate lawyer, but the way I see it, if the existing standards say that a company like Microsoft has to disclose this information, and the likely new standards also seem to say the same, then when a former Microsoft employee, Holly Alpine, is bringing a resolution to the annual meeting, it puts it her in a stronger position to argue for disclosure.
I can’t link directly to her video, but here’s the link to her post on LinkedIn, and a screenshot below:
If you are a corporate lawyer, or have a professional interest in seeing this question answered, do please get in touch.