Luxembourg’s Parliament recently amended the bill of law implementing the Corporate Sustainability Reporting Directive (CSRD) into national law. The amendments address specific concerns raised by the Conseil d’Etat, stakeholders and industry bodies, providing clarity on sustainability consolidation and reporting formalities.
On 28 October, the Finance Committee and the Justice Committee of the Luxembourg Parliament submitted amendments to bill of law 8370 (Bill of Law) implementing Directive (EU) 2022/2464 as regards corporate sustainability reporting (CSRD) to the Conseil d’Etat.
This comes after the Conseil d’Etat issued its opinion in July (Avis du Conseil d’État (12.7.2024)), in which it raised certain concerns regarding the first draft of the Bill of Law, as is customary under the ordinary legislative process in Luxembourg. Other relevant bodies have also expressed their opinions on the Bill of Law, including the Chambre des Métiers (8370/03 Avis de la Chambre des Métiers (25.10.2024)) and the Chambre de Commerce (8370/05 Avis de la Chambre de Commerce (22.10.2024)). The relevant documents are available on the Parliament’s dedicated web page
Key amendments
The parliamentary committees’ amendments, which take into account the opinions of the Conseil d’Etat and the other stakeholders, have clarified a few noteworthy items:
1. Scope of consolidation of sustainability information
As requested by the Conseil d’Etat and several industry stakeholders, it is now expresslyclarified that the exemptions applicable to the scope of the consolidation of financial information are also applicable to the scope of the consolidation of sustainability information. More precisely, the exemptions permitted under Luxembourg law will apply in the same way for the consolidation of sustainability information, except for the so-called parent-subsidiary exemption, which is regulated differently in cases of consolidation at non-EU level.
This clarification is of particular relevance to the asset management industry, which largely relies on the “private equity” exemption in its consolidation approach.
It is also in line with answer 10 of the EU Commission’s FAQs on the implementation of the EU corporate sustainability rules (published on 7 August 2024).
2. Reporting formalities where a consolidated management report is not prepared
In cases where the parent company of a group does not prepare a consolidated management report, the consolidated sustainability information must be published in a separate report submitted to the Luxembourg Trade and Companies Register.
This clarification is specifically relevant to companies with a different consolidation scope for financial and sustainability information, namely in cases when the parent-subsidiary exemption applies.
This amendment is also in line with answer 25 in the EU Commission FAQs referred to above.
3. Adjustment of size thresholds for in-scope undertakings (reconciliation of legislative texts)
It has now been clarified that the increases in size thresholds introduced by Commission Delegated Directive (EU) 2023/2775 will be implemented into Luxembourg law by the associated draft Grand Ducal regulation rather than the Bill of Law, thus avoiding a conflict in the implementation procedures and an overlapping of legislative initiatives.
Under this regulation, the size thresholds have been increased to reflect the effect of inflation.
The parliamentary committees also endorsed and incorporated most of the other observations about the technicalities of the legislation that the Conseil d’Etat made in its July opinion.
Assurance by IASPs and other measures not included in the revised Bill of Law
Among the other measures that are still not included in the Bill of Law, and are therefore unlikely to be in the final version, is the exercise of the option permitting the assurance of sustainability reports by Independent Assurance Service Providers (IASPs). Many stakeholders have expressed concerns about Luxembourg’s decision to limit assurance to independent auditors (réviseurs d’entreprises agréés), contrary to the approach adopted by other Member States. Both the Chambre des Métiers and the Chambre de Commerce have expressed their support for allowing assurance by IASPs, raising specific concerns about the competitive position of Luxembourg SMEs that may be active in providing these services and the associated higher costs for Luxembourg reporting undertakings.
The Chambre des Métiers also emphasised the need for financial support for Luxembourg SMEs that will be indirectly impacted by the CSRD due to the “trickle-down” effect of sustainability reporting. Although non-listed SMEs are not directly within the CSRD’s scope, those within the value chain of in-scope entities will need to assess and disclose their ESG-related impacts, risks, and opportunities to their upstream and downstream partners. Furthermore, it is anticipated that in the near future, a voluntary CSRD report based on the VSME standards developed by EFRAG could become an informal requirement from business partners and contracting authorities, particularly in public procurement. This underscores the need for financial support.
Next steps in the implementation process
Parliament has incorporated the Conseil d’Etat’s comments into the revised Bill of Law, which now needs to be reviewed again by the Conseil d’Etat. If the latter has no further comments, we expect the Bill of Law to be adopted by the end of 2024, which appears to be the goal of the parliamentary committees. However, if the Conseil d’Etat makes further comments, the Bill of Law is more likely to be adopted in early 2025.
