By Simon Jessop and Kate Abnett
LONDON/BRUSSELS (Reuters) - The European Union on Wednesday said it planned to increase the number of companies that must publish environmental and social data after criticism that the current rules were ineffective.
The EU move follows criticism from investors that the existing regime did not cover enough companies and was not sufficiently clear about what information to disclose and in what form, making it harder to compare and assess firms.
The EU said over three years companies covered by the rules - renamed as the Corporate Sustainability Reporting Directive - would more than triple to around 49,000.
The new rules, which require companies to disclose a broader range of data such as their carbon emissions, would also cover many large privately held companies and, eventually, listed small- and medium-sized enterprises.
Companies would also be required to obtain limited assurance for their sustainability disclosures from an auditor.
"The whole idea behind this is to have clarity of information for investors, and indeed as a management tool for the companies themselves to move towards sustainability," EU financial services chief Mairead McGuinness said.
The EU also said it would draw up more specific standards in a sign that there is growing pressure to define more clearly what information companies should share with investors and broader society about their environmental and social impact.
Initial standards to cover all the reporting areas would aim to be in place by Oct. 31, 2022, with further, more specific sector disclosure guidelines to follow by Oct. 31, 2023.
The EU plan follows a move by international accounting body the IFRS Foundation to look into creating a global standard setting structure, initially for climate-related disclosures.
The new rules are part of a package of sustainable finance-related regulations the bloc has planned to incentivise companies and investors to help to eliminate the EU's net greenhouse gas emissions by mid-century.