The EU Payment Observatory has just published its latest Thematic Report on Payment Practices reporting under Corporate Sustainability Reporting Directive (CSRD).
This thematic report explores the new payment practices disclosures introduced by CSRD. Through a pilot project, it provides an early assessment of how these requirements are being implemented in the first wave of reports. This analysis is complemented by a review of existing literature and comparable disclosure frameworks, with the aim of evaluating the potential impact of these measures on payment performance in the EU and whether they may contribute to reducing late payments.
These positive outcomes on payment culture in the EU could manifest themselves in several ways. The reporting requirements are likely to increase the availability of data on payment performance, a topic severely constrained by lack of information. In addition, they might provide incentives to reporting companies to change their behaviour and modify their internal practices by means of reputational pressures, greater awareness and more accountability. Equally, they could potentially empower suppliers, particularly small and medium-sized enterprises (SMEs), providing them with tools to better select their clients and negotiate better payment conditions, resulting in fairer business relationships. Nonetheless, none of these outcomes are guaranteed and they are dependent both on the design of CSRD and on its correct implementation. Several issues could undermine its impact, including reporting heterogeneity, limited data comprehensiveness, lack of clarity in the definition of payment practices concepts, a narrow scope of reporting entities and difficulties in accessing and displaying the information. Furthermore, legislative uncertainty may also dilute the effects.
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