With around 50,000 companies in Europe required to align with the new Corporate Sustainability Reporting Directive (CSRD), you'd better be ready to meet the new reporting requirements!
Even though we are approaching the initial 2024 deadline for the adoption of the CSRD, there is still a lot of buzz and uncertainty around this new EU regulation.
With this piece, we will go through the latest 2022 updates on the CSRD and highlight the implications for your business.
But before getting started, we recommend you to read our article on EU Sustainability Reporting to get a thorough understanding of the evolution of the European Reporting Directives over time.
Adopted on the 21st of April 2021, the Corporate Sustainability Reporting Directive (CSRD) will substitute the Non-Financial Reporting Directive (NFRD).
The new Directive will widen the pool of companies asked to comply and reinforce disclosure's quality, consistency and transparency requirements.
The main goal of the CSRD consists in increasing the verifiability, accessibility and coherence of non-financial data. Moreover, the Directive aims to enhance alignment between non-financial and financial standards.
The reporting requirements under the CSRD are still in development. Nonetheless, companies will have to disclose:
Differently from the NFRD, which mainly focuses on past performance, the CSRD gives a complete representation of organisations' sustainability progress.
Finally, the new Directive makes it mandatory to have the report in electronic (XHTML) format and undergo an auditing process.
The CSRD extends the range of companies obliged to disclose their non-financial information.
Under the previous NFRD, companies required to report were public-interest organisations with more than 500 employees.
With the CSRD coming into force, sustainability reporting will become mandatory for all listed companies, as well as for those that meet at least 2 of the following criteria:
The Council of the European Union has decided to postpone the enactment of the CSRD. Moreover, the deadlines to comply with the Directive will vary based on the nature of the reporting entity.
This segmentation considers the resources organisations have to complete the transition. Therefore, three different groups have been identified:
As of now, we are waiting for the European Parliament and the Member States in the Council to finalise the legislative text based on the European Commission's proposal.
Simultaneously, EFRAG (European Financial Reporting Advisory Group) is responsible for developing the draft for the new reporting standards.
To make sure you're going to be compliance-ready, read the following key steps you should go through in the upcoming months:
While we wait for a definitive version of the new reporting directive, make sure to have your reporting procedures up to and running to keep track of your sustainability achievements and ambitions!
In the meantime, have a look at our previous article on EU Sustainability Reporting and download our factsheet Everything You Need to Know About the New CSRD. You will be fully ready!