Corporate Sustainability Reporting Directive (EU)

The EU Corporate Sustainability Reporting Directive (CSRD) will amend the 2014 EU non-financial reporting directive. It will introduce more detailed reporting requirements and ensure that large companies are required to report on sustainability issues such as environmental rights, social rights, human rights and governance factors.

The CSRD will also introduce a certification requirement for sustainability reporting as well as improved accessibility of information, by requiring its publication in a dedicated section of company management reports.

The European Financial Reporting Advisory Group (EFRAG) will be responsible for establishing European standards, following technical advice from a number of European agencies.

EU rules on non-financial information apply to all large companies and all companies listed on regulated markets. These companies are also responsible for assessing the information at the level of their subsidiaries.

The rules also apply to listed SMEs, taking into account their specific characteristics. An opt-out will be possible for SMEs during a transitional period, meaning that they will be exempted from the application of the CSRD until 2028.

For non-European companies, the requirement to provide a sustainability report applies to all companies generating a net turnover of €150 million in the EU and which have at least one subsidiary or branch in the EU. These companies must provide a report on their ESG impacts, namely on environmental, social and governance impacts, as defined in this directive.

Application will take place in three stages:

• 1 January 2024 for companies already subject to the non-financial reporting directive

• 1 January 2025 for large companies that are not presently subject to the non-financial reporting directive

• 1 January 2026 for listed SMEs, small and non-complex credit institutions and captive insurance undertakings.

Further information is here, including the link to the CSRD itself.

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