The Corporate Sustainability Reporting Directive (CSRD) is a European directive that tightens and expands the rules for sustainability reporting by companies. This directive, which entered into force on January 5, 2023, replaces the previous Non-Financial Reporting Directive (NFRD) and introduces more extensive reporting requirements for companies.
Key features of the CSRD:
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Expanded scope: The CSRD extends reporting obligations to a wider range of large companies and listed small and medium-sized enterprises (SMEs). Certain non-EU companies generating more than €150 million in revenues in the EU market are also covered by this directive.
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Double materiality: Companies must report on how sustainability issues influence their performance and how their activities impact people and the environment.
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Standardised reporting: The Directive introduces the European Sustainability Reporting Standards (ESRS), which establish specific reporting requirements and criteria to ensure the consistency and comparability of sustainability information.
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Assurance obligation: There is an obligation for external assurance (assessment) of the reported sustainability information to increase reliability.
Implementation timeline:
The CSRD will be introduced in phases:
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From January 1, 2024: Large companies that were already subject to the NFRD must start reporting for the 2024 financial year.
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From January 1, 2025: Other large companies not currently covered by the NFRD must begin reporting for the 2025 financial year.
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From January 1, 2026: Listed SMEs, small and non-complex credit institutions, and captive insurance companies must begin reporting for the 2026 financial year.
The CSRD aims to improve the transparency and comparability of sustainability information, enabling investors, consumers, and other stakeholders to make more informed decisions. It emphasizes the importance of sustainability in business operations and encourages companies to take responsibility for their impact on people and the environment.