EU Corporate Sustainability Reporting Directive (CSRD)
Governmental Agency: European Commission
Jurisdiction: European Union
Ref no: DIRECTIVE (EU) 2022/2464
Status: ADOPTED January 2023
On January 5th 2023, the Corporate Sustainability Reporting Directive (CSRD) entered into force. It revises and strengthens the existing rules introduced by the Non-Financial Reporting Directive (NFRD), creating European Sustainability Reporting Standards (ESRS) and aiming to bring sustainability reporting on par with financial reporting over time.
The CSRD also aims to simplify the reporting process for companies. Many companies are currently under pressure to use an array of different sustainability reporting standards and frameworks. The CSRD establishes harmonized reporting criteria for businesses, which achieves plausibility and comparability of data and facts and meets the information needs of investors and stakeholders.
Companies will have to report on how sustainability issues affect their business and the impact of their activities on people and the environment.
EU member states have 18 months to transpose the CSRD into national law.
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The CSRD is expected to impact approximately 50,000 companies in the EU, even if the parent company is not EU based.
The rules will start applying between 2024 and 2028, as follows:
- from 1 January 2024 for large public-interest companies (with over 500 employees) already subject to the non-financial reporting directive, with reports due in 2025
- from 1 January 2025 for large companies (with more than 250 employees and/or €40 million in turnover and/or €20 million in total assets) not presently subject to the non-financial reporting directive, with reports due in 2026
- from 1 January 2026 for listed SMEs and other undertakings, with reports due in 2027. SMEs can opt-out until 2028.