CSRD: Mandatory sustainability reporting for all large companies in the EU.

On 5 January 2023, the Corporate Sustainability Reporting Directive (CSRD) came into force. Read here what exactly it entails and what it means for your company.
CSRD: Mandatory sustainability reporting for all large companies in the EU.

CSRD: Transparency on companies' environmental impact

The Corporate Sustainability Reporting Directive (CSRD) is a directive on corporate sustainability reporting issued by the European Union. The CSRD aims to create more transparency about the impact companies have on the environment and stems from the European 'Green Deal' and its 'Financing Sustainable Growth' action plan. The European Green Deal is a package of policy initiatives to help the EU make the green transition, with the ultimate goal of climate neutrality by 2050. The shared goal of the plans is to transform the EU into a modern, competitive economy that works for people and creates stability, jobs, growth and investment.

Sustainability reporting for large and listed companies

The CSRD requires all large and listed companies in the EU to report on the impact of their activities on people and the environment and the risks and opportunities arising from social and environmental issues. This reporting includes aspects such as:

  • Human rights
  • Social rights
  • Environmental rights
  • Climate change

CSRD expands on NFI guidelines: Covers more companies and requires more detailed reporting

The new CSRD directive expands on the existing NFI directive introduced in 2014 and provides more detailed reporting requirements. The current NFI directive only applies to listed companies. The CSRD will cover all large companies that meet two of the following criteria:

  • The company's turnover exceeds €50 million per year
  • A balance sheet total of more than €250 million
  • More than 250 employees (on average per year)

This guideline helps investors, civil society organisations, consumers and other stakeholders evaluate companies' sustainability performance under the European Green Deal. It modernises and strengthens the rules regarding the social and environmental information companies must report.

Better insights, more sustainable choices and lower costs

The new rules will ensure that investors and other stakeholders have access to the information they need to assess companies' impact on people and the environment, and for investors to assess financial risks and opportunities arising from climate change and other sustainability issues. Finally, reporting costs for companies will be reduced in the medium to long term by harmonising the information that needs to be provided.

Phased introduction of mandatory reporting

The directive will be phased in for different categories of companies. The obligation to report according to the new standards will apply to:

  • Companies already covered by the NFRD from financial year 2024 onwards
  • Large companies (see criteria above) from financial year 2025
  • Listed SMEs from financial year 2026 onwards
  • Non-EU companies from financial year 2028

Reporting according to the European Sustainability Reporting Standards (ESRS)

Companies subject to the CSRD must report according to the European Sustainability Reporting Standards (ESRS). These standards cover the full range of environmental, social and governance issues, including climate change, biodiversity, and human rights. They provide investors with information to understand the sustainability impact of the companies they invest in. These standards apply to companies covered by the CSRD, regardless of which sector they operate in.

Need help with the CSRD (Corporate Sustainability Reporting Directive)?

Should you have further questions about the CSDR and want to make sure you are compliant with the new rules, our Consultancy & Advisory services can help. Contact our customs experts by filling out the form below. They will be happy to help you and will contact you within one business day.