The Corporate Sustainability Reporting Directive (CSRD) is new EU legislation coming into force over the next couple of years.
While the implementation schedule doesn't really kick in until 2024, what are the key considerations about CSRD that are vital for companies to understand before it comes into fruition?
What is CSRD?
CSRD requires all large companies to publish regular reports on their environmental and social impact activities. It helps investors, consumers, policymakers, and other stakeholders evaluate large companies’ non-financial performance.
CSRD will see an increase in the number of corporations mandated to report their sustainability metrics. Currently, through the existing Non-Financial Reporting Directive (NFRD), this is around 11700 companies. It's estimated that CSRD will see this figure rise to nearly 50000 companies. It is also set to enlarge the aggregate information that corporations will report upon; in turn giving a greater perspective on sustainability impacts; introducing new auditing requirements for metrics to be assured, implementing a new digital reporting composition, and providing a connection to other standards.
CSRD will bring sizeable adjustments to how corporations will have to report and what undertakings they will be responsible for putting in place as required. It will also impact on non-EU companies, more detail on this is below in "When should I start worrying about CSRD?"
Why it is important?
According to the European Commission, “reports often omit information that investors and other stakeholders think is important”. Feedback to the EC would suggest that reported that information can be difficult to benchmark from company to company, and users are often unsure whether they can trust it.
With its new requirements, the EU is tackling the problem of quality reporting by establishing a common reporting framework.
When should I start worrying about CSRD?
While CSRD is being rolled out in a phased approach, we would highly advise companies to start planning and preparing in 2023. Also take opportunities to feed into the development of CSRD when this is requested.
Currently the schedule for CSRD implementation is:
FY 2024 – for companies currently within the scope of NFRD (report in 2025)
FY 2025 – for companies that are not presently subject to the NFRD, but meet at least 2 out of three criteria listed below (report in 2026)
FY 2026 – for listed small and medium-sized enterprises (SMEs) (report in 2027). - Separate standards will be published for this group, this will be expected in October 2023
FY 2028 - for third-country undertakings with net turnover above €150 million in the EU if they have at least one subsidiary or branch in the EU exceeding certain thresholds (report in 2029)
Who needs to report on a mandatory basis?
CSRD reporting will be mandatory for all EU companies that meet at least 2 out of 3 criteria :
More than 250 employees
Turnover that exceeds €40 million
Revenue that exceeds a total of €20 million
Who can help?
G17Eco can help guide you and your organisation to be fully compliant with all CSRD reporting requirements using our digital sustainability reporting platform, as well as facilitating the independent assurance of your disclosures.
During 2023 and beyond, we're planning to provide CSRD updates and support materials via our websites and social media channels, with a video interview with Professor Ian Thomson coming in early 2023.
Additionally, we're also planning for the CSRD reporting metrics to be made available through G17Eco’s sustainability reporting tools in the near future.
Contact us for more information and let us help your company get prepared for CSRD.
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