CSRD: a glance at the new Corporate Sustainability Reporting Directive.

The Corporate Sustainability Reporting Directive (CSRD) was adopted by the European Commission on the 21st of April 2021 in the wake of the EU Green Deal. It updates and strengthens rules introduced by the existing Non-Financial Reporting Directive (NFRD). As opposed to the SEC & the ISSB, focusing on climate-related themes, the CSRD covers all aspects of Environmental, Social & Corporate Governance. CSRD reporting standards must be in accordance with binding European Sustainability Reporting Standards (ESRS) developed by EFRAG.

Objective

1. Ensure that companies report reliable and comparable sustainability information necessary for stakeholders to evaluate companies’ non-financial performance.
2. Improve transparency for all stakeholders.

Target group

The scope of the new directive covers more than 75% of EU company’s turnover as it applies to all large, medium and small ones that match two of the criteria below

• more than 250 employees and/or
• more than 40M € turnover and/or
• more than 20M € total assets

Content

The directive requires companies to disclose and report on general disclosures such as Business model, strategy and policies / KPIs and targets (forward-looking information) / Company and sustainability governance / Double materiality assessment and due diligence / Risk and opportunity management. Targeted companies are also expected to report on Environmental (including EU-Taxonomy), Social and Corporate Governance per sector specific standards.

Timeline

Source: “The Corporate Sustainability Reporting Directive (CSRD)” — KPMG

The CSRD will undergo a staged enforcement:

• 2025 annual and ad-hoc reports on full year 2024 for companies already subject to the NFRD
• 2026 annual and ad-hoc reports on full year 2025 for large companies not currently subject to the NFRD
• 2027 annual and ad-hoc reports on full year 2027 for listed SMEs, small and non-complex credit institutions, and captive insurance companies, with an opt-out until 2028.

Make sure to get ready on time! Reach out to discover how SQUAKE can be by your side on this journey.