The European Council and the European Parliament have greenlighted the Corporate Sustainability Reporting Directive (CSRD).

The new directive is a part of the Green Deal, which the European Commission proposed back in 2021.

If you’re not sure what CSRD is about and what it means for you, let us enlighten you.

What is CSRD?

CSRD replaces the non-financial reporting directive (NFRD).

Many businesses will have to report on information about their impact on society and the environment to a larger extent than was the case with NFRD.

Also, the CSRD will have requirements for the format, so companies can be compared.

The hope is that it will help end greenwashing, bolster our social market economy, and inspire global sustainability reporting standards.

To put it simply, the goal is that sustainability reporting will become much more important and reliable.

Equally as important as financial reporting.

How is the CSRD different from the NFRD?

The point of the CSRD is to address limitations in the NFRD, which has been seen as insufficient and unreliable.

So, the CSRD brings with it more detailed reporting requirements on the impact on the environment, human rights, social standards, and governance (think ESG).

Some of the other new requirements include:

• Audits of the information you report as assurance that it’s true.

• Complying with the mandatory EU Sustainability Reporting Standards to increase comparability.

• Digital ‘tags’ on the reported information to make it machine readable and give digital access to the sustainability information.

What does it mean for you?

Will I be covered by this, you may ask.

Well, it’s very likely.

For large, public-interest companies with more than 500 employees (already covered by the NFRD), the CSRD will go into effect January 1st, 2024, with the first report in 2025.

One year later, large companies that fulfil two out of three of the following criteria will be included – with the first report in 2026:

• More than 250 employees

• €40 million in turnover

• €20 million in total assets

Listed SMEs and other undertakings (except for listed micro enterprises) will be covered from January 1st, 2026, with the first report in 2027.

SMEs can opt-out until 2028, though.

Bones info: the companies covered by the CSRD will also be covered by the EU taxonomy on the same dates.

Be aware that if you’re not included in the above, the rules may still impact you if you have a customer or supplier that is.

If you want to know more or don’t know what to do next, reach out!