The Council of the EU has approved the Corporate Sustainability Reporting Directive ("CSRD"). The CSRD was approved by the European Parliament on 10 November 2022. Following the Council's approval, the CSRD has now been adopted.
Once signed, the CSRD will be published in the Official Journal of the EU and will enter into force 20 days following publication. EU member states will have 18 months to transpose the CSRD into national law.
The CSRD will replace the current regime under the EU Non-Financial Reporting Directive ("NFRD") and will apply to all large EU companies (regardless of whether or where they are listed). Non-EU companies with substantial activity in the EU will also have to comply. Listed SMEs will also be in-scope, but they will have more time to adapt to the new rules.
The CSRD introduces more detailed reporting requirements on a broad range of environmental, social and governance matters in accordance with mandatory European sustainability reporting standards ("ESRS"). EFRAG delivered the first set of draft ESRS to the European Commission on 23 November. The European Commission will consult with EU bodies and member states before adopting the first set of ESRS by June 2023.
Reporting obligations under the CSRD will apply on a phased basis for financial years commencing as follows:
- from 1 January 2024 (reporting year 2025)for large public-interest companies (with over 500 employees) already subject to the NFRD
- from 1 January 2025 (reporting year 2026)for large companies not currently subject to the NFRD
- from 1 January 2026 (reporting year 2027) for listed SMEs (except micro undertakings) and other undertakings (SMEs may opt-out until 2028)
- from 1 January 2028 (reporting year 2029) for non-EU undertakings.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.