Thousands of companies are expected to be brought out of scope of sustainability reporting rules under the Corporate Sustainability Reporting Directive (CSRD) and the Taxonomy Regulation following a proposal by the Commission to increase the monetary thresholds triggering such reporting rules.
Background
Under CSRD and the Taxonomy, large companies, large groups and EU-listed small and medium (other than micro) companies are subject to sustainability reporting along with non-EU companies with significant activities in the EU (see previous briefings here and here for further details). A company/group qualifies as large, medium or small if it meets 2 out of the 3 relevant size criteria set out under the Accounting Directive. The size criteria include both monetary and employee criteria with the monetary criteria set by reference to balance sheet total and net turnover.
Commission proposal
The Commission proposes revising the monetary criteria for all types of companies, which revisions will result in a reduced number of companies subject to sustainability reporting under CSRD and the Taxonomy. The current and proposed monetary criteria are set out in the table below. No change is proposed to the employee criteria which is to remain the same across all classifications.
| Balance Sheet | Net Turnover | ||
|---|---|---|---|
| Micro companies | Current | 350,000 | 700,000 |
| Proposed | 450,000 | 900,000 | |
| Small (lower end) companies/ groups | Current | 4,000,000 | 8,000,000 |
| Proposed | 5,000,000 | 10,000,000 | |
| Small (higher end*) companies/groups | Current | 6,000,000 | 12,000,000 |
| Proposed | 7,500,000 | 15,000,000 | |
| Medium/large companies/ groups | Current | 20,000,000 | 40,000,000 |
| Proposed | 25,000,000 | 50,000,000 |
* Member States have the flexibility to define the thresholds for small companies/groups provided such thresholds do not exceed those set out for small (higher end) companies/groups.
Next Steps
The Commission expects to adopt proposals in Q4 2023 with a requirement for Member States to apply transposing measures for financial years beginning on or after 1 January 2024 i.e., the first CSRD application date.
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