ARTICLE
14 November 2022

Corporate Sustainability Reporting Directive At A Glance Guide

M
Matheson

Contributor

Established in 1825 in Dublin, Ireland and with offices in Cork, London, New York, Palo Alto and San Francisco, more than 700 people work across Matheson’s six offices, including 96 partners and tax principals and over 470 legal and tax professionals. Matheson services the legal needs of internationally focused companies and financial institutions doing business in and from Ireland. Our clients include over half of the world’s 50 largest banks, 6 of the world’s 10 largest asset managers, 7 of the top 10 global technology brands and we have advised the majority of the Fortune 100.
European Parliament formally adopted Corporate Sustainability Reporting Directive ("CSRD") on 10 November 2022.
Ireland Corporate/Commercial Law

Timeline

Adoption:

  • European Parliament formally adopted Corporate Sustainability Reporting Directive ("CSRD") on 10 November 2022. The Council is expected to adopt the proposal on 28 November, after which it will be signed and published in the EU Official Journal.
  • Enters into force 20 days after publication.
  • EU Member States will then have 18 months to transpose CSRD into national law.
  • European Financial Reporting Advisory Group currently drafting sustainability reporting standards to be published in coming weeks and adopted mid-2023.

Reporting for companies to begin in four stages:

  • 1 January 2024 for financial year ("FY") 2025 –companies already subject to existing reporting rules under the Non-financial Reporting Directive;
  • 1 January 2025 for FY 2026 - large companies not already subject to existing rules;
  • 1 January 2026 for FY 2027 – listed SMEs (non-listed SMEs can opt out until 2028), captive insurance undertakings and non-complex credit institutions;
  • 1 January 2028 - non-EU companies.

Scope

All large companies governed by the law of, or established in, an EU member state and all EU stock exchange-listed companies (excluding micro-companies).

Non-EU companies with substantial EU activity (ie, annual net turnover of €150m in the EU and at least one subsidiary / branch in the EU).

"Large company" meets 2 of 3 of the following criteria:

  • at least 250 employees;
  • annual turnover exceeds €40m;
  • assets in excess of €20m.

Exemptions for subsidiaries if parent company's consolidated management report complies with EU reporting standards (or, if parent established in third country, recognised equivalent reporting standards).

Obligations

Publication/reporting of sustainability information across all three ESG topics (eg, biodiversity, climate goals, human rights including forced labour, social rights, ethics, bribery, corruption) alongside financial information in directors' reports.

EU-wide audit requirement for reported sustainability information (becoming more demanding over time).

Companies must digitally tag sustainability information for onward transmission into the European single access point database.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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