What is CSRD and who will it apply to?
Corporate Sustainability Reporting Directive (CSRD) proposal was
issued by the European Commission on 21 April, 2021 with the aim to
strengthen and extend the scope of sustainability reporting
requirements, as currently laid out in EU Directive 2014/95/EU,
also known as NFRD.
While many entities fell out of NFRD's scope as it only
applied to large public interest entities (i.e. listed companies,
banks and insurance companies with )500 employees), CSRD will apply
to all listed companies and all large companies meeting at least 2
out of 3 criteria:
- )250 employees;
- )EUR 20m total balance sheet assets;
- )EUR 40m net turnover.
Readiness check
In addition to the existing NFRD reporting requirements, CSRD details out the non-financial information to be reported and adds additional reporting requirements, including but not limited to:
- double materiality (sustainability risk, impact on society and the environment);
- disclosure of information on intangibles;
- requirement for the audit of reported information, to ensure that reported information is accurate and reliable.
Liaise with us to learn more about the new CSRD reporting
requirements and what you can do to be prepared.
Timeline
Should an agreement be reached early in 2022, the first set of
the reporting standards could be adopted by the end of next year,
and companies within CSRD's scope would have to apply the
reporting standards in 2024, covering FY2023.
Nevertheless, as the Member States expressed their concerns on the
proposed timeline as too ambitious, the Slovenian Council's
Presidency prepared a compromise text, including amendments to the
deadline for transposition and start of the application. This text
will be discussed in the Council's working committee on CSRD in
December this year.
The final timeline will depend on the outcome of the European
Parliament and Council negotiations.
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.