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Last week, the European Parliament in Plenary session gave its formal approval to the Corporate Sustainability Reporting Directive (CSRD). For reference, a provisional agreement was struck between the Parliament and Council in June 2022.

The CSRD amends the 2014 non-financial reporting Directive. It introduces more detailed reporting requirements on companies’ impact on the environment, human rights, social standards and governance factors, based on common criteria in line with EU’s climate goals. The CSRD also introduces a certification requirement for sustainability reporting as well as improved accessibility of information, by requiring its publication in a dedicated section of company management reports.

The European Commission is expected to adopt the first set of standards by June 2023. The European Financial Reporting Advisory Group (EFRAG) will be responsible for establishing European standards, following technical advice from a number of European agencies.

The new rules will start applying between 2024 and 2028, as follows:

• From 1 January 2024 for large public-interest companies (with over 500 employees) already subject to the non-financial reporting directive, with reports due in 2025;
• From 1 January 2025 for large companies that are not presently subject to the non-financial reporting directive (with more than 250 employees and/or €40 million in turnover and/or €20 million in total assets), with reports due in 2026;
• From 1 January 2026 for listed SMEs and other undertakings, with reports due in 2027. SMEs can opt-out until 2028.

The Council is expected to adopt the proposal on 28 November, after which it will be signed and published in the EU Official Journal.

Source: European Parliament