CSRD Update November 2022
With 525 votes in favour, 60 votes against and 28 abstentions, the Corporate Sustainability Reporting Directive (CSRD) was adopted by the European Parliament. So corporations that fall under the CSRD will have to report frequently, uniformly, and transparently about their sustainability performance. This blog post is our CSRD Update November 2022.
ESRS – The European Sustainability Reporting Standard as reporting framework for disclosures under the CSRD
The Corporate Sustainability Reporting Directive will make businesses more publicly accountable by obliging them to regularly disclose information on their environmental and social impact. With the CSRD comes the European Sustainability Reporting Standard (ESRS), a reporting framework developed by the EFRAG. The ESRS covers all domains of ESG and will be the reporting framework used by corporations to disclose sustainability performance under the CSRD.
CSRD comes with an extended scope
Compared to the Non-Financial Reporting Directive (NFRD), the predecessor of the CSRD, the CSRD will apply to around 50.000 companies compared to about 11.700 that had to mandatory report under the NFRD.
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Companies that will have to report under CSRD
Opposite to the NFRD, the CSRD will apply to all large companies and is no longer limited to those listed on stock markets. Even Non-EU companies will fall under the regulations of the CSRD depending on their turnover (>€150 million in the EU). There is an exception for listed SMEs, giving them more time to adapt to reporting under the CSRD.
What will be the next steps?
It is expected that the Council will adopt the proposal on November 28th 2022. Once the Council has adopted the proposal, it will be signed and published in the EU Official Journal and will enter into force 20 days after its publication.
Here is an implementation timeline:
- The rules will apply from January 1st 2024, to large public-interest companies (>500 employees) already reporting under the NFRD. The first report under the CSRD will be due in 2025.
- Starting from January 1st 2025, the CSRD will apply to large companies (more than 250 employees and/or €40 million in turnover and/or €20 million in total assets) that do not fall under the NFRD. The first report under the CSRD will be due in 2026.
- Finally, the CSRD will apply to listed SMEs and other undertakings starting on January 1st 2026, and the first reports are due in 2027. SMEs can opt out until 2028.
You can find the press release here.
More information on CSRD and ESRS
We covered the CSRD and the ESRS in several blog posts:
About NordESG
NordESG is an advisory firm helping corporates develop, articulate and execute their ESG and sustainability strategies. Our work includes sustainability performance reporting support under various ESG frameworks, strategy development or conducting materiality assessments. By doing so, we help businesses meet their disclosure compliance requirements like CSRD but also help them proactively communicate their strategy to other stakeholders like investors, customers and local communities in which they operate. Our work is focused mainly on Europe and North America.
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