The Corporate Sustainability Reporting Directive (CSRD) requires companies to report on the impact of corporate activities on the environment and society and requires the audit (assurance) of reported information.
In 2022 European Union approved Corporate Sustainability Reporting Directive (CSRD). Aim of the Directive is to transform the Union into a modern, resource-efficient and competitive economy with no net emissions of greenhouse gases (GHG) by 2050. The strategy aims to put the Europe’s biodiversity on a path of recovery by 2030.
On 31 July, 2023, the Commission adopted the standards with a final Delegated Act to turn the European Sustainability Reporting Standards (ESRS) into EU law, requiring all EU member states to implement them. The development of these CSRD standards marks a significant step in enhancing transparency and accountability in sustainability reporting across the EU.
The CSRD proposes to modernize and strengthen the EU rules concerning all three pillars: the environmental, the social and the governance-related information that companies must report. According to the law, corporate directors may be compelled to pay fines of up to €75,000 and face imprisonment for up to five years, if they fail to provide essential information for external auditors to validate their CSRD-compliant reports or if they obstruct the auditors’ work.
The CSRD aims to make reliable and structured sustainability information available for various stakeholders. It does so by forcing firms to disclose information on non-financial indicators. The CSRD will cover all large companies that meet two of the following three criteria: turnover exceeding €50 million per year, a balance sheet total of more than €25 million, more than 250 employees (averaged over a year).
CSRD will impact entities in a phased approach: large companies already subject to the NFRD will be impacted first; from 2024, with their first CSRD-compliant annual report published in 2025. An estimated 50,000 companies across the EU are expected to be affected.
More information about CSRD is available at europa.eu
