The Corporate Sustainability Reporting Directive (CSRD) is one of the proposed measures within the Sustainable finance package, adopted on the 21st April 2021. The CSRD extends the scope and reporting requirements of the NFDR already existing Directive 2014/95/EU, regarding disclosure of non-financial and diversity information by certain large undertakings and groups.
CSRD aims to upgrade the NFRD and applies to all of the large companies, including listed ones which should publish regular reports on their environmental and social impact activities, in accordance with the requirements, implemented in the CSRD.
CSDR enters into force on 5th of January 2023. As of the 1st January 2026 small and medium-sized undertakings will have to send reports containing the required information as well.
With the CSRD, the European Commission defines a common reporting framework for all of the Member States, concerning non-financial data, for the first time.
Companies which have to report under the CSRD need to comply with at least two of the following three criteria:
- Have at least 250 employees
- Have a turnover of at least 40 million euros
- Have at least 20 million euros in assets
The number of concerned companies is approximately 49 000.
The companies should apply on the 1st January 2024 for the 2023 financial year. The reporting will be developed in two phases. The first set of Sustainability Reporting Standards should be submitted for the 2023 financial year. The second set of Sustainability Reporting Standards should be submitted for the 2024 financial year. The Directive was supposed to be adopted in the legislation of the Member States by 1st December 2022, however, it has not been adopted yet.
The proposed directive offers new requirements that all of the concerned companies should meet. The companies are also expected to report information, regarding all of the set requirements. According to the CSRD the companies should include in their reports information about environmental protection, climate change and how it affects the company’s activities, as well as disclose information regarding human and intellectual resources and information about company’s respect for human rights.
In the amendments to Directive 2013/34/EU it is stated that by 31st October 2022, the Commission shall adopt delegated acts specifying the information that undertakings are to report and at least specifying information corresponding to the needs of financial market participants subject to the disclosure obligations of Regulation (EU) 2019/2088. In addition, by 31 October 2023, the Commission shall adopt delegated acts specifying complementary information that undertakings shall report with regard to the sustainability matters and reporting areas, where necessary, as well as information that undertakings shall report that is specific to the sector in which they operate.
Member States shall provide for penalties applicable to infringements of the national provisions adopted in accordance with thе Directive and shall take all the measures necessary to ensure that those penalties are enforced. The penalties provided for shall be effective, proportionate and dissuasive.