European Union
EU regulation transforming corporate sustainability reporting, enhancing transparency and combating greenwashing for companies.
The Corporate Sustainability Reporting Directive (CSRD) represents a significant EU regulatory advancement aimed at enhancing corporate transparency regarding sustainability practices. Enforced from January 2023, it mandates extensive reporting requirements for nearly 50,000 companies, emphasizing double materiality. The directive promotes accountability, combats greenwashing, and ensures that investors and stakeholders receive reliable sustainability data, supporting the EU's broader objective of achieving climate neutrality by 2050.
The Corporate Sustainability Reporting Directive (CSRD) is a landmark EU regulation that entered into force on January 5, 2023, fundamentally transforming corporate sustainability reporting in Europe.
Key Aspects
Scope and Application Nearly 50,000 companies will need to comply, including:
- Large EU companies meeting two of these criteria: €50M+ turnover, €25M+ assets, or 250+ employees
- Non-EU companies with €150M+ turnover in the EU
- Listed SMEs (with delayed implementation)
Implementation Timeline
- 2024: Large public-interest companies (500+ employees)
- 2025: Other large companies
- 2026: Listed SMEs and other entities (with possible opt-out until 2028)
Reporting Requirements
Double Materiality Companies must report on:
- How sustainability issues affect their financial performance
- How their activities impact society and environment
Key Disclosure Areas
- Sustainability policies and due diligence processes
- Environmental impact and emissions
- Social impact and workforce matters
- Target metrics and transition plans
- Value and supply chain sustainability
- Paris Agreement-aligned emissions reduction plans
Technical Aspects
Format and Verification
- Reports must be included in annual management reports
- Information must be submitted in standardized digital format
- Third-party assurance is mandatory
- Reports must follow European Sustainability Reporting Standards (ESRS)
Objectives
The directive aims to:
- Enhance transparency in corporate sustainability
- Combat greenwashing
- Provide investors and stakeholders with comparable, reliable sustainability data
- Support the transition to a sustainable economy
- Help achieve EU climate neutrality by 2050
Citations: [1] https://www.celsia.io/blogs/csrd-regulation-summary [2] https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en [3] https://normative.io/insight/csrd-explained/ [4] https://www.ibm.com/topics/csrd [5] https://kpmg.com/nl/en/home/topics/environmental-social-governance/corporate-sustainability-reporting-directive.html