Corporate Sustainability Reporting Directive (CSRD)

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