Preparing for the Corporate Sustainability Reporting Directive (CSRD)

The Corporate Sustainability Reporting Directive (CSRD) is now in force across the EU, with Member States given 18 months to adopt it into national law. The highly-anticipated directive requires companies operating in the EU to publicly disclose and report on environmental, social, and governance (ESG) issues. This means businesses will need to be prepared for more complex commitments to improve and report on their sustainable impact.

The CSRD heralds a new pace of regulatory change, and many companies are affected, facing both new opportunities and risks of penalties for non-compliance. So how can business leaders ensure they start preparing now, and remain on track to meet this new directive? Our experts have outlined what companies need to do to act now for what’s next. Download our guide below.

Why this new directive?

The objective of the CSRD is to define a standardised and common language for sustainability information, bringing sustainability reporting to the same level as financial reporting. This move takes significant steps toward the goals of the European Green Deal, and to make the EU climate-neutral by 2050.

The directive focuses on improving the quality of the sustainability information communicated, by imposing the use of the European Sustainability Reporting Standards (ESRS) for all companies within the scope of the directive.

Who does the CSRD affect?

The new directive extends the scope of companies subject to sustainability reporting obligations, with around 50,000 companies impacted based on a range of criteria, including turnover, employee number and balance sheet. Other companies not directly affected by the scope will likely face increased pressure to comply through their supply chain. Download our guide below for the full criteria.

What information will companies need to report on?

Companies in the scope of CSRD will need to report on their sustainability impact, and how sustainability issues affect the company's development, performance and position (known as “double materiality”).

Will there be compulsory assurance on this reporting?

The sustainability statements and the information they contain will be subject to compulsory assurance, starting with moderate assurance with an expected evolution towards reasonable assurance from 2028 (after an evaluation as to the feasibility the implementation of reasonable assurance for auditors and companies). This will be tracked by the EU audit committee.

How was this directive developed?

The CSRD is the update of the current Non-Financial Reporting Directive (NFRD) which, in 2014, created reporting and transparency obligations on sustainability topics for a number of European companies.

On December 16, 2022, the final text of the Corporate Sustainability Reporting Directive (CSRD) was published in the Official Journal of the European Union (OJEU). This publication is the culmination of a process that lasted several months, from the CSRD proposal by the European Commission (EC) in April 2021, to the political agreement reached in June 2022 on a slightly revised version of the initial CSRD proposal and finally the formal adoption by the Parliament and then the Council.

This new directive came into force 20 days after its publication in the OJEU, i.e. on January 5, 2023. Member States have 18 months to transpose it into their national law (by July 6, 2024 at the latest). This transposition will be the final step to specify the scope of the CSRD requirements and its implementation schedule.


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