The Corporate Sustainability Reporting Directive (CSRD) is a directive adopted by the European Union (EU) that significantly enhances and expands the existing sustainability reporting requirements for companies operating within its jurisdiction. Building upon the Non-Financial Reporting Directive (NFRD), the CSRD aims to improve the quality, consistency, and comparability of sustainability information disclosed by companies, thereby promoting transparency and accountability in environmental, social, and governance (ESG) matters.
Key features of the CSRD include:
- Expanded Scope: The directive applies to all large companies and all companies listed on EU-regulated markets, including listed small and medium-sized enterprises (SMEs), significantly increasing the number of entities required to report on sustainability matters.
- Detailed Reporting Requirements: Companies are required to provide comprehensive information on a wide range of ESG issues, including their impact on the environment, social matters, treatment of employees, respect for human rights, anti-corruption and bribery matters, and diversity on company boards.
- Mandatory Assurance: Reported sustainability information must be audited to ensure its accuracy and reliability, aligning the credibility of sustainability reporting with that of financial reporting.
- Digital Reporting: Companies are required to prepare their sustainability reports in a digital, machine-readable format, facilitating accessibility and analysis by stakeholders.
- Alignment with Global Standards: The CSRD seeks to align EU sustainability reporting standards with global initiatives to promote coherence and comparability at the international level.
The CSRD entered into force on 5 January 2023, and companies are expected to start reporting under the new requirements for financial years beginning on or after 1 January 2024. This directive represents a significant step towards integrating sustainability considerations into corporate strategies and decision-making processes, fostering a more sustainable and transparent business environment within the EU.
You Might Also Be Interested In:
