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CSRD
Corporate Sustainability Reporting Directive
The CSRD , the EU Corporate Sustainability Reporting Directive, is a new regulation that requires large companies to disclose their sustainability strategies, objectives and measures as well as their sustainability performance based on predefined key performance indicators (KPIs). The reporting requirements are set out in the so-called European Sustainability Reporting Standards (ESRS) .
background
The CSRD is based on the European Green Deal , which aims to make the EU climate neutral by 2050 and promote sustainable business practices. The Green Deal introduces new reporting obligations with regard to sustainability aspects, including the EU taxonomy for sustainable activities, the Sustainable Finance Disclosure Regulation (SFDR) and the CSRD itself. The introduction of the CSRD marked a huge change in corporate reporting. It heralds a shift away from purely financial reporting towards the inclusion of non-financial factors. In the future, sustainability indicators will be on a par with financial reporting indicators. The directive thus goes well beyond previous standards for sustainability reporting in terms of its complexity and scope. The binding European Sustainability Reporting Standards (ESRS) prescribe the mandatory content that a company must report on in its sustainability report in the future. All ESG areas are covered. Companies must assess the materiality of sustainability issues throughout their entire value chain and then develop them according to predefined criteria.
Who is affected?
Large companies and listed SMEs with more than ten employees are required to publish sustainability information in accordance with the ESRS in their annual reports. Large companies are those that meet at least two of the following criteria: total assets ≥ 25 million euros, net sales ≥ 50 million euros or number of employees ≥ 250.
Implementation timeline: The CSRD requirements will be phased in from 1 January 2024, initially affecting public-interest entities with more than 500 employees. From 1 January 2025, they will also apply to all other large companies and from 1 January 2026 to capital market-oriented SMEs, unless they choose to extend the period until 2028.
Tip 1: Even if your company is not directly affected, understanding the CSRD can prevent requests from stakeholders. There will also be a voluntary standard for SMEs - the VSME (voluntary SME standard).
Tip 2: Is your company part of an affiliated company or a subsidiary of a larger group? First, research how the annual report is structured. If you do not prepare your own annual report, you probably do not have to submit your own sustainability report. Your auditor can make the final assessment.
Key Features
Conclusion
In the future, sustainability indicators will be just as important as financial indicators. Sustainability will play a significant role in everyday business operations – and not just in large companies.
It also shows that sustainability is no longer a single discipline. Many specialist departments must be involved and sufficient resources are needed to implement CSRD in the company.
Our offer to you
We are happy to support you in all steps of implementing the CSRD: from project setup to the double materiality analysis, the selection of suitable software and the target group-oriented and ESRS-compliant report.
If you do not (yet) fall under the CSRD, a sustainability report according to the DNK is a good alternative or a good introduction to sustainability reporting for SMEs. We are happy to help you here too.
Please feel free to contact us.
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