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Corporate Sustainability Reporting Directive

January 17, 2023

CSRD - what now?

On 21 April 2021, the EU Commission presented a proposal for the Corporate Sustainability Reporting Directive (CSRD), the successor of the Non-Financial Reporting Directive (CSR-RUG). The CSRD is a part of the sustainable finance package and is intended to encourage more private investment for the transition into a climate-neutral economy.

Is your company affected?

The EU Commissions' proposal to expand the scope of application will see the total number of companies reporting in accordance to CSRD grow from 11,000 to approximately 49,000. A further distinction requires ‘Large Enterprises’ to fulfill reporting obligations starting 2023 while SMEs are expected to collect the relevant data from 2026.

Companies that are considered to be large enterprises:

  • Balance sheet total: > €20M
  • Annual net sales: > €40M
  • Number of employees: > 250

Companies that are considered to be SMEs:

  • Balance sheet total: between €4M and €20M
  • Net sales: between EUR €8M and €40M
  • Employees between 50 and 250

However, the Directive only applies to SMEs traded on exchange-regulated markets in the EU.

When do the new rules apply?

In accordance with CSRD adoption at the end of 2022, large companies are expected to begin data collection based on thenew standards starting January 2023 and report on them at the beginning of 2024.

In the case of SMEs, reporting is expected to commence from the financial year 2026, with data collection commencing in January 2026 and reports submitted at the beginning of the financial year 2027. A separate, easier-to-handle standard is being developed for SMEs.

What is in store for your company?

The EU, for the first time, is developing legally binding, concrete standards according to which reporting must take place. While drawing from widely used voluntary frameworks such as the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), and Task Force on Climate-Related Financial Disclosure (TCFD), the CSRD will maintain a distinction. This will require companies to adapt to new criteria and questions in accordance with reporting standards. The standards also require the information gathered to reflect in the company’s annual report as opposed to standalone sustainability reporting.  

Keeping with the concept of ‘Double Materiality’, companies are expected to report not only the impact of their actions on society and the environment but also the risks and opportunities arising from social and environmental developments for the company.

How is the quality of the reports assured?

For the time, sustainability reporting is to be audited in the form of a "limited assurance", which requires the presentation of evidence that allows conclusions to be drawn on the credibility and plausibility of the reported facts. However, the clear aim is to extend this to "reasonable assurance" as soon as auditing standards on sustainability information are also available.

What are the special challenges?

  • Broadening the scope

With an increasing number of companies falling under the new compliance requirements, companies with little or no prior experience or reporting capacity will be required to fulfill sustainability reporting obligations.

  • New standards

Even for companies that are currently reporting on their sustainability, the new standards are a challenge. They are more comprehensive, more complex, and require more detailed information than ever before.

  • Data from the supply chain

The new standards require collecting and reporting sustainability data from across the supply chain instead of just internal data.

How do we help you?

Together with experts from large, medium-sized and small companies with experience in sustainability reporting, we have developed a software solution that makes it easier for you to implement the new directive.

  • We simplify the collection of relevant data internally and along the supply chain, increasing efficiency and reducing effort.
  • We allow you to oblige the information requests from your customers but allow you to protect business-critical information about your supply chain from being exposed to the data receiver at the same time.
  • We explain the new standards in an understandable way and help with the calculations. In this way, we relieve you of tedious work steps and simplify data entry.
  • We facilitate data exchange with suppliers and ensure that necessary information from the supply chain arrives correctly and without additional effort.
  • We can help you generate your report in the correct format at the touch of a few buttons once the data has been entered.

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