On January 5, 2023 – nearly two years after the European Commission’s original regulatory proposal – the Corporate Sustainability Reporting Directive no. 2022/2464 of December 14, 2022 entered into force.
The CSRD will replace the Non-Financial Reporting Directive across all EU Member States and gradually apply to all in-scope entities.
Since 2017, the NFRD required certain large “public-interest” entities (mainly: large listed companies, and large credit and insurance institutions) to report on a limited set of non-financial information as part of their annual management report, largely on a comply-or-explain basis.
The CSRD represents a considerable reinforcement of such non-financial reporting obligations, and a significant enlargement of their scope. The new rules should in fact cover over 50,000 European undertakings (compared to the 11,700 that are now subject to the NFRD) – plus the third country parents of large multinational groups that generate a significant turnover within the EU’s internal market.
Annual sustainability reports issued under the CSRD will need to follow common sustainability reporting templates and standards and be subject to limited third-party audit.
This alert memorandum provides an overview of CSRD reporting requirements, and situates them within the wider context of other key EU sustainability-related reforms (such as the Taxonomy Regulation and the Sustainable Finance Disclosure Regulation.