Who falls under CSRD?

Who falls under CSRD?

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The Corporate Sustainability Reporting Directive (CSRD) is an EU legislation that aims to enhance and standardize sustainability reporting for companies within the EU. It builds upon the Non-Financial Reporting Directive (NFRD) and seeks to improve the quality, comprehensiveness, and consistency of sustainability reports. The CSRD applies to large EU companies, listed SMEs, and non-EU companies with significant EU operations, impacting an estimated 50,000 companies.

Who falls under CSRD?

The CSRD broadens the scope of companies required to report sustainability information, including risks and impacts on people and the environment. It applies to large EU companies or those with significant EU operations, meeting criteria such as €40 million in net turnover or 250 employees.

Compliance Timeline

Companies previously under NFRD must comply with the CSRD from January 2024, while others start their reporting obligations in January 2025.

Reporting Standards

The CSRD introduces two sets of Sustainability Reporting Standards developed by the European Financial Reporting Advisory Group (EFRAG). These standards guide reporting on double materiality, encompassing environmental and social impacts, financial materiality, and the quality of information.

Environmental Impact

Alongside climate-related information under the Task Force on Climate-related Financial Disclosures (TCFD) and Greenhouse Gas (GHG) Protocol, companies must report on broader environmental impacts in alignment with the EU Taxonomy. This ensures that companies disclose the sustainability of their activities and their adherence to environmental standards.

Sustainability Management

The CSRD emphasizes the need for robust and transparent reporting systems. It requires limited assurance (external audit) to enhance the verifiability of sustainability reports.

It is worth noting the relationship between the CSRD and the EU Taxonomy. The CSRD requires companies to disclose the environmental sustainability of their activities, aligning with the EU Taxonomy's criteria. This ensures that sustainability reports cover a wide range of environmental impacts and contribute to the EU's sustainability goals.

Reports must be prepared in XHTML format to ensure accessibility in the European Single Access Point (ESAP) database. This integration of financial and sustainability information facilitates easier access and analysis of company reports.

In conclusion, the Corporate Sustainability Reporting Directive (CSRD) expands the reporting obligations for companies within the EU. It applies to large EU companies, listed SMEs, and non-EU companies with significant EU operations. Compliance timelines, reporting standards, environmental impact, and sustainability management are key aspects of the CSRD. By adhering to the CSRD, companies contribute to the EU's sustainability goals and enhance transparency in their reporting practices.

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