What – The Corporate Sustainability Reporting Directive (CSRD) is a proposed legislative framework by the European Union (EU) that aims to enhance and standardise sustainability reporting by companies operating within the EU. It builds upon the existing Non-Financial Reporting Directive (NFRD) and introduces a more comprehensive and harmonised reporting regime for sustainability and environmental matters.
When – The CSRD proposal was officially released by the European Commission on April 21, 2021. It is currently in the legislative process, which involves discussions, amendments, and approvals by the European Parliament and the Council of the European Union. The directive is already in force and will apply to reporting periods starting 1st January 2024, which will be reported in 2025.
Why – The CSRD is being introduced for several important reasons:
1. It aims to standardise sustainability reporting requirements across the EU. This will make it easier for stakeholders to compare and evaluate the sustainability performance of different companies.
2. Improving the transparency of companies’ sustainability practices. This will help investors, consumers, and other stakeholders make informed decisions and hold companies accountable for their environmental and social impacts.
3. Integrating sustainability reporting with financial reporting, reinforcing the idea that environmental and social factors are integral to a company’s financial performance.
4. Emphasising reporting on material sustainability topics. Companies will need to disclose information that is relevant to their specific business, focusing on issues that have a significant impact.
5. Encouraging the use of digital reporting formats like Inline XBRL to improve the accessibility and usability of sustainability data.
Overall, the CSRD represents the EU’s commitment to sustainability and its aim to create a fair, green, and resilient economy. It recognizes the growing importance of sustainability information in decision-making and aims to provide clear and reliable reporting guidelines for companies to follow.”
More information
www.esma.europa.eu/esmas-activities/sustainable-finance/sustainability-reporting
