The CSRD and its timelines

On 22 June 2022, the Council and European Parliament reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD). This proposal was adopted in April 2021 to improve the existing reporting requirements of the EU’s Non-Financial Reporting Directive (NFRD). This agreement removes the uncertainty around the delay of the CSRD timelines. What does this mean for your sustainability reporting, and when do you have to comply with CSRD?

In short: what is the CSRD?

The CSRD will legally oblige companies to report in compliance with European Sustainability Reporting Standards (ESRS). An attempt by the EU for greater transparency, making companies resilient and perform better, both in financial and non-financial terms.

Key takeaways:

  • Integrated reporting; including sustainability information in the management report
  • Qualitative, quantitative, forward-looking & retrospective information on ESG impact that maps the short, medium, and long-term horizons, strategy, and targets
  • Applying double materiality to identify both the impact of sustainability on the business and the impact of the business on society and the environment
  • Information about the company’s value chain, including the company’s own operations, and due diligence processes along the supply chain
  • Assurance on the alignment of the sustainability information with the ESRS
    • Limited assurance within 3 years after the implementation of CSRD.
    • Reasonable assurance within 6 years after implementation

The scope

The CSRD will extend the scope of sustainability reporting requirements to all large companies without the previous 500-employee threshold of the NFRD. This change will result in all large companies being held publicly accountable for their impact on people and the environment. Specifically, this scope includes all EU companies that meet at least 2 out of 3 criteria:

  • More than 250 employees
  • Turnover that exceeds €40 million
  • Balance sheet that exceeds a total of €20 million

Timelines

The application of the regulation will take place in the financial years starting on:

  • 1 January 2024 – for companies in scope of NFRD (report in 2025)
  • 1 January 2025 – for companies that are not presently subject to the NFRD, but meet at least 2 out of three criteria named above (report in 2026)
  • 1 January 2026 – for listed small and medium-sized enterprises (SMEs) (report in 2027)
    • Separate standards will be published for this group, this will be expected in October 2023

Next steps

We highly recommend starting your preparations early to comply with CSRD. This not only gives you new insights into your non-financial indicators related to corporate activities but also allows you to implement reasonable and well-developed structures.

Read our blog on how you can prepare your CSRD reporting already.  

Read our blog on how you can prepare your CSRD reporting already.  
Authors
Fia Fuchs

Fia Fuchs

Consultant, Sustainalize

Marit Luijckx

Former colleague, Sustainalize

Don’t hesitate to reach out if you have questions regarding this topic or need any help or assistance in your reporting process.

Published on: 23 June 2022

Share this article
Share on facebook
Share on twitter
Share on linkedin
Share on email

Other news in this category

Met OV

Phasellus dignissim nulla tincidunt ultrices interdum. Nulla a enim ullamcorper, consectetur ligula sit amet, rutrum ante. Praesent cursus viverra urna ut sagittis. Sed nunc felis, hendrerit sit amet odio a, mattis laoreet mi. Quisque diam turpis, convallis at ultrices eu, vehicula a urna. Suspendisse potenti.

Met OV

Phasellus dignissim nulla tincidunt ultrices interdum. Nulla a enim ullamcorper, consectetur ligula sit amet, rutrum ante. Praesent cursus viverra urna ut sagittis. Sed nunc felis, hendrerit sit amet odio a, mattis laoreet mi. Quisque diam turpis, convallis at ultrices eu, vehicula a urna. Suspendisse potenti.

Met OV

Phasellus dignissim nulla tincidunt ultrices interdum. Nulla a enim ullamcorper, consectetur ligula sit amet, rutrum ante. Praesent cursus viverra urna ut sagittis. Sed nunc felis, hendrerit sit amet odio a, mattis laoreet mi. Quisque diam turpis, convallis at ultrices eu, vehicula a urna. Suspendisse potenti.