WHAT IS EU CSRD?
The EU Corporate Sustainability Directive, also known as the EU CSRD, is a piece of European Union legislat
ion that aims to improve the sustainability of businesses operating within the EU. The directive requires large companies to disclose information about their environmental, social, and governance (ESG) performance in their annual financial reports.
The EU CSRD applies to companies that are listed on EU regulated markets and meet certain size thresholds, as well as to credit institutions and insurance undertakings. It aims to provide investors with better information about the sustainability risks and opportunities of companies, and to encourage companies to improve their sustainability performance.
The directive requires companies to disclose information about a wide range of ESG topics, including climate change, environmental impacts, h
uman rights, and social impacts. It also requires companies to explain how they have taken into account the interests of their stakeholders, such as employees, customers, and local communities.
The EU CSRD is an important step towards a more sustainable and responsible business environment in the European Union. By providing investors with better information about the sustainability performance of companies, it helps to promote transparency and accountability, and encourages companies to adopt more sustainable practices.
WHAT ARE ESRS?
The EU Sustainability Reporting Standards (ESRS) provide companies with a set of guidelines to follow when reporting on their sustainability performance as required by the Corporate Sustainability Reporting Directive (CSRD). The ESRS outline the mandatory concepts and principles that companies must adhere to in their sustainability statements.
The ESRS also introduces the concept of doubl
e materiality, require companiesto expand their reporting boundary to encompass their entire value chain, and disclose a significant amount of detailed information about their sustainability performance. These requirements significantly impact the scope, volume, and granularity of information that companies must disclose.
The first set of ESRS consists of 12 standards that align with the CSRD proposal and address environmental, social, and governance matters. The set includes both cross-cutting and topical standards. The ESRS architecture also includes provisions for the publication of sector-specific standards and standards for small and medium-sized enterprises (SMEs) that are not yet available for public consultation
WHEN?
The obligation to report ESG information according to the ESRS will take effect between 2024 and 2028 as follows:
From January 1, 2024 for companies already subject to the Non-Financial Reporting Directive (reporting in 2025 on 2024 data)
From January 1, 2025 for large companies not currently subject to the Non-Financial Reporting Directive (reporting in 2026 on 2025 data)
From January 1, 2026 for listed small and medium-sized enterprises (SMEs) and other undertakings (reporting in 2027 on 2026 data). SMEs can withdraw until 2028.
From January 1, 2028 for non-EU companies with significant operations in the EU (reporting in 2029 on 2028 data)"