On 28 November 2022, the European Council adopted the Corporate Sustainability Reporting Directive (“CSRD”), following its adoption by the European Parliament on 10 November 2022. The CSRD will replace and broaden the scope of the existing sustainability reporting requirements under the current reporting obligations, which are basically set out in the Non-Financial Reporting Directive (“NFRD”).
The CSRD will require all large companies to publish regular reports on sustainability matters, such as environmental rights, social rights, human rights and governance factors. The purpose of the new regulation is to help investors, consumers, policymakers, and other stakeholders to evaluate large companies’ non-financial performance. Therefore, it encourages these companies to develop more responsible approaches to business.
The new sustainability reporting obligation will apply to all large companies (meaning companies with more than 250 employees and more than EUR 40 million turnover and/or more than EUR20 million in total assets) and to all companies listed on the regulated markets (except micro-enterprises, less than 10 employees or below EUR 20 million in turnover). The companies already subject to NFRD will have to submit their report aligning with the CSRD on 1 January 2025 for the 2024 financial year. Large companies that are not currently subject to the NFRD will be obliged to submit the reports in 2026 for the financial year 2025.