EU Companies now required to Disclose their Societal and Environmental Impact.
The EU has become a front-runner in global sustainability reporting standards by formally adopting the Corporate Sustainable Reporting Directive (CSRD). With CSRD officially adopted, this new directive will expand on the already existing Non-Financial Reporting Directive (NFRD). The hope is that CSRD will introduce more detailed reporting requirements on companies’ impact on the environment, human rights and social standards.
In summary, CSRD will provide the following the following:
Transparency on environmental, social affairs and governance matters to become the norm for large firms;
EU to become front-runner in global sustainability reporting standards;
Around 50,000 companies to be covered by new rules, up from the current 11,700.
Directly from the European Parliament, “The new EU sustainability reporting requirements will apply to all large companies, whether listed on stock markets or not. Non-EU companies with substantial activity in the EU (with a turnover over €150 million euro in the EU) will also have to comply. Listed SMEs will also be covered, but they will have more time to adapt to the new rules.
For nearly 50 000 companies in the EU, collecting and sharing sustainability information will become the norm, compared to about 11 700 companies covered by the current rules.”
Assuming the Council adopts the proposal on November 28th as expected, the rules that will be applied between 2024 and 2028 include the following:
From 1 January 2024 for large public-interest companies (with over 500 employees) already subject to the non-financial reporting directive, with reports due in 2025;
From 1 January 2025 for large companies that are not presently subject to the non-financial reporting directive (with more than 250 employees and/or €40 million in turnover and/or €20 million in total assets), with reports due in 2026;
From 1 January 2026 for listed SMEs and other undertakings, with reports due in 2027. SMEs can opt-out until 2028.
Sources:
https://www.linkedin.com/posts/vdelamar_sustainable-economy-parliament-adopts-new-activity-6996906150893912064-sLvK/?utm_source=share&utm_medium=member_desktop
https://www.europarl.europa.eu/news/en/press-room/20221107IPR49611/sustainable-economy-parliament-adopts-new-reporting-rules-for-multinationals
