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Corporate Sustainability Reporting Directive (“CSRD”)

The CSRD was published in the Official Journal of the EU on 16 December 2022 and entered into force on 5 January 2023.

The overall objective of the CSRD is to ensure that companies report reliable and comparable sustainability information, by introducing detailed and standardized norms.

The key changes are :

  • Extension of sustainability reporting requirements to all large companies, whether listed or not, listed small and medium-sized enterprises (SMEs), and non-EU companies which generate a net turnover of more than EUR 150M in the EU and have at least one subsidiary or branch in the EU ;
  • Extension of the scope of reporting to a wide range of environmental, social and governance (« ESG ») matters relevant to the company’s business, in line with mandatory EU sustainability reporting standards currently being developed by the European Financial Reporting Advisory Group (« EFRAG ») ;
  • Introduction of a “double materiality” : in-scope companies will have to report not only on how sustainability issues might create financial risks for them, but also on their own impact on people and the environment ;
  • Requirement for limited assurance on sustainability information, with the end goal to move to reasonable assurance in the longer term ;
  • Requirement for in-scope companies to include such reporting in their management reports in an electronic format and tag the sustainability information.

The CSRD will be applicable starting from 2025 (for financial years starting on or after 1 January 2024) to 2029 (for financial years starting on or after 1 January 2028), depending on the type/size of companies.