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What applies to listed companies today will apply to all large companies from 2025: the obligation to publish a sustainability report. In 2021, the European Union (EU) adopted the Corporate Sustainability Reporting Directive (CSRD). The CSRD sets out the requirements to be met by a sustainability report, creating a uniform standard for all Member States.
The CSRD is a means to achieve the EU’s climate goals as laid down in the Green Deal. One of the goals is to become climate neutral by 2050.
What does this mean in concrete terms?
As things stand, large organisations will be required to include a sustainability report in their annual report from the financial year 2025 onwards. Accordingly, organisations will need to have clearly into focus the impact that their operations have on the environment and social justice. Aspects to be covered include carbon emissions and workforce diversity.
When will the CSRD be introduced and for what companies?
The CSRD will be introduced in stages:
- 1 January 2024: large listed companies
- 1 January 2025: all other large companies
- 1 January 2026: all small and medium-sized listed companies
What is the CSRD definition of a large company?
Large companies are companies that exceed at least two of the three following criteria:
- a balance sheet total of € 20 million
- turnover of € 40 million
- 250 FTEs
Why is it relevant now?
If your organisation will be required to report on the 2025 financial year, setting to work on defining a sustainability ambition and policy and identifying sustainability risks and opportunities a few years in advance is essential. Organisations are expected to show awareness and take deliberate action; they will not get away with ‘greenwashing’.
What does the CSRD mean for SMEs?
Unlisted small and medium-sized enterprises are not yet subject to the legislation. That said, they may nevertheless be asked to disclose sustainability information by their large chain partners.
What is the difference between the NFRD and CSRD?
In force since 2018, the EU’s Non-Financial Reporting Directive (NFRD) is effectively the CSRD’s predecessor. It applies to large listed companies and large public interest entities (PIEs). With the introduction of the CSRD, the NFRD will be revised and all large companies, including unlisted ones, will be required to prepare sustainability reports in accordance with the new EU standard.