Corporate Sustainability Reporting Directive

Reporting
- Companies must disclose information relating to their operations and management of social and environmental issues
- Companies must report in line with mandatory EU sustainability reporting standards. Draft standards on EU sustainability reporting will be developed by the European Financial
- Reporting Advisory Group (EFRAG)- the first set of standards is expected to be adopted by October 2022
- Companies will need to digitally tag reported information into a European single access point
Due Diligence

Human Rights
- Including the treatment of employees
Environment
- The exact scope will be revised by the Parliament in the upcoming evaluation
Other Social Matters
- Anti-corruption and bribery
- Diversity of the board (including age, gender, educational and professional background)
Broad ranging

Own Operations
Subsidiaries
- Covers the EU subsidiaries of non-EU companies
Direct Suppliers
Indirect Suppliers
- Due diligence assessments also extend to business partners defined as any party that supplies goods or services directly to the enterprise, but that is not part of the supply chain
Full Value Chain

Large Companies
- All large companies are covered (eliminates the 500-employee threshold in the NFRD)
SMEs
- Extends the scope to SMES with securities listed on regulated markets
- Covered SMEs are allowed to report according to standards that are simpler than the standards that will apply for large companies
- Around 49,000 companies (including large companies) in the EU would be required to comply with the CSRD
All sectors

Monitoring
- EU-wide audit (assurance) requirement for reported sustainability information to ensure that reported information is accurate and reliable
- ‘limited’ rather than a ‘reasonable’ assurance requirement
Administrative Sanctions

The CSRD amends the Non-Financial Reporting Directive (NFRD)
The rules introduced by the NFDR remain in force until companies have to apply the new rules of the CSRD.
The first companies will have to apply the new rules for the first time in the 2024 financial year, for reports published in 2025.
The CSRD will function in line with the Taxonomy Regulation, which sets the conditions an economic activity must meet to qualify as environmentally sustainable