EUROPEAN COUNCIL APPROVED “CORPORATE SUSTAINABILITY REPORTING DIRECTIVE” (CSRD)
On 28 November 2022, the Corporate Sustainability Reporting Directive (CSDR) was approved by the European Council. Big EU companies will be obliged to disclose data about their impact on the environment, people, the planet and the sustainability risks they face. The Directive aims to modify the obligations already imposed by the (inadequate) Directive 2014/95/EU, the NFRD, and extend them to a wider range of subjects, such as all large companies and all companies listed on regulated markets (with the exception of the listed micro company). The directive is part of the European Green Deal initiative.
The CSRD aims to improve sustainability reporting, increase transparency on environmental, social and governance issues, fight greenwashing and strengthen the sustainability footprint of European economies and markets. To ensure these results, companies must publish information about:
- Environmental issues
- Social affairs and treatment of employees
- Respect for human rights
- Anti-corruption and extortion
- Differences in BOD, such as gender, age, education, etc
The Directive, in addition to extending the range of actors obliged to draft this new more detailed reporting, demands all the information communicated by the participating companies in the Sustainability Report will be certified by an independent and accredited third party, to guarantee its reliability and authenticity. Furthermore, all sustainability information must be published in the Management Report and made available in digital format.
The goal of the European Union is to allow investors, politicians and consumers to evaluate the non-financial performance of companies. Thus, the concept of a double perspective is introduced: it is necessary to consider both the impact of the company on people and the environment, and the impact that sustainability issues have on the company itself.
The new rules approximately involve 50,000 companies (compared to 11,700 who were subject to the previous NFRD obligation). The new rules will be applied to businesses, in a staggered basis, between 2024 and 2028:
• From 1st January 2024 for big public interest companies (with more than 500 employees) which were already subject to the Non-Financial Disclosure Directive (NFRD) with data publication deadline in 2025.
• From 1 January 2025 for all big companies not yet subject to the Non-Financial Disclosure Directive (with more than 250 employees and/or €40 million sales volume and/or €20 million in total assets), with data publication deadline in 2026.
• From 1 January 2026 for listed SMEs (except listed micro company), small and non-complex credit institutions and captive insurance companies. SMEs can decide not to partecipate until 2028.
• From 1 January 2028 for non-European that which do not have revenues from sales and services higher than €150 million in the EU, if they have at least one subsidiary or branch in the EU that exceeds certain limits.