CSRD implementation: where are we now?

Photo by: Christian Lue, Unsplash

As the Corporate Sustainability Reporting Directive (CSRD) is rolled out across the EU, we look at how countries are “gold-plating” this key directive and member state progress on the transposition process.

What is the CSRD?

The CSRD requires companies in the EU (and parent companies outside the EU) to disclose non-financial information about environmental, social, and governance matters in a sustainability report.

Many companies in the EU already disclose non-financial information, as required by the Directive 2014/95/EU on Non-financial Reporting (NFRD), but the CSRD amends the NFRD and other existing legislation to extend the scope of this reporting to more companies, while introducing additional reporting requirements. One of the important provisions of the CSRD is that companies in scope must follow the European Sustainability Reporting Standards, which set out the specific disclosures companies must make. The CSRD also requires companies to ensure sustainability reports are published in a digital and machine-readable format as part of companies’ management reports. Companies must also provide external assurance for these reports.

The CSRD’s requirements are being phased in between 2024 and 2028. Large companies that are already reporting under the NFRD must apply the CSRD’s rules from their 2024 financial year and submit their first sustainability reports in 2025.

Why is the CSRD so important?

The CSRD seeks to make companies more accountable for their impacts on people and the environment by giving sustainability information a status comparable to that of financial information.

Transposition requirements

The CSRD’s requirements were required to be transposed into the law of EU member states by July 6, 2024, with first reports expected in 2025 for the largest companies in scope. Several countries have completed the task, some are in progress, and others have yet to begin. See Figure 1 below but note that Croatia completed its transposition shortly after the deadline and other countries’ draft legislation continues to move through the legislative process.

Figure 1. Member state progress on implementing the CSRD, as of July 6, 2024.

Above and beyond

The CSRD sets minimum requirements for EU member states. However, countries can add or strengthen requirements (often called “gold-plating”) in certain ways:

• Extended scope: Countries may extend the CSRD’s scope to encompass more companies, such as including more types of companies or including more companies by setting different (lower) thresholds.
• Language: Non-EU and/or third-country parent companies may be required to translate their consolidated reports in the official language of the country, or international or regional languages.
• Online publishing: Companies may be required to publish digital copies of their reports on their websites to make sure they are freely accessible.
• On-demand reports: Companies without websites may be required to provide physical copies of their reports upon request.
• Independent assurance: Countries may require that a company’s sustainability report is assured by an independent provider.
• Distinct auditor for assurance: Countries may allow companies to have their sustainability report assured by a separate auditor (a different auditor to that used to assure the company’s annual financial statement).
• Stricter submission deadlines: Countries may introduce stricter submission deadlines compared to the CSRD.

Do you need to know more about the CSRD?

At ECOFACT, we are closely monitoring the national transposition of the CSRD by EU member states in our Policy Outlook tool. We can help you stay informed about the CSRD, and other crucial sustainability regulations across the EU and worldwide, and what these mean for your organization.

Learn more about Policy Outlook and subscribe today.