EU corporate sustainability reporting directive adopted. Council gives final green light to corporate sustainability reporting directive. The Council gave its final approval to the corporate sustainability reporting directive (CSRD).
This means that companies will soon be required to publish detailed information on sustainability matters. This will increase a company’s accountability, prevent divergent sustainability standards, and ease the transition to a sustainable economy.
In practical terms, companies will have to report on how their business model affects their sustainability and how external sustainability factors (such as climate change or human rights issues) influence their activities. This will equip investors and other stakeholders better for making informed decisions on sustainability issues.
New Reporting Rules For Companies
The Corporate Sustainability Reporting Directive introduces more detailed reporting requirements and ensures that large companies and listed SMEs are required to report on sustainability matters such as environmental rights, social rights, human rights and governance factors.
The rules also apply to listed SMEs, taking into account their specific characteristics. An opt-out will be possible for listed SMEs during a transitional period, exempting them from the application of the directive until 2028.
The new sustainability reporting rules will apply to all large companies and to all companies listed on regulated markets except listed micro undertakings. These companies are also responsible for assessing the information applicable to their subsidiaries.
For non-European companies, the requirement to provide a sustainability report applies to all companies generating a net turnover of EUR 150 million in the EU and which have at least one subsidiary or branch in the EU exceeding certain thresholds. These companies must provide a report on their environmental, social and governance (ESG) impacts, as defined in this directive.
Next Steps of the Corporation Sustainability Reporting Directive
Following the Council’s approval today of the European Parliament’s position, the legislative act was adopted.
After being signed by the President of the European Parliament and the President of the Council, it will be published in the Official Journal of the European Union and will enter into force 20 days afterward. The new rules will need to be implemented by member states 18 months later.