CSRD has been Passed by the European Parliament
Published 21 November 2022
Category: Impact and ESG
The European Parliament has passed the Corporate Sustainability Reporting Directive (“CSRD”). CSRD replaces the Non-Financial Reporting Directive (“NFRD”), and introduces higher requirements of more detailed reporting, and a mandatory EU sustainability reporting standard. Further, it expands the field of application, and more companies will in future be obliged to report on their work with sustainability.
CSRD introduces requirements on detailed sustainability reporting of environmental, social and governance (“ESG”) data. The purpose of the directive is to ensure reliability on the ESG data that companies provide, thus combatting among others greenwashing. It introduces a mandatory audit regime with the purpose of ensuring the reliability of the data. The exact requirements of the reporting will be introduced in the European Sustainability Reporting Standards (“ESRS”) which are still being drafted and are expected to be passed by spring 2023. The public drafts both have standard requirements as well as sector specific requirements, and introduces requirements on strategy, targets, achievement of targets and value chains. Further, the CSRD introduces a double materiality principle used in the assessment and reporting on targets, results, actions taken, policies and material risks.
Apart from the European Parliament, it also needs to be passed by the Council of the European Union. This is expected on 28 November 2022. After passing, the directive shall be implemented into Danish law, primarily by changes to the Danish Financial Statements act.
CSRD will take effect continuously, starting with public companies etc. with more than 500 employees on 1 January 2024 with reporting duties from 2025, then companies with more than 250 employees and/or more than 40 mEUR in net turnover and/or 20 mEUR in balance from 1 January 2025 with reporting from 2026, and lastly public small and medium sized companies, with further details still underway, from 1 January 2026.
See also our pulse update on the proposal for a Directive on Corporate Sustainability Due Diligence here.
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