End of November the Council approved the CSRD and gave the go for the signing of the directive which will effect approximately 49000 companies. The CSRD amends the existing reporting requirements of the NFRD (Non Financial Reporting Directive), which concerned approx 12000 companies. The new rules will need to be implemented by member states 18 months later, i.e. middle of 2024.
The CSRD creates a framework for required sustainability disclosures and it´s main aim is to extend the scope to all large companies and all companies listed on regulated markets. It also requires auditing / assuring of reported information, introduces more detailed reporting requirements, and a requirement to report according to mandatory EU sustainability reporting standards and requires the companies to digitally ‘tag’ the reported information, so it is machine readable and feeds into the European single access point envisaged in the capital markets union action plan.
As already provided for in the German Due Diligence Law (GDDL; https://www.gesetze-im-internet.de/lksg/ ), the CSRD requires a report on the performance of risk analyses and the implementation of preventive and remedial measures. However, the requirements of the CSRD are more target-oriented. Companies must be measured, among other things, by whether independently defined KPIs have been achieved and whether preventive and remedial measures have been successful.
The European Financial Reporting Advisory Group (EFRAG) will be responsible for developping draft European standards. The final first set of standards is envisaged before the end of June 2023, first drafts have already been submitted. Details can be found on https://efrag.org/ .