The Corporate Sustainability Reporting Directive

On 5 January 2023 the Corporate Sustainability Reporting Directive (»CSRD«)[1] entered into force. CSRD amends the current Non-Financial Reporting Directive (NFRD)[2] in a way that modernises and strengthens the rules about the social and environmental information that companies have to report.

The CSRD supports the European Green Deal, a set of proposals to make the EU’s climate, energy, transport and taxation policies fit for reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels.

The European Green Deal is Europe’s growth strategy that aims to improve the well-being and health of citizens, make Europe climate-neutral by 2050 and protect, conserve and enhance the EU’s natural capital and biodiversity. As part of that effort, companies need a comprehensive sustainability framework to change their business models accordingly. To ensure the transition in finance, prevent greenwashing and channel private investment behind the transition to a climate-neutral economy, the European Commission adopted several regulations within the Sustainable Finance and EU Taxonomy package, which is comprised of (i) the CSRD, (ii) the EU Taxonomy Climate Delegated Act, and (iii) six amending Delegated Acts on fiduciary duties, investment and insurance advice.

Scope of the CSRD

The scope of the directive is considerably extended to a broader set of large companies, as well as listed SMEs, which will now be required to report on sustainability – approximately 50 000 companies in total.

The Directive applies to the three groups of companies:

  • to all companies listed on the EU regulated markets, except for listed micro companies;
  • to a “large undertaking” that is either an EU company or an EU subsidiary of a non-EU company whereby the term “large undertakings” covers all undertakings exceeding at least two of the following criteria: (a) a net turnover of EUR 40 million, (b) a balance sheet total of EUR 20 million, (c) an average of 250 employees during the financial year;
  • to insurance undertakings and credit institutions regardless of their legal form.

Reporting under the CSRD will first have to be implemented by companies already subject to the NFRD. These companies will have to apply the new rules for the first time in the financial year 2024, for reports published in 2025.

The new rules will ensure that investors and other stakeholders have access to the information they need to assess investment risks arising from climate change and other sustainability issues. According to the directive, sustainability reporting should be “comparable, reliable and easy for users to find and make use of with digital technologies”. They will also create a culture of transparency about the impact of companies on people and the environment. Finally, reporting costs will be reduced for companies over the medium to long term by harmonising the information to be provided. The CSRD also makes it mandatory for companies to have an audit of the sustainability information that they report. In addition, it provides for the digitalisation of sustainability information.

The EU Member States are expected to transpose the new directive into national law 18 months after its entry into force.

[1] Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting (Text with EEA relevance).

[2] DIRECTIVE 2014/95/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups.

RELATED POSTS
We are back in full swing, sharing our experience and knowledge with you!

We are back in full swing, sharing our experience and knowledge with you!

Our lawyers, Jan Sibinčič and Dr Anja Strojin Štampar, will give a lecture for the Slovenian Association of Supervisors on…

Read more
Legal 500 Ranking

Legal 500 Ranking

We are happy to announce that Sibinčič Novak & Partners has been ranked again bythe Legal 500 among the leading…

Read more
We are expanding our legal knowledge and connections across borders.

We are expanding our legal knowledge and connections across borders.

Sibinčič Novak & Partners has joined Mackrell International Legal Network! A global network of law firms specializing in all fields of law….

Read more

Address:

Law firm Sibinčič Novak & Partners
Dalmatinova ulica 8
SI-1000 Ljubljana, Slovenia

Company information:

Share capital EUR 12,000

Reg. no: 9575782000

VAT no: SI68184093

District court of Ljubljana