Corporate sustainability reporting
Corporate sustainability reporting
EU rules require large companies and listed companies to publish regular reports on the social and environmental risks they face, and on how their activities impact people and the environment.
What the EU is doing and why
EU law requires all large companies and all listed companies (except listed micro-enterprises) to disclose information on what they see as the risks and opportunities arising from social and environmental issues, and on the impact of their activities on people and the environment.
This helps investors, civil society organisations, consumers and other stakeholders to evaluate the sustainability performance of companies, as part of the European green deal.
New rules on corporate sustainability reporting: The Corporate Sustainability Reporting Directive
On 5 January 2023, the Corporate Sustainability Reporting Directive (CSRD) entered into force. This new directive modernises and strengthens the rules concerning the social and environmental information that companies have to report. A broader set of large companies, as well as listed SMEs, will now be required to report on sustainability.
The new rules will ensure that investors and other stakeholders have access to the information they need to assess the impact of companies on people and the environment and for investors to assess financial risks and opportunities arising from climate change and other sustainability issues. Finally, reporting costs will be reduced for companies over the medium to long term by harmonising the information to be provided.
The first companies will have to apply the new rules for the first time in the 2024 financial year, for reports published in 2025.
Companies subject to the CSRD will have to report according to European Sustainability Reporting Standards (ESRS). The standards were developed by the EFRAG, previously known as the European Financial Reporting Advisory Group, an independent body bringing together various different stakeholders.
The ESRS were published in the Official Journal on 22 December 2023 under the form of a delegated regulation. They are tailored to EU policies, while building on and contributing to international standardisation initiatives.
The CSRD also requires assurance on the sustainability information that companies report and will provide for the digital taxonomy of sustainability information.
Rules introduced by the Non-Financial Reporting Directive
The rules introduced by the Non-Financial Reporting Directive (NFRD) remain in force until companies have to apply the new rules of the CSRD. Under the NFRD, large companies have to publish information related to
environmental matters
social matters and treatment of employees
respect for human rights
anti-corruption and bribery
diversity on company boards (in terms of age, gender, educational and professional background)
These reporting rules apply to large public-interest companies with more than 500 employees. This covers approximately 11 700 large companies and groups across the EU, including
listed companies
banks
insurance companies
other companies designated by national authorities as public-interest entities
Policy making timeline
22 December 2023
Legislation – European sustainability reporting standards
Publication of the European Sustainability Reporting Standards (ESRS) in the Official Journal.
17 October 2023
Legislative proposal – European sustainability reporting standards
2024 Commission work programme: Proposal for a Decision as regards the time limits for the adoption of sustainability reporting standards for certain sectors and for certain third-country undertakings.
31 July 2023
Legislation – European sustainability reporting standards
Adoption of the European Sustainability Reporting Standards (ESRS), accompanied by questions and answers on the ESRS.
Source : finance.ec.europa.eu
