What we know so far about the roadmap to CSRD
In our previous article, we described the regulations around Corporate Sustainability Reporting Directive (CSRD). Companies are becoming increasingly aware of the social and environmental impact of their business operations, leading to the introduction of sustainability reporting standards, referred to as Environmental, Social, and Governance reporting (ESG). In this article, we describe the roadmap to Corporate Sustainability Reporting Directive (CSRD). As soon as the roadmap to CSRD changes we will also publish an update.
In December 2019, The EU Commission announced it would review the existing Non-Financial Reporting Directive in light of the European Green Deal. Throughout 2020, the EC launched public consultations with stakeholders and mandated the European Financial Reporting Advisory Group (EFRAG) to conduct preliminary action on expanding EU non-financial reporting standards. Based on the recommendation of the EFRAG to develop EU sustainability reporting standards, the EC made its first proposal for the Corporate Sustainability Reporting Directive (CSRD) in April 2021.
This directive extends the existing reporting requirements of the Non-Financial Reporting Directive (NFRD), aimed to bring sustainability reporting to the same level as financial reporting. In February 2022, the CSRD was approved by the European Council (EC), after which it was submitted to the European Parliament (EP). In their submission, some amendments were proposed, including a delay for several deadlines and a smaller reporting burden for SMEs.
It was planned to be effective from 2024, reporting on Fiscal Year 2023. However, the European Council proposed delaying it to start in 2025, with different phases for specific companies.
- Phase 1: 2025, report on FY2024 – Companies already complying with NFRD
- Phase 2: 2026, report on FY2025 – Large companies that did not yet comply with NFRD
- Phase 3: 2027, report on FY2026 – Listed Small to Medium-sized Entreprises (SMEs) & small banks and insurance companies
In addition, a new deadline for reasonable assurance is requested to only be effective from 6 years after their starting point in complying with CSRD. E.g., when you start in 2026, the reasonable assurance would begin in 2032. We illustrate this timeline in the below figure:
More recently, in April 2022, the EFRAG published the first draft of the European Sustainability Reporting Standards (ESRS). Here, you can already view the reporting standards for several topics within the three Environmental, Social, and Governance pillars.
Last week, on 21 June, the EP approved the CSRD, moving it forward to the EU Commission. It is planned that all member states will adopt it in October 2022.
In the meantime, we keep you updated on all the developments around CSRD and prepare you for the upcoming challenges of increasing data volumes and reporting processes. In addition, we guide you through the available tools in the market to facilitate sustainability reporting processes.