EU Parliament adopts new sustainability reporting rules
The new Corporate Sustainability Reporting Directive (CSRD) was adopted with a large parliamentary majority in favor of more detailed requirements and a wider scope of companies that must report. The EU hopes to end greenwashing, strengthen the EU’s social market economy, and lay the basis for globally comparable reporting standards.
The new EU sustainability reporting requirements will now apply to all large European companies, regardless of whether they are listed or not. Thus around 50,000 companies will have to collect and report on their sustainability performance versus the previous 11,700 companies under the previous NFRD. Non-EU companies, with substantial activity in the EU (turnover > €150 million), such as many Swiss companies, will also have to comply. Listed SMEs are accorded more time to comply.
The CSRD introduces more detailed reporting requirements on companies’ impact on the environment, human rights, and social standards, based on common criteria in line with EU’s climate goals as well as the impacts affecting the financial position of the company (double materiality). The reporting will be based to a large extent on existing frameworks provided by GRI, SASB, and TCFD.
The CSRD also requires independent assurance of the reporting supplementing auditing requirements of financial reports. The idea is to put financial and sustainable reporting on equal, reliable footing. Digital access will be ensured by using XBRL format.
The timeline has seen some delay, but companies already reporting under the existing NFRD, will have to comply in 2025 for the year 2024, and large companies not governed by NFRD (i.e., largely the difference between 50,000 and 11,700) will have to report a year later in 2026. Listed SMEs must report in 2027 with an opt-out until 2028.