Corporate Sustainability Reporting Directive: Sustainability reports in companies

The Corporate Sustainability Reporting Directive (CSRD) is a landmark European legislation that aims to improve and standardize corporate sustainability reporting. The CSRD is a further development of the previous Non-Financial Reporting Directive (NFRD) and was introduced by the European Union (EU) to increase the transparency and comparability of companies’ environmental, social and governance (ESG) information. The directive was first proposed in 2021 and is expected to come into force in 2024.

Main features of the CSRD:

1. Expanded scope: compared to the NFRD, the CSRD is applicable to a wider range of companies. In addition to listed companies, large unlisted companies as well as certain financial institutions and public bodies are now also included in the reporting obligation.
2. Harmonization and standardization: The CSRD establishes uniform reporting standards and criteria for the disclosure of ESG information. This should ensure that the reports are comparable and enable investors and stakeholders to better assess companies in terms of their sustainability performance.
3. Digital reporting: The CSRD promotes digital reporting by requiring companies to publish their sustainability reports in electronic format. This enables more efficient use of information and facilitates the integration of ESG data into financial analyses.
4. Mandatory verification: Large companies must have their sustainability reports verified by independent auditors to ensure the reliability and integrity of the reported information.
5. Increased sanctions: The CSRD introduces tougher sanctions for companies that fail to meet their reporting obligations or provide inaccurate information. This is to ensure compliance with the Directive.

The introduction of the Corporate Sustainability Reporting Directive underlines the growing importance of ESG factors for companies, investors and society as a whole. It promotes transparency, responsible corporate behavior and the integration of sustainability aspects into companies’ strategic decision-making. Through the CSRD, the EU will take an important step towards a more sustainable and responsible economy