CSRD timeline: how to comply and when?

The Corporate Sustainability Reporting Directive (CSRD) aims to enhance the transparency of corporate sustainability reporting in the European Union.  

This guide outlines the timeline of the Directive’s development, key features, and its importance in enhancing corporate transparency and accountability in environmental, social, and governance (ESG) matters.

Early Developments and Influences

In line with the EU's ambition to achieve a net-zero status by 2050, the European Commission acknowledges the necessity of steering private investments towards environmentally sustainable projects.

The Commission recognises the importance of investor’s access to quality, credible and comprehensive information about their investment targets, including their environmental practices, social responsibilities, and governance structures.

The Corporate Sustainability Reporting Directive (CSRD) acts as a key legislative instrument to aid the shift towards a more sustainable society while responding to existing shortcomings in sustainability reporting.

This Directive works in conjunction with two other key regulations with similar objectives: the Sustainable Finance Disclosure Regulation (SFDR) and the EU Taxonomy.

Moreover, the CSRD is set to enhance and replace the Non-Financial Reporting Directive (NFRD).

Timeline

Early Developments

Before 1996-97, a few businesses and industry bodies voluntarily reported on their environmental and social impact. With the launch of the Global Reporting Initiative (GRI) in 1997, structured sustainability reporting started gaining prominence.

• 2014: The European Commission proposes a directive aimed at enhancing transparency in sustainability reporting, leading to the approval of the NFRD by the European Parliament.
• 2015: Official publication of the NFRD in the Official Journal of the European Union (OJEU).
• 2017-2018: NFRD is transposed into national law by EU Member States, with companies beginning to report on various non-financial information.

Transition to CSRD

• 2021: The European Commission conducts a consultation on the NFRD, leading to the approval of a revised and expanded version, known as the Corporate Sustainability Reporting Directive (CSRD).
• 2022: CSRD was formally published in the Official Journal of the European Union (OJEU), and EU Member States were allocated a deadline of 18 months to incorporate the Directive into their respective legislations. EFRAG initiated a public consultation on the draft of the European Sustainability Reporting Directives.

CSRD Implementation and Requirements

• 2023: CSRD officially entered force in January. The first set of European Sustainability Reporting Standards (ESRS) was adopted as a Delegated Act by the European Commission in July, with final adoption in October.
• CSRD Requirements: Companies must follow the ESRS, provide third-party assurance for sustainability information, and publish this information in a digital format (XHTML) as part of their management report.
• Scope: The CSRD is mainly targeted at large EU firms, covering both publicly traded companies and European subsidiaries of companies based outside the EU, fulfilling at least two of these conditions: having over 250 employees, a turnover of more than €40 million, or possessing total assets exceeding €20 million. It is anticipated that approximately 50,000 companies throughout the EU will be impacted.

Learn more about CSRD requirements and compliance process here.

Implementation Timeline and Phases

CSRD will be implemented in various phases as per company size and other criteria:

• First Phase (Starting 1st January 2024): Impacts large companies with over 500 employees already subject to the NFRD, mandating them to start reporting in alignment with the CSRD guidelines starting from fiscal year 2024, with publication to be due for 2025.
• Second Phase (Starting 1st January 2025): Includes large companies meeting at least two out of three specified requirements, which were not previously subject to the NFRD.

Subsequent Phases:

• Large public companies in the EU, with shares traded in the EU market and more than 500 employees, are required to start reporting in 2025 for financial periods beginning on or after January 1, 2024.
• Big EU companies and parent companies of large groups, along with large non-EU companies listed on an EU market, need to begin reporting in 2026 for financial periods that start on or after January 1, 2025.
• Small and medium-sized businesses in the EU and those from outside the EU, but listed on EU markets, must start their reporting in 2027 to 2029 at the latest, for financial periods starting on or after January 1, 2026.
• Non-EU companies with significant EU subsidiaries or a branch in the EU are required to report from 2029 for financial years starting on or after January 1, 2028.

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Significance and Future Outlook

The CSRD signifies a major step forward in corporate sustainability reporting.

It aims to systemise sustainability reporting across the EU, ensuring consistent, reliable, and easily understandable information for all stakeholders.

By the time the first batch of reports as per CSRD are published, it is expected that the Directive would have resulted in enhanced comparability and benchmarking across industries and geographies.

This, in turn, will drive more informed decision-making by investors, regulators, and consumers, who will have access to more transparent and comprehensive information about companies' ESG performance.

In the future, the CSRD could serve as a model for other regions and contribute to the development of global sustainability reporting standards. As the EU leads in this area, it could influence practices worldwide, encouraging a global shift towards more responsible and sustainable business practices.

In conclusion…

The Directive’s impact on corporate reporting, stakeholder engagement, and overall corporate responsibility is poised to be profound. It is expected to set a new standard for transparency and accountability in the business world.

If your company must comply with the CSRD, you should begin immediately.

The deadline is rapidly approaching, and the consequences of noncompliance can be significant.

At Apiday, we understand the complexities and challenges involved in the reporting process.

That's why our platform is designed to simplify and streamline it by:

• Identifying your specific reporting requirements
• Pre-populating ESRS templates
• Highlighting any data gaps that need to be addressed
• And providing you with a fully compliant CSRD reporting pack, complete with digital tagging and EU Taxonomy alignment, ready for audit and seamless integration into your annual reporting

So you can focus on what matters the most: driving change in your company rather than fetching and crunching data!

Take the first step towards CSRD compliance now, book a no obligations session with one of our experts!