La Directive sur le Reporting de la Durabilité d'Entreprise (CSRD)

La Directive sur le Reporting de la Durabilité d'Entreprise (CSRD)

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The EU legislation will affect 50,000 companies - will you be one of them?

The Corporate Sustainability Reporting Directive (CSRD) is the new EU legislation requiring all large companies to publish regular reports on their environmental and social impact activities. It helps investors, consumers, policymakers, and other stakeholders evaluate large companies' non-financial performance. Thus, it encourages these companies to develop more responsible approaches to business. For instance, it radically changes companies' scope and type of sustainability reporting. With the CSRD, the European Commission defines a common reporting framework for non-financial data for the first time.

On 28 November 2022, the European Union Council approved the corporate sustainability reporting directive (CSRD). Following the Council’s approval of the European Parliament's position, the CSRD legislative act was adopted.

Compliance is happening soon: companies must submit their report aligning with the CSRD on 1 January 2025 for the 2024 financial year. It will be challenging for reporting companies, as data collection and auditing require time and resources. If your company is not familiar (yet) with this regulation and you are wondering, "Does my company need to comply?" it is time to become an expert on the topic. On that side, we have you covered.

Qu’est-ce que la directive européenne sur la publication d'informations extra-financières pour les grandes entreprises (CSRD) ?

To help improve money flow towards sustainable activities across the European Union, the European Commission adopted the ambitious and comprehensive Sustainable Finance Package on 21 April 2021. One of the proposed measures within the package is the Corporate Sustainability Reporting Directive (CSRD).     

The Corporate Sustainability Reporting Directive extends the scope and reporting requirements of the existing Non-Financial Reporting Directive. This regulatory framework mandates sizeable public interest entities to report on their sustainability performance since 2018.

This new legislation comes into play as Environmental, Social and Governance (ESG) reporting gains momentum. There is evidence that companies' information needs to be more sufficient in the reporting. According to the European Commission, "reports often omit information that investors and other stakeholders think is important". Reported information can be challenging to benchmark from company to company, and users often need clarification on whether they can trust it. For example, investors must assess this information to report under the SFRD and channel money to sustainable activities.

Avec ses nouvelles exigences, l'UE s'attaque au problème de la qualité des rapports en établissant un cadre commun pour les rapports. Le CSRD vise également à garantir que les entreprises communiquent des informations fiables et comparables sur le site afin de réorienter les investissements vers des technologies et des entreprises plus durables.

NFRD versus CSRD: differences and action points    

Qu’est-ce que la directive européenne sur la publication d'informations extra-financières pour les grandes entreprises (CSRD) ?
Differences between NFRD and CSRD
Credit: Plan A

Quelles sont les entreprises qui doivent se conformer à la CSRD ?

While the NFRD only requires "public interest entities" with more than 500 employees to report on their sustainability performance, the CSRD requires all large companies - meaning companies with more than 250 employees and more than €50M turnover and/or more than €25M in total assets - and all listed companies (except micro-enterprises, less than ten employees or below €20M in turnover) to report on their sustainability.

As soon as put into force, nearly 50,000 companies (15,000 in Germany alone) in the EU will need to follow detailed EU sustainability reporting standards, corresponding to 75% of all EU companies' turnover.

Which information will have to be disclosed?

In addition to the NFRD, Under Directive 2014/95/EU, large companies have to publish information related to the following:

  • Protection environnementale
  • Responsabilité sociale des entreprises et traitement du personnel
  • Respect des droits de l'homme
  • Lutte contre la corruption
  • Respect de la diversité au sein des conseils d’administration

Also, the CSRD is adding additional requirements on:

  • Double materiality concept: Sustainability risk (including climate change) affecting the company + companies’ impact on society and the environment
  • The process of selecting material topics for stakeholders
  • More forward-looking information, including targets and progress
  • Disclose information relating to intangibles (social, human and intellectual capital)
  • Reporting in line with the Sustainable Finance Disclosure Regulation (SFDR) and the EU Taxonomy Regulation

Businesses will correspondingly have to start reporting how sustainability risks might affect their performance.

While the EU provides voluntary reporting guidelines for NFRD reports, the CSRD introduces more detailed reporting requirements and requirements to report according to mandatory EU sustainability reporting standards. The CSRD reporting will align with the existing Sustainable Finance Disclosure Regulation and the EU Taxonomy.

Learn more about the EU Taxonomy with Plan A's Whitepaper.

Et après ?

On 28 November 2022, the European Union Council approved the corporate sustainability reporting directive (CSRD). Following the Council’s approval of the European Parliament's position, the CSRD legislative act was adopted. After being signed by the President of the European Parliament and the President of the Council, it will be published in the Official Journal of the European Union and enter into force 20 days afterwards. The new rules will need to be implemented by member states 18 months later. Here are the next steps and what to expect:

  • 2025: Businesses already subject to the NFRD will have to start reporting on the financial year 2024
  • 2026: SMEs listed on a regulated market (no micro-enterprises) must report for FY 2025 (but under less stringent reporting requirements).
  • 2028: Small and medium enterprises, small and non-complex credit institutions, and captive insurance undertakings will have to start reporting for 2027, with a further possibility of voluntary opt-out until 2028. The reporting standards for SMEs will be lighter.
  • 2029: Non-European companies with EU branches or subsidiaries with a net turnover of €150M in the EU will have to start reporting.

Can companies get sanctioned if they are not complying?

It is still being determined precisely when the EU Commission will sanction businesses failing to comply with the CSRD. According to the Commission's requirements within the Directive, the sanctions can be expected to be significant.

The nature of the sanctions and the fines amount will depend on the different Member States. For example, suppose German businesses must report compliance with the German version of the Non-Financial Reporting Directive (the Directive being amended with the CSRD). In that case, they face fines up to the highest amount: €10M or 5 % of the company's total annual turnover or twice the amount of the profits gained or losses avoided because of the breach.

On the other hand, French businesses face no fines if they don't
report according to the NFRD unless an interested party asks to disclose the non-financial information. If it is not available, subsequently, financial penalties can be imposed by a judge.

What does the CSRD mean for businesses?

If your company must comply with the CSRD, you must act now. 2025 is closer than it seems. To be fully prepared, businesses should start collecting data now.

It is challenging to stay on top of the requirements and understand which data must be collected and when to disclose it. We at Plan A have the solution for you. Get in touch with us.

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