The Corporate Sustainability Reporting Directive (CSRD) intensifies the existing rules on non-financial reporting introduced in the 2014 Non-Financial Reporting Directive (NFRD).
Companies will soon be required to publish detailed information on sustainability aspects, increasing their accountability, preventing divergent sustainability standards and easing the transition to a sustainable economy.
Companies will have to report on how their business model affects their sustainability (inside-out) and on how external sustainability factors (such as climate change) influence their activities (outside-in).
The regulation will be enforced in four stages for companies with a presence in the EU:
The European Financial Reporting Advisory Group (EFRAG) was made responsible for developing draft European standards. The European Commission will adopt the final version of the standards as a delegated act, following consultations with EU member states and a number of European bodies.
The location of the disclosure of sustainability information is also specified in the CSRD. Apart from the (company) management report – which is required to be in a machine-readable format – there is also a mandatory audit by an accredited, independent auditor.
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The Council of the EU published the press release on 28.11.2022.