On 28 November 2022, the European Council definitively approved the text of the directive on corporate sustainability reporting (Corporate Sustainability Reporting Directive – CSRD), presented by the European Commission as part of the European Green Deal and the sustainable finance programme.
The objective of the CSRD is to close the gaps in existing rules on sustainability information and establish a common standard for sustainability reporting by enterprises throughout the EU. Financial markets need access to reliable, relevant and comparable ESG information in order for private capital to be directed towards financing the green and social transition.
This directive provides for the introduction of detailed reporting obligations and ensures that large enterprises and listed SMEs are required to communicate information regarding sustainability matters, such as environmental rights, social rights, human rights and governance factors.
With the enactment of the CSRD, enterprises will be required to provide observations on how their business model influences their sustainability and, in addition, how external sustainability factors (primarily climate change and human rights) guide their business activities.
The directive, which must be implemented by Member States within 18 months from its entry into force, provides for a four-year implementation plan (2025-2029) and the rules contained therein shall apply to all large enterprises and all companies listed on regulated markets, with the exception of listed microenterprises.
The CSRD shall be applicable, starting from 2029, also to non-European enterprises, solely in cases where such enterprises generate net revenues from sales and services exceeding EUR 150 million in the territory of the European Union and have at least one subsidiary or branch office in the territory of the EU that exceed certain thresholds.
The approval of the directive by the European Commission represents a confirmation of the commitment to corporate responsibility on ESG reporting matters and to the definition of uniform standards.
