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What is the CSRD and Why is it Important for You?
The Corporate Sustainability Reporting Directive (CSRD) is the latest iteration of EU’s sustainability reporting regulation. This new directive replaces the Non-Financial Reporting Directive (NFRD), which has been in force since 2018. The CSRD substantially increases the requirements, for listed undertakings residing or operating within the EU, to disclose on their ESG performance. The CSRD came into effect on the 5th of January 2023, and the first companies to report in accordance with this new regulation are to publish their reports in FY2025 based on FY2024 data. The 11.700 undertakings already subject to the NFRD are first in line to report. Next in line is the “Large” undertakings which are companies that meet two of the following three criteria:
- 250+ employees
- More than €25 million in total assets
- More than €50 million in net revenue
The “Large” undertakings are to start reporting in FY2026 on FY2025 data.
And finally, we have the rest, which are listed SME’s (except micro-enterprises) and subsidiaries of non-EU undertakings with a turnover of more than €150 million. These have to report in FY2027 on FY2026 data.
In total an estimated 50.000 undertakings within the EU are going to fall under this regulation, and another 10.000 undertakings from outside the EU.
Some key takeaways from the CSRD are the introduction of:
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Double Materiality
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– meaning that undertakings are to assess, not just how their operations can be impacted by external factors but also how their operations impacts the world.
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Value chain reporting
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– meaning that undertakings are to conduct due diligence and report on material subjects throughout their value chain.
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Assurance
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– meaning that all disclosures published under the CSRD are to obtain assurance from a third-party auditor. Starting with limited assurance and moving to reasonable assurance no later than 2028
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Digital tagging
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– meaning that all disclosures published under the CSRD are to receive XBRL-tagging, to become machine readable, and to be publishable and comparable through the European Single Access Point (ESAP)
A Snapshot of the CSRD and What to Prepare
Expertise Brief
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Get an overview and find out the next steps to take in order to prepare for the CSRD
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More Useful Information
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This e-book gives straightforward answers to some of the biggest ESG questions. Read it to find answers to:
What ESG data needs to be included in the annual report, Who needs to be involved in the ESG reporting process, How ESG is working alongside other mandates to disrupt the annual reporting process, Why it's important to future-proof your ESG reporting processes now to mitigate further inevitable change.
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