Reed Smith In-depth

Key takeaways

  • The Corporate Sustainability Reporting Directive (EU) 2022/2464 (the “CSRD”) introduces new rules concerning the social and environmental disclosures companies are required to make.
  • The CSRD will not only apply to a greater number of EU companies than previous reporting rules, but will also bring a number of non-EU companies into scope.
  • The reporting requirements will be implemented in stages from 2024 to 2028 for different categories of companies.
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Abstract

The Corporate Sustainability Reporting Directive (EU) 2022/2464 (the CSRD) introduces new rules concerning the social and environmental disclosures companies are required to make and expands the scope of reporting requirements to include a broader range of companies. Most notably, the CSRD will not only apply to a greater number of EU companies than previous reporting rules, but will also bring a number of non-EU companies into scope. The extra-territorial effect of the rules is potentially very broad and companies with a significant presence or product placement in Europe would be well advised to consider how they might be affected. Companies subject to the CSRD will be required to report according to European Sustainability Reporting Standards (ESRS) on the social and environmental risks they face, and on the impact of their activities on people and the environment. In addition, in-scope companies will need to disclose how sustainability factors affect their financial performance. The reporting requirements will be implemented in stages from 2024 to 2028 for different categories of companies.

Assessing the impact of the CSRD on a company’s reporting requirements is complex and is likely to be particularly challenging for those that may already be subject to different reporting regimes (whether they be compulsory or voluntary, or in the U.S., the UK or elsewhere).

Overview of the CSRD

The CSRD, which entered into force on 5 January 2023, revises and extends the requirements for sustainability reporting on environmental, social and governance (ESG) matters under Directive 2013/34/EU (the Accounting Directive).