Dialogue with labor unions is essential for achieving sustainability
The Corporate Sustainability Reporting Directive (CSRD) is set to revolutionise the way businesses in the European Union (EU) disclose their environmental, social, and governance (ESG) impacts. The aim is to enhance transparency and disclosure of sustainability information, promoting more responsible and sustainable business practices across the EU.
Application of the CSRD
The CSRD applies to large undertakings, parent companies of large groups (whether listed or non-listed), and listed companies on EU regulated markets. It also extends to small and medium-sized enterprises (SMEs) that have financial instruments admitted to trading on regulated markets, excluding micro-enterprises. Non-EU companies with significant turnover in the EU are also included, starting from 2029 for the 2028 financials.
Reporting Deadlines
The reporting deadlines are phased, with large public-interest entities with over 500 employees required to report in 2025 (financial year 2024). Other large undertakings, parent companies of large groups, and listed SMEs must report in 2026 (financial year 2025), with listed SMEs having an option to opt out for two more years. Large non-EU companies active in the EU must report in 2029 (financial year 2028).
Reporting Content
Companies must provide detailed disclosures on ESG matters, including their business model, strategy, and governance with respect to sustainability; policies, targets, and progress on sustainability goals; GHG emissions; climate-related risks and transition plans; resource usage; workforce diversity; employee well-being; pay equity; human rights due diligence; impacts on communities and value chains; stakeholder engagement; board oversight on sustainability issues; ethics; anti-corruption measures; and sustainability risk management practices.
Double Materiality Perspective
The reporting must reflect not only how sustainability matters affect the company’s financial position but also how the company impacts society and the environment.
Technical Reporting Standards
The reporting must follow the European Sustainability Reporting Standards (ESRS), ensuring consistency, comparability, and reliability across the EU market.
The CSRD entered into force on January 5, 2023, and must be transposed by July 6, 2024. The sustainability reporting becomes an integral part of the management report prepared by the administrators. The Ministry of Economy and Finance has made the draft delegated decree for the transposition of the CSRD available for consultation, with the consultation phase open until March 18, 2024.
[1] European Commission. (2022). Proposal for a Directive of the European Parliament and of the Council amending Directive 2014/95/EU as regards corporate sustainability reporting.
[2] European Financial Reporting Advisory Group (EFRAG). (2021). Final report on the EU Sustainability Reporting Standards.
[3] European Commission. (2022). Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) 2020/852 as regards corporate sustainability reporting.
[4] European Commission. (2022). Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) 2020/2092 as regards corporate sustainability reporting.
[5] European Commission. (2022). Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) 2019/1151 as regards corporate sustainability reporting.
- The CSRD, applicable to various types of businesses and even non-EU companies with significant EU turnover, necessitates detailed financial disclosures on environmental, social, and governance (ESG) matters, incorporating subjects like climate-related risks, human rights due diligence, and workforce diversity.
- The European Sustainability Reporting Standards (ESRS) are utilized for reporting, ensuring consistency and comparability across the EU market, while encompassing science and finance dimensions, such as environmental-science data and business strategy.
