Summary

On January 5, 2023, the Corporate Sustainability Reporting Directive (CSRD) came into effect, introducing updated regulations for companies to report social and environmental information. Approximately 50,000 companies, including a broader range of large companies and listed SMEs, will be required to report on sustainability. The new rules aim to enhance transparency and provide investors and stakeholders with the necessary information to assess investment risks related to sustainability issues. By harmonizing reporting requirements, the directive aims to reduce reporting costs for companies in the long term. The European Sustainability Reporting Standards (ESRS), developed by the independent body EFRAG, will serve as the reporting framework, aligning with EU policies and international standardization efforts. Companies will need to apply these standards starting from the 2024 financial year. The CSRD also mandates sustainability information audits and promotes the digitalization of sustainability reporting. Public feedback on draft standards is being sought, with the final standards to be submitted for scrutiny by the European Parliament and Council.