The Corporate Sustainability Reporting Directive (CSRD) is a draft law of the European Commission that aims to improve the consistency and comparability of sustainability reports of companies within the EU. It amends the existing Non-Financial Reporting Directive (NFRD) and extends its scope to a wider range of companies.
The main features of the CSRD are
- Extended scope: The Directive applies to all large companies and all companies listed on regulated markets, including small and medium-sized enterprises (SMEs), although the latter may have some reporting exemptions.
- Detailed reporting obligations: Companies are required to report on sustainability issues, including environmental, social and governance (ESG) factors. This includes information on their business model, sustainability risks and impacts on sustainability issues.
- Alignment with the EU taxonomy: The CSRD requires companies to disclose how their activities comply with the EU taxonomy in order to promote transparency in the area of sustainable finance.
- Audit requirement: Companies must have a third-party audit of their sustainability reports, which increases the reliability of the information provided.
The CSRD is part of the EU's wider commitment to promoting a sustainable economy and ensuring that investors have access to relevant information on sustainability risks and opportunities.