New Corporate Sustainability Reporting Directive (CSRD) by European

Published on: 23 December 2021 12:35 PM
by KnowESG
Climate Disclosure Standard Board
Climate Disclosure Standard Board

A Brief Summary

The EU has published the new Corporate Sustainability Reporting Directive (CSDR) that revises the Non-Financial Reporting Directive. CDSB is working closely with EU Institutions and the Member States to ensure a proper review of the Directive across the European Union. The Sustainability reporting policy in Europe is moving at an unprecedented pace. CDSB will work at the EU level to improve further the Directive. The next update to the CSRD must provide the catalyst to push companies to increase their disclosure on environmental and climate risks and opportunities.

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The new Corporate Sustainability Reporting Directive (CSDR), which replaces the Non-Financial Reporting Directive(NFRD), has been released by the European Union.CDSB is collaborating closely with EU Institutions and the Member States to ensure that the Directive is properly reviewed across the European Union, using worldwide benchmarks such as the CDSB Framework for reporting environmental data.

To guarantee that the new Corporate Sustainability Reporting Directive is fit for purpose, read CDSB's key proposals.

The CSRD proposal alters the Accounting Directive 2013/34/EU, the Transparency Directive 2004/109/EC, the Audit Regulation No 537/2014, and the Audit Directive 2006/43/EC. It requires approximately 49,000 companies across Europe to disclose information in their management reports on their business model and strategy, policies, risks, targets, and due diligence concerning environmental matters, social and employee aspects, respect for human rights, anti-corruption and bribery issues, and diversity in their board of directors in terms of gender and other factors such as age, educational and professional backgrounds.

The CDSB applauds the revision of the Directive as an important step toward increasing corporate transparency, relevance, consistency, and comparability of sustainability data for big and publicly traded companies.

Although some sections of the Directive might be improved, CDSB believes that the legislation should serve as a minimum set of requirements across the EU.

CDSB will work at the EU level to strengthen the Directive, clarify its requirements, and incorporate new information, such as the Task Force on Climate-related Financial Disclosures' proposals (TCFD).

CDSB will continue to build capacity and provide assistance to enterprises at the Member State level to support the reporting of decision-useful sustainability information to financial markets. Improvements to be made are:

  1. Making reporting information material for enterprise value creation in the management report mandatory;

  2. Expanding the current scope to include large undertakings with more than 250 employees, as defined in the Accounting Directive; and

  3. Strengthening non-financial and financial information linkages by ensuring the implementation of the TCFD recommendations, which includes information on the financial impacts of climate change on businesses.

Timeline to Expect

Based on the revision of the Non-Financial Reporting Directive (NFRD) by the Corporate Sustainability Reporting Directive (CSRD) and the establishment of European sustainability reporting standards, Europe's sustainability reporting policy is advancing at an unprecedented pace.

A window of opportunity for Europe's economy.

The next CSRD update must act as a spur for corporations to raise their environmental and climate risk and opportunity disclosure, ensuring that investors are well-informed about the long-term viability of their investments. A minor tweak to the present Directive would not be enough, and it will surely not channel the additional €260 billion in yearly investments required to meet the EU's 2030 climate and energy ambitions.

The above proposals represent CDSB's current position. We appreciate the chance to speak with you about the CSRD position.