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What is the Corporate Social Responsibility Directive (CSRD)?

Updated: Jan 18

The Corporate Sustainability Reporting Directive (CSRD) of the European Union came into force in January 2023, mandating detailed reporting on environmental, social, and governance aspects. The impact of CSRD extends beyond entities covered by the current EU non-financial reporting requirements (NFRD), encompassing certain non-EU companies and their EU subsidiaries. Compliance with specific reporting obligations depends on various factors, making it a complex process that may require legal counsel's early involvement. Reporting obligations may commence as early as the fiscal year 2024, and their significance should not be underestimated.


The CSRD establishes a foundational framework, and EU Member States are tasked with transposing it into national law. While Member States can introduce additional provisions, they are not allowed to eliminate any requirements outlined in the CSRD. Therefore, companies are advised to closely monitor developments in EU Member States as part of this ongoing process.


Who is impacted?


The reach of the new requirements extends widely, affecting not only publicly traded companies but also encompassing US and other non-EU-based companies. The impact is not restricted solely to publicly traded entities. Reporting obligations may be applicable to entities falling within any of the following categories, either at the entity level or as part of a consolidated group.


  1. Companies listed on an EU Exchange

  2. Large* EU unlisted companies

  3. The parent company of an EU-unlisted large* group of companies


*Total Assets: €25m, Net revenue: €50m, Avg. employees: 250


What rules are introduced by the Non-Financial Reporting Directive?


The regulations outlined in the Non-Financial Reporting Directive (NFRD) continue to be in effect until companies are required to adhere to the new regulations of the Corporate Sustainability Reporting Directive (CSRD). According to the NFRD, large companies are obligated to disclose information pertaining to:


  • environmental matters

  • social matters and treatment of employees

  • respect for human rights

  • anti-corruption and bribery

  • diversity on company boards (in terms of age, gender, educational and professional background)


The need for independent assuarance


Independent assurance is mandated for Corporate Sustainability Reporting Directive (CSRD) reporting from its first applicable year. The requirements commence with limited assurance and progress to reasonable assurance at a later, unspecified date. The nature, timing, and extent of assurance procedures will vary, taking into account factors such as:


  • The choice of reporting standards.

  • Whether the parent company intends to report at a consolidated or subsidiary level.

  • The timing of the reporting requirements.

  • Whether the statutory auditor is enlisted to conduct the sustainability attestation.


Anticipated are substantial coordination efforts between non-EU group teams and EU-based assurance teams in conducting audits of CSRD requirements.



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