Corporate Sustainability Reporting Standard (CSRD)
The new European Sustainability Reporting Directive (CSRD) came into effect on 05.01.2023 and shall be implemented into the national law of the EU member states within 18 months (by mid-2024 at the latest).
With the new CSRD, the number of organisations in the EU obliged to report increases 4-fold to around 49,000 affected companies. By increasing the number of affected parties and setting clear EU-wide regulations regarding formats, contents, key figures, deadlines and audit obligations are intended to increase transparency with regard to sustainability-related performance in the economy.
In Germany, the transposition into national law is expected in summer 2023. The CSR Directive Implementation Act (CSR-RUG) currently in force in Germany on the disclosure of information on non-financial aspects is therefore expected to be replaced from 2024 - at least with regard to environmental, employee and social issues, respect for human rights and combating corruption and bribery (section 289c HGB).
The concrete contents and indicators for reporting are defined in the EU standards for CSR reporting (European Sustainability Reporting Standards - ESRS). These are currently available as drafts at the EU Commission. The indicators to be reported in the EU have not yet been finalised. However, we provide regular information on the latest developments.
CSRD - Affected parties, report contents and audit requirement
The CSR reporting obligation is extended as follows:
From 1 January 2024
Companies with more than 500 employees that are already required to report under the EU Non-Financial Reporting Directive (NFRD)
From 1 January 2025
All large companies (whether listed or not) that meet two of the following three criteria:
• more than 250 employees
• more than 40 million euros turnover
• more than 20 million euros balance sheet total
From 1 January 2026
Listed SMEs, small and non-complex credit institutions and captive insurance and reinsurance companies
From 1 January 2028
Also non-EU companies that generate an annual net turnover of more than €150 million in the EU and have at least one subsidiary or branch in the EU
Important: For all of the above-mentioned deadlines, the report is effectively published one year later. The report must always cover the previous business year, and the disclosure of the corresponding information is due on 30th of April of the following year. This means, for example, that large companies that have only published their non-financial indicators voluntarily up to now must report on the 2025 business year in 2026.
As the publisher of the indicators, the Sustainability Board of the European Financial Reporting Advisory Group (EFRAG), adopted the first set of drafts of the planned EU standards for CSR reporting on November 15th of 2022. The second, final set is to be adopted in summer 2023. This will fully define the CSRD reporting content and the transition period from 2024 to 2028 will begin.
The compromise drafts presented by the EU Commission in November 2022 have the following structure:
The cross-sectional standards ESRS1 and ESRS2 define the general requirements for a sustainability report, while the topic-specific standards describe reporting requirements of the central sustainability topics.
According to the CSRD, the verification of sustainability reporting is mandatory. One of the main points of controversy was the approval of institutions for auditing the company information: Are auditors the only ones allowed to audit or can certification bodies and environmental auditors do the same?
In the final version, this decision was delegated to the states. How the state law will be implemented in Germany is still open. Consultations at state level are already in full swing and, at least from Brussels, no exclusion has been specified so far. We therefore hope to be able to support our clients in the audit of information subject to CSRD in the future! A decision on the audit authority is expected in summer 2023. We will inform you immediately.
Recommendations by GUTcert
If your company has to report on the non-financial indicators in terms of the CSRD in the coming years, the bridging period should be used: Collect and analyse the necessary data promptly so that a solid sustainability strategy can be defined.
We would be happy to support you by carrying out our sustainability check to record the current status of your sustainability performance.
Have you already written a sustainability report? Then we would be glad to check any possible gap to the new standards.
If your company already operates management systems, you have a clear advantage: you benefit from many interfaces between sustainability reporting and your certifications.
Training courses at the GUTcert Academy
We have been supporting our clients in writing sustainability reports for many years: We review them and conduct workshops to make the definition of the essential topics of sustainable development transparent. For this purpose, we offer numerous training courses for those responsible in our academy.