Changes to the original proposal, published by the European Commission in April 2021, include a revised timeframe for application and the extension of sustainability reporting obligations to certain non-EU companies.
The Council press release confirmed that the application of the CSRD will now take place on a phased basis as follows:
- from 1 January 2024 (reporting year 2025) for companies already subject to the EU Non-Financial Reporting Directive ("NFRD");
- from 1 January 2025 (reporting year 2026) for large companies that are not presently subject to the NFRD; and
- from 1 January 2026 (reporting year 2027) for EU listed SMEs, small and non-complex credit institutions and captive insurance undertakings.
The press releases also confirm that the requirement to provide a sustainability report will also apply to non-EU companies with substantial activity in the EU (generating an annual net turnover of EUR150 million in the EU and with at least one subsidiary or branch in the EU).
The agreed text of the CSRD is not yet available and there are some further steps to be taken before a final directive is published in the Official Journal of the EU. The CSRD will enter into force 20 days after its publication in the Official Journal, following which member states will be required to transpose the CSRD into national law within 18 months.
The Corporate Sustainability Reporting Directive (CSRD) will make businesses more accountable by obliging them to disclose their impact on people and the planet. This aims to end greenwashing and lay the groundwork for sustainability reporting standards at global level.