The Council of the European Union (EU) has given final approval to its guidance on the corporate sustainability reporting directive (CSRD), which will require companies to provide detailed sustainability disclosure.
The decision was announced in a November 28 press release, in which Jozef Síkela, the EU Council’s Minister for Industry and Trade, stated that the CSRD will “make more businesses accountable for their impact on society and will guide them towards an economy that benefits people and the environment.”
The CSRD rules introduce more detailed reporting requirements for companies and ensure that large companies as well as listed small and medium enterprises (SMEs) report on sustainability matters including “environmental rights, social rights, human rights and governance factors.”
Non-European companies will also be required to provide a sustainability report if they generate a net turnover of 150 million euros within the EU and have at least one subsidiary or branch in the EU “exceeding certain thresholds.”
The application of the new regulations is set to take effect in four stages, with the first batch of reporting scheduled in 2025 from companies that are already subject to the EU’s Non-Financial Reporting Directive (NFRD). Large companies not currently subject to the NFRD are required to report in 2026. SMEs, small and non-complex credit institutions, and captive insurance undertakings will report in 2027, and non-European companies will report in 2029.
The European Financial Reporting Advisory Group (EFRAG) will be responsible for developing draft European standards, with the European Commission set to adopt the final version of the standards as a delegated act, following consultations with EU member states and a number of European bodies.