The Non-Financial Reporting Directive (NFRD) will soon become the “Corporate Sustainability Reporting Directive (CSRD). A draft delegated act by the European Commission aims to create a set of rules that will – over time – bring sustainability reporting on a par with financial reporting. It will extend the EU’s sustainability reporting requirements to all large and listed companies.
This means that nearly 50,000 companies in the EU will soon need to follow detailed EU sustainability reporting standards, an increase from the 11,000 companies that are subject to the existing requirements. In other words, the Commission proposes the development of standards for large companies plus separate, proportionate standards for SMEs, which non-listed SMEs can use on a voluntarily basis.
The new CSRD would also require publicly listed companies, banks and insurance companies to release information about how their activities align with the list of investments considered sustainable under the new EU Taxonomy Regulation. With this, the Commission wants to help investors channel more money toward projects supporting the green transition.
Companies would for example be asked “to disclose the share of their turnover, capital and operational expenditure resulting from environmentally sustainable economic activities,” while financial institutions would have “to disclose to what extent they finance, or invest, in environmentally sustainable economic activities.”
The draft delegated regulation still needs to be discussed and finalized with the European Parliament and the European Council.
Click HERE for further information about the upcoming CSRD.