Final Adoption of the CSRD
Published 6 January 2023
Category: Impact and ESG
The CSRD has now been finally adopted after the Council of the European Union on 28 November 2022 approved the European Parliament’s position. On 16 December 2022, the directive was published in the Official Journal. The date of entry into force is 20 days from the publication date.
We have previously made an update on the CSRD. In general, the CSRD replaces the NFRD and introduces more detailed requirements for reporting on various sustainability matters. Companies must report on how their activities are being affected by external sustainability factors as well as how their sustainability is being influenced by their own business model.
The directive applies to companies listed on regulated markets, including SMEs, as well as all large companies. Also, these companies are responsible for evaluating information on their subsidiaries. In relation to listed SMEs, it will under certain circumstances be possible for them to opt-out in the transitional period, i.e., until 2028. Further, the directive also requires that non-European companies which generate a net turnover of 150 mEUR in EU and which have one or more branches or subsidiaries in EU which exceed more precisely determined threshold values, shall provide a sustainability report.
These new rules must be implemented in the member states within 18 months from the entry into force of the CSRD. It will take effect in the following stages: 1) Companies already covered by the NFRD, i.e. public companies etc. with more than 500 employees, shall report in 2025 on the financial year 2024, 2) large companies not covered by the NFRD but to which the directive now apply, i.e. companies with more than 250 employees and/or more than 40 mEUR in net turnover and/or 20 mEUR in balance, shall report in 2026 on the financial year 2025, 3) listed SMEs, captive insurance undertakings and non-complex as well as small credit institutions shall report in 2027 on the financial year 2026, and lastly, 4) third-country undertakings to which the directive apply shall report in 2029 on the financial year 2028.
For more information on the CSRD, please find the directive here.