On 21 June, the Council and the European Parliament agreed on a provisional deal about the Corporate Sustainability Reporting Directive (CSRD). According to the Council, the non-financial information that companies are currently incentivized to report is largely insufficient for investors and other stakeholders.
From 2024, big companies and their subsidiaries will be obliged to publicly disclose all the information about their management and operations of social and environmental risks. This aims to end greenwashing and lay the groundwork for sustainability reporting standards at global level, other than being one of the major cornerstones of the EU Green Deal and the Sustainable Finance Agenda. The European Financial Reporting Advisory Group (EFRAG) will be responsible for establishing European standards, following technical advice from several European agencies. The data submitted by the companies will be independently audited and certified whilst investors will have access to transparent and reliable information.
This directive applies also on non-EU companies with considerable activities on the EU market as Member States will enforce compliance together with the Commission. These companies must provide a report on their ESG impacts, namely on environmental, social and governance impacts, as defined in this directive. Some SMEs listed on public markets will be given the chance to opt out of the new system until 2028.
The provisional agreement reached will need to be formally approved by the Council and the European Parliament. From the Council’s side, the provisional political agreement is subject to approval by the Permanent Representatives Committee (Coreper), before going through the formal steps of the adoption procedure.
To access the directive, click here.