What is the CSRD?
The Corporate Sustainability Reporting Directive (CSRD) represents a significant evolution in European Union regulatory frameworks, specifically addressing non-financial reporting obligations for entities operating within its jurisdiction. Building upon the foundation laid by the Non-Financial Reporting Directive (NFRD), the CSRD introduces enhanced reporting requirements to bolster transparency and accountability in corporate sustainability practices. The directive mandates a more expansive scope of disclosure, encompassing diverse facets of environmental, social, and governance (ESG) considerations. By stipulating standardized reporting parameters, the CSRD aims to harmonize sustainability reporting practices across EU member states, thereby facilitating consistent and comparable information for stakeholders.
What are the criteria for CSRD?
Double Materiality Requirements
The directive requires a double materiality assessment, which includes financial materiality and impact materiality. Financial materiality evaluates how sustainability issues impact financial performance and cash flow. Impact materiality assesses the broader environmental and societal consequences of a company’s activities and value chain.
Standardization of ESG Reporting
The CSRD delineates the specifics of what companies are required to report regarding Environmental, Social, and Governance (ESG) factors. This approach aims at streamlining reporting practices and making reports more comparable.
Mandatory External Audit and Assurance
Companies subject to the CSRD must undergo external audit and assurance processes. Initial requirements include limited assurance on sustainability information from an independent and experienced third party.
Digital Standardization of Reporting
The directive mandates the standardization and digitization of corporate sustainability reporting. Reports must be digitally tagged to facilitate integration into the European Single Access Point. This centralized platform consolidates information pertinent to capital markets, financial services, and sustainable finance.
Companies are obligated to provide both retrospective and forward-looking analyses. This entails sharing quantitative data, such as measured impact to date, as well as qualitative information encompassing targets, strategies, and risk assessments. This dual perspective ensures a holistic understanding of a company’s sustainability performance over time.
How ensogo empowers CSRD compliance
Conduct a materiality assessment using ensogo’s industry-specific expertise and data-driven insights
Align requirements and gather data
Collect data aligned with CSRD for easy comparison and reporting
Built-in data validation mechanisms help you prepare for assurance
Frequently asked questions
The Corporate Sustainability Reporting Directive (CSRD) applies to various entities with staggered commencement dates. The CSRD applies to:
⦁ All large EU companies
⦁ Companies with securities listed on an EU-regulated market
⦁ Small and medium-size enterprises (SMEs)
⦁ And certain non-EU parent entities exceeding more than €150 million in net turnover in the EU and who:
⦁ Own a subsidiary that is considered a large undertaking in the EU
⦁ Own a subsidiary with debt or equity securities listed on an EU-regulated exchange
⦁ Own a significant EU branch with net turnover exceeding €40 million
The CSRD outlines a phased approach for reporting obligations, starting in Fiscal Year 2024 through 2028 and including over 50,000 companies.
⦁ 2025: Companies subject to the Non-Financial Reporting Directive (NFRD) are required to report in 2025 for their 2024 financial year.
⦁ Large companies not currently subject to the NFRD must comply with the CSRD starting in 2026 for their 2025 financial year.
⦁ Small & Medium Enterprises shall commence reporting in 2027 for their 2026 financial year.
⦁ International companies with a net turnover exceeding €150 million in the EU and meeting additional CSRD requirements are subject to reporting obligations in 2029 for their 2028 financial year.
The European Sustainability Reporting Standards (ESRS) are a set of guidelines and frameworks established under the Corporate Sustainability Reporting Directive (CSRD).
These standards provide specific requirements and methodologies for reporting on environmental, social, and governance (ESG) factors. The ESRS is designed to standardize and enhance the quality and comparability of sustainability disclosures.
Request a demo today to discover how ensogo can help you collect and manage ESG data more efficiently and advance your sustainability initiatives.