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EU Publishes Corporate Sustainability Reporting Directive (CSRD)

SafeGuardSSoftlines, Hardgoods, Automotive, Toys and Juvenile Products, Personal and Protective Equipment, Electrical & ElectronicsMarch 06, 2023

SG 34/23

The EU Corporate Sustainability Reporting Directive (CSRD) has now been signed and published in the EU Official Journal. It took effect on January 5, 2023, and EU member states have 18 months to integrate it into their national law.

The Corporate Sustainability Reporting Directive (CSRD) is the EU’s latest initiative to improve the quality and comparability of corporate environmental, social and governance (ESG) disclosures. It replaces and significantly broadens the scope of the existing sustainability reporting requirements under the EU’s current sustainability reporting rules, the Non-Financial Reporting Directive (NFRD). The CSRD is intended to revise and strengthen the rules introduced by the NFRD and strives to increase the transparency of corporate progress in terms of sustainability and environmental protection.

The CSRD creates new and detailed sustainability reporting requirements and significantly expands the number of EU and non-EU companies subject to the EU sustainability reporting framework. It specifies the format of disclosure and the standards that companies must use for their reports (according to European Sustainability Reporting Standards (ESRS)). Affected companies are required to report on sustainability issues such as environmental rights, social rights and human rights, as well as governance factors including employee matters, anti-corruption and anti-bribery matters. These will be phased-in beginning in 2024, with reports being published in 2025. The rules introduced by the NFRD remain in force until companies are required to apply the new rules of the CSRD.

The CSRD applies to all large and listed companies on EU regulated markets. A large company can be defined as an EU company or an EU subsidiary of a non-EU company meeting two out of the three following criteria at its balance sheet date:

  • Net turnover exceeding €40 million; and/or
  • Balance sheet assets exceeding €20 million; and/or
  • More than 250 employees on average during the financial year

Under the CSRD, small and medium enterprises (SMEs) have a delayed compliance date and micro-enterprises exclude from complying with the directive’s requirements.

The new rules require affected companies to publicly publish available reports on their environmental impact, social and economic performance, as well as governance practices, where sustainability information is required to be reported in a clearly identifiable dedicated section of the company’s management report. In addition, the CSRD requires submitted sustainability data to be audited externally to ensure that the provided data is accurate and credible. Company reporting costs are expected to reduce over the medium to long term as the information to be provided becomes harmonized. Non-compliance with CSRD reporting obligations may trigger civil and/or criminal enforcement action.

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SGS is committed to making a positive impact on society through our extensive global supply chain and services provided in all sectors. We have defined high-level ambitions and specific targets for 2023 and 2030 in three areas: better governance, a better society, and a better planet. Our Sustainability Ambitions 2030 address our entire value chain and aim to deliver a measurable contribution to the United Nations' Sustainable Development Goals through our SGS Impact Valuation Framework. Visit our sustainability website, or contact us to discover more.

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For further information, please contact:

Louann Spirito

Louann Spirito

Consumer and Retail — Softlines
US & Canada Softlines Business Head

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