The objective of the CSRD is to bring sustainability reporting to a level of maturity equivalent to financial reporting and make non-financial information more transparent, comparable, and reliable.
But what is it, who will it address, and when will it become effective?
In this article we will see:
- Who is affected by the CSRD
- What's new in the CSRD
- The next steps for compliance
- How our IMPACT solution can help
Who is required to comply with the Corporate Sustainability Reporting Directive?
With the CSRD, the audience of companies required to report ESG data is further expanding. The number of Italian companies obliged to report according to the new standards has risen from 200 to around 5,000, while at a European level there will be around 50,000. The reporting obligation has been extended to:
- large companies, listed or unlisted, with more than 250 employees, a turnover equal to or greater than 40 million euros and assets equal to or greater than 20 million;
- SMEs, with the exception of micro-quoted companies;
- foreign companies which in Europe generate a turnover of more than 150 million euros and have at least one large brand, or a listed branch, or a branch with a turnover of more than 40 million euros.
What are the main innovations introduced?
New European reporting standards
The CSRD has introduced new European reporting standards, called the European Sustainability Reporting Standard (ESRS), which will provide companies with reporting guidelines relating to environmental, social and governance issues. These standards are defined and issued by EFRAG, the European Financial Reporting Advisory Group.
Learn more: ESRS: The European standards for sustainability reporting
Introduction of the principle of double materiality
The principle of double materiality presupposes, for each material topic, the assessment by the companies of:
- the current and potential impacts generated on the environment and society during management (inside-out perspective);
- the risks and opportunities capable of positively or negatively influencing the future cash flows of the organization (outside-in perspective).
Integration of information in the management report and the new format
To make non-financial information more accessible to investors, the new CSRD directive mandates that it be reported and integrated within the management report. Additionally, companies must now publish the management report in an XHTML digital format and tagged according to the ESEF model to ensure greater usability of the information.
Introduction of the concept of limited assurance
Companies will have to obtain from a statutory auditor or an auditing firm a limited assurance on sustainability reporting aimed at verifying the correctness of the information contained in the report and compliance with reporting requirements. By 2028, businesses will be required to obtain reasonable assurance which, unlike limited warranty, requires a more thorough report review process.
Find out the next steps of application of the CSRD Directive for sustainability reporting
Below you will find the dates scheduled for the publication of the sustainability report:
- 2024: companies already subject to the directive for the 2024 report
- 2025: large companies not subject to the directive for the 2025 report
- 2026: listed SMEs (with 2-year opt-out), small and non-complex credit institutions, and captive insurance companies for 2026 report
- 2028: companies with non-EU parent company generating over 150 million euros in Europe for the 2026 report by 2028
Don't miss the deadlines to publish your sustainability reports and keep yourself in compliance with the new directive.
Find out how IMPACT can help your business
If you're looking for a tool to manage all sustainability processes quickly, collaboratively, and seamlessly in compliance with European regulations and international standards, our IMPACT solution is ideal for you!
IMPACT manages ESG processes, environmental and social performance, ensures compliance with international standards, minimizes risks and improves the creation of corporate value.
The IMPACT technological platform has already been chosen by leading Italian and European companies and has been included in the "Smart Innovators: ESG Reporting And Data Management Software” report of Verdantix, an independent international research body, placing IMPACT among the market leading software for ESG Reporting, Disclosure, Data management and Analysis.