Dr. Hanne Böckem
Partner, Audit, DPP
KPMG AG Wirtschaftsprüfungsgesellschaft
The Corporate Sustainability Reporting Directive (CSRD for short), which was adopted in December 2022, obliges certain companies or groups to include a sustainability report in the (consolidated) management report and to make understandable in this report, on the one hand, the effects of the company with regard to people and the environment (impact perspective) and, on the other hand, the effects of sustainability aspects on the development, the earnings situation and the financial position of a company (financial perspective).
Article 29b empowers the European Commission (EU Commission) to issue delegated regulations setting out detailed reporting requirements in the sustainability report (European Sustainability Reporting Standards, ESRS). On behalf of the EU Commission, the European Financial Reporting Advisory Group (EFRAG) had submitted the first set (Set 1) of ESRS drafts to the EU Commission in November 2022, which presented a draft Delegated Regulation in June 2023 (we reported on this in Express Accounting News 17/2023).
After the end of the comment period and processing of the feedback, the Delegated Regulation adopted by the EU Commission was published on 31 July 2023. The first sentence of the ESRS is contained in Annex I to the Delegated Regulation, Annex II contains a list of abbreviations and a glossary.
From the perspective of the EU Commission, the content of the final standards largely corresponds to the drafts of the regulation from June 2023. In particular, the controversially discussed concept was retained according to which all reporting obligations are dependent on the materiality of the disclosures for the reporting company (with the exception of the general disclosures according to ESRS 2). However, in contrast to the drafts from June 2023, the final standards now stipulate that companies that have not identified any material impacts, risks and opportunities in relation to climate change and therefore waive all disclosures under ESRS E1 must provide a comprehensive justification for the immateriality of the topic for the company. If data points that are mandatory for financial companies on the basis of other EU legislation (Sustainable Finance Disclosure Regulation (SFDR), Pillar III reporting requirements for banks, the Reference Values Regulation and EU climate legislation) are omitted, companies must explicitly explain the immateriality of these data points.
The European Parliament and the Council of the European Union now have up to four months to raise objections. If they do not, the regulation will be published in the European Official Journal after this period and will then enter into force three days later. It is to be applied by companies subject to the CSRD from the respective reporting year (2024 at the earliest).