Government draft of the CSRD Implementation Act published

On 24 July 2024, the Federal Cabinet adopted the government draft of the law to implement the Corporate Sustainability Reporting Directive (CSRD) (draft law to implement Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No. 537/2014 and Directives 2004/109/EC, 2006/43/EC and 2013/34/EU with regard to corporate sustainability reporting).

Following the draft bill published in March 2024 (see Express Accounting News 14/2024), the government draft represents the next step in implementing the CSRD into national law.

The CSRD obliges large European companies and capital market-oriented SMEs to provide mandatory sustainability reporting, including an audit obligation. It affects large companies. The CSRD amends the Accounting, Transparency and Auditing Directives. The government draft aims to transpose these directives into German law. In the course of implementing the CSRD, the existing legal framework is also to be reviewed and selectively adapted according to the government draft. In addition to comprehensive modifications to the German Commercial Code, adapted regulations are also planned in other relevant laws, such as the German Stock Corporation Act, the Cooperatives Act, the Securities Trading Act, the German Auditors Act and the Act on Corporate Due Diligence Obligations in Supply Chains (LkSG).

According to the government draft, the government continues to maintain that the sustainability report must be audited either by the company's auditor or by another auditor.

Changes compared to the draft bill published in March 2024 were made in areas such as the appointment and reporting of the auditor of the sustainability report. Furthermore, the LkSG substitution right was optimised to avoid duplicate reporting obligations. The ESEF preparation solution implemented in the draft bill was retained as, according to the explanatory memorandum to the law, a continuation of the previous ‘disclosure solution’ would not be possible in accordance with the directive.

The government draft of the implementation law is available here.