Corporate Sustainability Reporting Directive (CSRD) Corporate Sustainability Reporting Directive (CSRD) Corporate Sustainability Reporting Directive (CSRD)

The Corporate Sustainability Reporting Directive (CSRD) adopted by the EU Parliament in November 2022 profoundly changes the scope and nature of corporate sustainability reporting.

The CSRD significantly expands existing rules on non-financial reporting. All companies listed on an EU-regulated market (with the exception of micro-enterprises) are covered by the new reporting obligation. In addition, all non-capital market oriented companies are covered by the CSRD if they fulfil two of the following three criteria:

• Balance sheet total > 20 million euros
• Net sales > 40 million euros
• Number of employees > 250

It is estimated that this would affect about 50,000 companies in the EU, 15,000 of them in Germany alone. 

The new CSR Directive follows a double materiality perspective. This means that companies must record the effect of sustainability aspects on the economic situation of the company. And they must clarify the impact of operations on sustainability aspects. The CSRD requires reporting to include information on:

• Sustainability goals,
• the role of the executive board and the supervisory board
• the company's most significant adverse impacts, and
• intangible resources not yet accounted for.

In addition, with the new CSRD there is no longer the possibility to publish non-financial information in a separate non-financial report. In future, sustainability information is to be disclosed exclusively in the management report.