CSRD reporting: What you need to know

• 2022: CSRD approval by Parliament and Council.
• 2023: Final approval by EU Commission of first set of ESRS.
• 2024: Applicable for companies subject to NFRD or "large & listed" entities. Expected Transposition of CSRD by Member States before July 2024.
• 2025: Effective for all other "large undertaking" meeting criteria under CSRD (FY 2025 reporting in 2026).
• 2026: Effective for listed SMEs*, certain small and non-complex institutions, captive insurance & reinsurance undertakings (FY 2026 reporting in 2027).
• 2028: Additional reporting for non-EU companies required to report at a global consolidated level under the €150 million criterion of the CSRD (first reporting in 2029).

• Insurance and Banking firms
• Companies listed on EU-regulated markets
• “Large EU Companies (Listed and not Listed)"
• EU companies that are a Parent of a “Large Group”
• Small-medium sized EU undertakings
• Subsidiaries and branches in the EU

The scoping criteria must meet at least two of the following:

1. Total assets exceeding €20 million
2. Net turnover exceeding €40 million
3. 250+ employees.

Additional rules and scoping criteria apply for Group and EU Subsidiary entities of non-EU parents as defined within the CSRD.

• Parent undertakings of a large group need to report on a consolidated basis
• Consolidated financial reporting is not the same as consolidated sustainability reporting
• Entities need to provide an adequate understanding of the risk / impacts of the subsidiaries and disclose based on materiality which may go beyond control
• Subsidiaries may be able to apply an exemption from preparing its own sustainability statements where the parent in the Group is consolidating across the structure
• A temporarily available variant of the subsidiary exemption is available for certain EU subsidiaries with non-EU parents  

Consolidated sustainability reporting also applies to sustainability statements and goes beyond consolidation requirements covered within the financial statements with entities needing to provide an adequate understanding of the risk / impacts of the subsidiaries across any material topics.

The most significant difference is the introduction of mandatory reporting standards under the CSRD in the form of the European Sustainability Reporting Standards (ESRS). Entities reporting under CSRD must apply these EU sustainability reporting standards and bring sustainability information into their annual management report, applying the same reporting period for both.

The EU Commission is at the final stages of approval of the first tranche or Set 1 of the ESRS. The last public consultation on the final amendments closed on 7 July 2023 and the final text was issued within the EU Delegated Acts on July 31 2023.

The first set of ESRS includes two 'cross cutting' and ten topical standards across the three ESG areas as outlined below:

The CSRD and ESRS introduce the concept of double materiality. Entities applying ESRS must report material impacts, risks and opportunities or 'IROs' across each topical area within their sustainability statements that are both financially impactful (outside in) and have an impact to people and the environment (inside out).

Double materiality concept: Summary overview and concepts 

Within ESRS, stakeholders are defined as both users of sustainability statements and other stakeholders or information users. Stakeholders are those who can affect, or be affected by, the organisation and both need to be incorporated into the due diligence process.

A summary of phased-in Disclosure Requirements for all reporting entities is outlined below:

For reporting entities with less than 750 employees:

In addition, until 2030, EU subsidiaries of non-EU parents can prepare just one report, which includes subsidiaries that would ordinarily be required to report separately, due to size or if they are listed. 

CSRD expands the reporting boundary for undertakings beyond their own operations to include both upstream and downstream value chain activities. An undertaking must report material impacts, risks and opportunities within the value chain against ESRS disclosures or if other material impacts exist not covered by ESRS include entity specific disclosures. This applies to all tiers of the value chain.