CSRD — In simple terms
The Corporate Sustainability Reporting Directive (CSRD) is a game-changer in the making. Proposed by the European Commission on April 21, 2021, the CSRD aims to widen the scope of the sustainability reporting mechanism currently in force in the EU — the Non-Financial Reporting Directive.
The NFRD, which was introduced in 2018, is limited in coverage, applying to only around 11,000 EU companies. The CSRD regime is set to widen the coverage to roughly 50,000 companies.
Criteria for CSRD compliance
All EU-listed companies and large companies meeting any two of the following three criteria need to comply with the CSRD regime.
- More than 250 employees
- A turnover of over 40 mln euros
- Total assets over 20 mln euros
The substance of companies’ CSRD reporting
Companies need to report on double materiality — which means they need to disclose the sustainability risks that affect themselves as well as the impact of their activities on the environment and society.
Companies also need to furnish more forward-looking information such as targets, and the progress being made to achieve them. Disclosures under the CSRD will be subject to a limited level of assurance.
When does the CSRD regime kick in?
The CSRD will kick in from the 2023 financial year, with the first set of sustainability reporting standards being available from mid-2022. The second set of standards will be made available in 2024.
The Global Reporting Initiative and the European Financial Reporting Advisory Group (EFRAG) have recently tied up to construct new EU sustainability reporting standards.
What format do companies need to use for CSRD reporting?
Companies are required to furnish sustainability information in the digital xHTML format and include it in their management report. The reporting will be in accordance with the European Single Electronic Format (ESEF) regulation.
Use IRIS CARBON® for CSRD reporting
IRIS CARBON® — a collaborative SaaS solution — is used by companies across the EU for ESEF reporting. The solution is backed by over 16 years of experience in XBRL/iXBRL-based compliance and also assists companies in regions including the US, UK, and South Africa.
With a stellar list of features that greatly simplify compliance reporting, IRIS CARBON® is the best bet for your sustainability reporting needs.