CSRD: a standardised extra-financial report defined by the European Commission

From January 2025, large companies will have to share standardised non-financial information, based on the CSRD and covering the 2024 financial year.

Are you ready for 2025? How will you report? What about the link with the GRI?

At CAP conseil, we closely follow the work and discussions related to this directive and we can help you with your CSRD reporting.

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What is
CSRD?

The Corporate Sustainability Reporting Directive (CSRD) is a European piece of legislation that is part of the European Green Deal policy, as is the Taxonomy, the publication of information on sustainable development in the financial services sector (SFDR) and the future Due Diligence directive.

Aiming at a greater transparency of the economy, the CSRD extends the obligation to produce a sustainability report to more companies and more non-financial indicators such as ESG (environmental, social, governance).

As a reminder, there are already extra-financial reporting obligations for listed companies via the transposition of the Non-Financial Reporting Directive (NFRD) into national legislation in Europe.

Targeted companies will have to disclose their environmental, social and governance policies and performance using the European Sustainability Reporting Standards (ESRS) developed to detail the required information. This new regulation, that will be transposed into national law in each European country, encourages companies to develop a more responsible strategy and practice in their business. This will enable investors, consumers, legislators and other stakeholders to better assess companies' ESG performance and redirect, where appropriate, their investments, purchases and subsidies to the most responsible companies.

To which companies does the
CSRD apply?

The directive concerns two groups of enterprises:

large companies that meet at least 2 of these 3 criteria:

> 250 people
€ 50 million turnover
€ 25 million balance

Listed companies (including SMEs with more than 10 employees or more than € 2 million turnover/balance)

The new CSRD directive will in a first stag apply to the first group (2025), then also to medium-sized companies two years later (2027).

hat is specific in the CSRD reports?

The first element is the notion of double materiality: it is necessary to account for the financial impacts of sustainability on your company, and the social and environmental impacts generated by your company on society at large.

The second element is the reporting on future perspectives (including the 3 scopes of the carbon footprint assessment). In particular, companies will have to demonstrate they have a clear strategy to meet the Paris targets of max 1.5°C of global warming.

The format of the published information will need to be aligned with the legislative requirements of the EU Taxonomy (already partially validated) and the Corporate Sustainability Due Diligence (at validation stage). These two European texts also require the publication of social and environmental information.

ESG information will have to follow the European Sustainability Reporting Standards (ESRS). This standard was developed to transform the required data into precise indicators.

How to write a CSRD report?

The report will have to take the format of a single management report (merged with the annual financial report) and should therefore be published annually.

It will need to be fully audited by an independent third party that will provide at least a limited level of assurance.

It will have to appear in a digital format (xhtml). It has to be ‘machine readable’ to possibly be able to process the content in an automated way. There is talk of developing a centralised European portal where companies will have to upload their report.

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