The adoption of the EU’s Corporate Sustainability Reporting Directive – CSRD – by the European Parliament in November 2022 was a major step towards streamlining sustainability reporting in line with financial reporting.
The adoption of the EU’s Corporate Sustainability Reporting Directive – CSRD – by the European Parliament in November 2022 was a major step towards streamlining sustainability reporting in line with financial reporting.
The new sustainability reporting will serve as a basis for assessing how different companies contribute to the transformation toward sustainable development in society and thus steer capital in the “right direction.” In total, approximately 50,000 companies within the EU will be covered by CSRD and the associated European Sustainability Reporting Standards (ESRS). However, not all of them will have to start reporting at the same time, and this is the current situation (based on what we know at the time of writing):
- For the financial year 2024, i.e., the reports published in 2025, companies currently covered by the EU’s Non-Financial Reporting Directive (NFRD) – which includes listed companies and public utility companies such as banks and insurance companies with more than 500 employees – must report under the CSRD and ESRS. Note that this is fewer companies than those covered by the Annual Accounts Act’s (ÅRL) sustainability report requirements because those requirements also cover listed and unlisted companies with more than 250 employees. These latter companies must still submit a sustainability report according to ÅRL for the financial year 2024, as long as no changes are made to ÅRL until then.
- For the financial year 2025, all large companies that meet at least two of the three size requirements – more than 250 employees, a balance sheet total of more than EUR 20 million, net turnover of more than EUR 40 million – must report under CSRD and ESRS. This means that the companies that for the financial year 2024 could still report according to ÅRL must now also report under CSRD and ESRS.
- The last group of companies covered by CSRD and ESRS are listed SMEs, with the exception of listed micro-enterprises, which must report for the financial year 2026. However, SMEs will not have to report to the same extent as the larger companies, and there will be less extensive reporting standards for these companies in the future.
- Note that non-EU companies with securities listed in the EU are also subject to the above requirements.
For those companies that are covered in the first stage, it can feel a little stressful when it comes to getting data collection, processes, and internal controls in place as early as 2023. Tips on how to think about the implementation of CSRD and ESRS and what steps to take will come in February.
”As specialists in annual and sustainability reporting and sustainability communication, Hallvarsson & Halvarsson is closely following the development of CSRD and ESRS. We want to be able to help our customers based on the new conditions that will apply once CSRD and ESRS come into force and together with them create the annual reports of the future,” says Jenny Fransson, responsible for Sustainability Affairs at Hallvarsson & Halvarsson.