The European Commission announced today the publication of a new set of set of frequently asked questions (FAQs), aimed at supporting companies and other stakeholders such as auditors in implementing sustainability reporting requirements of the EU’s Corporate Sustainability Reporting Directive (CSRD), with the first reports set to begin next year, based on the 2024 financial year. The CSRD is a major update to the EU’s Non-Financial Reporting Directive (NFRD), the previous EU sustainability reporting framework, significantly expanding the number of companies required to provide sustainability disclosures to over 50,000 from around 12,000. Based on new underlying European Sustainability Reporting Standards (ESRS), the CSRD introduces more detailed reporting requirements on company impacts on the environment, human rights and social standards and sustainability-related risk. The CSRD took effect from the beginning of 2024 for large public-interest companies with over 500 employees, with the first reports to be issued in 2025, followed by companies with more than 250 employees or €40 million in revenue in the following year, and listed SMEs one year later. According to the Commission, the new FAQ reflects input received from companies, and is intended to help reduce the administrative burden on companies, providing greater clarity and certainty, with a goal to “facilitate the compliance of stakeholders with the regulatory requirements in a cost-effective way and to ensure the usability and comparability of the reported information on sustainability.
Key topics covered in the FAQ include the scope of the rules, establishing company size categories for compliance dates, exemptions, ESRS sets to use, and suggestions for applying non-compliance decisions companies can get Value chain information In addition to requests for sustainability information, SMEs should expect to receive CSRD as a result. The FAQs also cover audit and assurance matters, such as certification and training requirements for auditors, and accreditation requirements for independent assurance providers.