Executives worldwide are gearing up for compliance with the European Union’s Corporate Sustainability Reporting Directive (CSRD), which requires disclosures for the 2024 financial year, due in 2025. To assist both EU and international corporations, the European Commission has published a set of frequently asked questions (FAQs) that cover crucial aspects of this directive. These FAQs aim to clarify the CSRD’s sustainability reporting requirements, guidance on obtaining verified third-party assurance, the definition of key intangible resources, the compliance expectations for non-EU companies, and details related to the Sustainable Finance Disclosure Regulation (SFDR). 

The CSRD sets the overarching legal framework for corporate sustainability disclosures, mandating detailed reporting obligations through the European Sustainability Reporting Standards (ESRS). There are 12 ESRS reports that companies must submit to comply with the CSRD, ensuring uniformity and comparability in sustainability reporting. 

The FAQs address several key issues. They clarify how companies can determine if they are required to disclose information, including guidance on calculating the average number of employees and whether credit and insurance institutions need to comply. Additionally, the FAQs provide detailed instructions on obtaining verified third-party assurance, including the roles of statutory auditors and the accreditation process. They also specify what qualifies as a key intangible resource—non-physical assets essential for creating value—and why these must be included in reports. 

For non-EU companies, the FAQs offer more flexibility, noting that small and medium-sized enterprises (SMEs) outside the EU can opt out of sustainability reporting until January 2028. Lastly, the SFDR requires financial advisors and market participants to disclose details on ESG and sustainability claims. The FAQs clarify that any “non-material” items in a company’s ESRS do not need to be included in the SFDR disclosures. This comprehensive guidance helps businesses navigate the complex landscape of sustainability reporting and align with global ESG standards effectively. 

Sources: 

https://trellis.net/article/what-you-need-to-know-about-the-eus-csrd-reporting-requirements/ 

https://ecochain.com/blog/csrd-esrs-eu-reporting-guidelines/#:~:text=The%20Corporate%20Sustainability%20Reporting%20Directive%20(CSRD)%2C%20approved%20by%20the,Sustainability%20Reporting%20Standards%20(ESRS).