The Corporate Sustainability Reporting Directive expands the existing sustainability reporting requirements and brings more companies under its scope.
By Paul A. Davies, Michael D. Green, and James Bee
On 21 June 2022, the European Parliament and European Council reached a provisional political agreement on the terms of the EU’s proposed Corporate Sustainability Reporting Directive (CSRD). The CSRD will extend the current sustainability reporting requirements in the EU (namely those under the Non-Financial Reporting Directive (NFRD)), to include more companies and topics and to require more detailed disclosures, and represents a key piece of legislation in the international trend towards increasing sustainability-related reporting by companies. The European Parliament indicated this international aim in its press release announcing the agreement, stating that the CSRD “aims to end greenwashing and lay the groundwork for sustainability reporting standards at global level.”
While the full text of the agreed version of the CSRD has not yet been made public, the press releases from the European Parliament and Council do shine some light on the key provisions that will likely be included in the final document.
On 3 November 2021, the International Financial Reporting Standards (IFRS) Foundation Trustees Chair, Erkki Liikanen, announced the long-awaited formation of the International Sustainability Standards Board (ISSB). The ISSB aims to address to one of the key issues that companies and investors have faced in relation to environmental, social, and governance (ESG)-related corporate reporting over recent years — the wide variety of different reporting frameworks and a lack of an authoritative market leader.
On 21 December 2020, the Financial Conduct Authority (FCA) confirmed in a published Policy Statement