As reported by Edenark Group for some time, and as stated in this article, on November 28, 2022 the European Council gave final approval for a new Corporate Sustainability Reporting Directive (CSRD). This will now be transposed into the laws of the EU member states.
The CSRD is meant to reduce Greenwashing and lay the groundwork for sustainability reporting standards at a global level.
Like most new laws, this one will take time to find its footing and impact. However, it, and other similar policies around the world, will impact how every company operates.
To highlight a few selected aspects:
- The CSRD will widen both scope and depth of sustainability reporting by prescribing a double materiality standard under which companies have to explain both how their business models are affected by sustainability matters and how it affects such matters itself.
- While previous policy efforts concentrated predominantly on large companies with stock market listings, the EU’s focus has been widened to also account for sustainability related effects of large companies without stock market listings, as well as listed small and medium sized companies.
- Non-EU companies will also be affected. Their EU subsidiaries will have to comply with the new sustainability reporting obligations as early as 2025 if they have large company status and a stock listing on an EU-regulated market, and from 2026 if they have large company status and no such stock listing. Moreover, certain non-EU companies’ own sustainability efforts can become subject to reporting obligations as of 2029.
The United States is up next and should go live in January 2023.
Then, Japan’s new law will start March 31, 2023.