Everything you need to know about CSRD - the new sustainability directive from the EU
From 2023, larger companies with more than 250 employees and listed companies must report according to the EU's Corporate Sustainability Reporting Directive (CSRD). The CSRD requirement means that companies must annually report on their sustainability work according to the EU's new standards. In the future, the CSRDalso apply to smaller companies. It may therefore be worthwhile to start already now by incorporating sustainability aspects and ESG. Through ESG reporting, information on sustainability issues is collected, which in turn enables smoother adaptation to future regulations and directives. We at Ava follow the development with CSRD and will write more about this in the future - stay tuned here on our website!
Non-Financial Reporting Directive (NFRD)
According to EU legislation, larger companies must report how they work with sustainability and social sustainability. The legal requirement was introduced to help stakeholders, users and organizations to more easily access information about how the company works in areas that do not solely concern the economy. Through the legal requirement, companies are also encouraged to develop responsible and sustainable work. The Non-Financial Reporting Directive (NFRD) of 2014 is the previous directive that requires larger companies to publish information about their work on sustainability, the environment, social responsibility, employee conditions and human rights to name a few points.(NFRDis to change its name to the Corporate Sustainability Reporting Directive (CSRD) and includes some new requirements.
The previous directive NFRD must therefore be changed to the new directive CSRD. The changes are made to guarantee that there is sufficient and comparable information about companies and operations' sustainability information. Through the changed directive, other EU requirements are also linked together. For example, the EU's green give and the EU taxonomy are linked to the general sustainability reporting.
The change from NFRD to CSRD will mean that more companies need to invest in sustainability and sustainability reports. Previously, only companies with more than 500 employees had to report on sustainability, but CSRD will eventually include more large companies and listed companies. Another requirement that comes with CSRD is the requirement for third-party review, that is, the information in the sustainability report will be subject to review by a third party. In addition, companies must report according to the EU's common standards.
What does CSRD mean for your company?
The work with CSRD is still ongoing and will be adopted by the EU Commission. The CSRD requirement will enter into force in the financial year 2023 and the first reporting will only take place in 2024. Large Swedish companies are already covered by the Annual Accounts Act and already have reporting requirements. CSRD, on the other hand, will mean more rules and requirements that must be reported and new requirements on what the report must contain. Initially, the regulations will include companies that meet two of the following requirements: That they have over 40 million euros in net sales, over 20 million euros in the balance sheet and 250 employees.
Eventually, the requirements will also include small to medium-sized listed companies. It is therefore important to prepare now and incorporate the new sustainability requirements.
We at Ava are aware of all current and upcoming regulations in sustainability. Companies and businesses that already work with sustainability reporting will not only be competitive and attract stakeholders, but will also save time and money in the future. Contact us at Ava to find out more about our sustainability work and how we can help you be at the forefront when it comes to sustainability