Audit, Compliance and Risk Blog

On February 26, the European Union’s (EU’s) European Commission issued its “Omnibus I” proposal to “recalibrate” the EU’s Corporate Sustainability Reporting Directive (CSRD), by reducing reporting requirements and excluding smaller entities.  The CSRD was adopted in November 2022 and took effect in January 2023 (I wrote about it HERE), providing reporting requirements that are being phased in during 2024-2028. CSRD superseded and narrowed the EU’s previous Non-Financial Reporting Directive (NFRD; which I discussed HERE). The remainder of this note discusses the proposed changes. 

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Beginning in 2024, the European Union’s (EU’s) Corporate Sustainability Reporting Directive (CSRD) will expand EU rules for corporate reporting of social and environmental information. The CSRD was adopted in November 2022 and took effect in January 2023. It provides new reporting requirements that will be phased in during 2025-2029, superseding the existing EU Non-Financial Reporting Directive (NFRD; which I discussed HERE). It also lowers the threshold for reporting to reach large numbers of somewhat smaller companies. The EU estimates the new rules will apply to approximately50,000 companies (up from 11,700), mostly EU-based but also including non-European companies with sufficient sales in the EU and/or with sufficiently significant EU-based subsidiaries. The Wall Street Journal has estimated that 10,000 additional non-EU companies will also be covered. The remainder of this note summarizes these new requirements, which are still being refined by the EU-sponsored EFRAG organization.

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Beginning in 2018 with reporting of 2017 data, the European Union’s (EU’s) Non-Financial Reporting Directive (NFRD) requires targeted companies to provide information to help shareholders and other interests to understand risks faced by the company, and to summarize the company’s activities regarding a variety of social and environmental issues. These requirements will be superseded during 2025-2029 by a new Corporate Sustainability Reporting Directive (CSRD) that clarifies and expands NFRD requirements. The remainder of this note summarizes existing NFRD requirements.

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