The European Commission has released a comprehensive set of frequently asked questions (FAQs) to assist companies and other stakeholders in navigating the complexities of the Corporate Sustainability Reporting Directive (CSRD). This new directive, a drastic expansion of the previous Non-Financial Reporting Directive (NFRD), mandates more extensive sustainability disclosures from a wider range of companies.

Key Provisions of the CSRD

The CSRD introduces more stringent reporting requirements for companies, focusing on environmental impacts, human rights, social standards, and sustainability-related risks. It expands the scope of reporting entities to over 50,000 companies, compared to the NFRD’s 12,000.

The phased implementation of the CSRD began in 2024, with large public-interest companies initially affected. Smaller companies will follow in subsequent years.

Here is a flowchart released by the EU to further assist companies in understanding their reporting obligations under the CSRD.

Purpose of the FAQs

The Commission developed the FAQs in response to industry feedback, aiming to streamline the implementation process and reduce administrative burdens. The document provides clarity on various aspects of the CSRD, including:

• Scope of the Directive: Defining which companies are subject to the CSRD and when.
• Data Collection: Addressing challenges related to data availability and estimation.
• ESRS Application: Clarifying the use of European Sustainability Reporting Standards (ESRS).
• SME Requirements: Outlining specific reporting obligations for small and medium-sized enterprises (SMEs).
• Auditing and Assurance: Providing guidance on auditor qualifications and assurance procedures.

The FAQ document can be accessed here.