{"id":5571,"date":"2022-09-30T11:23:46","date_gmt":"2022-09-30T02:23:46","guid":{"rendered":"https:\/\/codo.jp\/?p=5571"},"modified":"2026-10-08T09:55:53","modified_gmt":"2026-10-08T00:55:53","slug":"is-your-company-ready-for-the-eu-corporate-sustainability-reporting-directive-csrd","status":"publish","type":"post","link":"https:\/\/codo.jp\/en\/is-your-company-ready-for-the-eu-corporate-sustainability-reporting-directive-csrd\/","title":{"rendered":"Is your company ready for the EU Corporate Sustainability Reporting Directive (CSRD)?\u00a0"},"content":{"rendered":"\n
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The EU is set to adopt its new <\/strong>Corporate Sustainability Reporting Directive (CSRD)<\/strong><\/a> in October 2022, in accordance with the EU Green Deal pledge. In its attempts to expand sustainability information for consumers, the CSRD will revise the existing <\/strong>Non-Financial Reporting Directive<\/strong><\/a> (2014) and significantly raise reporting requirements on enterprises falling within its scope. The new directive will also increase the number of companies subject to EU sustainability reporting obligations, including non-European companies. Codo summarizes what you should know about it.<\/strong> <\/p>\n<\/blockquote>\n\n\n\n

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Where does this new rule come from? <\/h3>\n\n\n\n

The reporting rules under the current Non-Financial Reporting Directive (NFRD, adopted in 2014) were important in establishing principles for large companies\u2019 ESG reporting. It also introduced a \u201cdouble materiality perspective\u201d, which requires corporations to report on how sustainability issues influence their company, <\/em>but also their own impact on people and the environment<\/em><\/strong>. However, the information that companies reported under this framework was found insufficient and reports would often omit crucial information for investors and other stakeholders\u2019 decisions. <\/p>\n\n\n\n

With the CSRD, the European Commission aims to close the accountability gap created by the problems in the quality of reporting under the existing rules on disclosure of non-financial information. It is the first time the Commission defines a common reporting framework for non-financial data<\/strong>. <\/p>\n\n\n\n

The CSRD is part of the EU Green Deal Package. The purpose of the Green Deal is to make Europe the first climate-neutral continent by 2050. It is the EU\u2019s response to achieving the targets laid down in the 2015 Paris Agreement. The EU\u2019s action package \u2018Fit for 55\u2019 works towards the first step: reducing net emissions by at least 55% by 2030. <\/p>\n\n\n\n

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What are the new rules?  <\/h3>\n\n\n\n

The CSRD amends the NFRD directive of 2014 in the areas of scope, reporting, standards, and digitalization. It requires more extensive reporting by asking large corporations to report on sustainability issues such as environmental rights (climate change and biodiversity), social rights, human rights, and governance factors. <\/p>\n\n\n\n

Regarding environmental factors, the reporting will include the Greenhouse Gas Protocol (disclosing companies\u2019 Scope 1,2 and 3 emissions). In addition, the six environment impact criteria established by the EU Taxonomy Regulation<\/a>, EU\u2019s classification system for sustainable economic activities, will be covered. The companies will be required to disclose how they substantially contribute to the environmental goals while not damaging any of these six environment impact criteria; climate change mitigation, climate change adaptation, water and marine resources, resource use and circular economy, pollution, biodiversity and ecosystems, respectively.  <\/p>\n\n\n\n

Aligned with these standards, companies will be required to disclose their sustainability targets and science-based transition plans (if any) that they have established to ensure their business model and strategy are compatible with: <\/p>\n\n\n\n

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  1. the transition to a sustainable economy; <\/li>\n<\/ol>\n\n\n\n
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    1. the objectives of limiting global warming to 1.5\u00b0C in line with the Paris Agreement; and <\/li>\n<\/ol>\n\n\n\n
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      1. achieving climate neutrality by 2050 in line with the EU\u2019s goals in the European Climate Law, with no or limited overshoot. <\/li>\n<\/ol>\n\n\n\n

        In this sense, the CSRD disclosures are broader than the upcoming rules of the US Securities & Exchange Commission<\/a>. The new directive requires more forward-looking company information, including targets and progress. The CSRD also includes a certification requirement for sustainability reporting, as well as better information accessibility by asking companies to include it in a separate area of corporate management reports (instead of the annual report under the rules of NFRD). Lastly, the reporting is expected to be in line with Sustainable Finance Disclosure Regulation (SFDR)<\/a>, the European regulation introduced to improve transparency in the market for sustainable investment products and to prevent greenwashing.  <\/p>\n\n\n\n

        Who ensures the quality of reporting? <\/h3>\n\n\n\n

        Under the new rules, an accredited independent auditor or certifier must certify reporting and confirm that the sustainability information complies with the certification requirements that have been approved by the EU. The reporting of non-European corporations must also be validated by an accredited auditor. <\/p>\n\n\n\n

        Who will be covered by the directive?<\/h3>\n\n\n\n