CSRD sheet
Corporate Sustainability Reporting Directive
Type : Regulatory reporting
Date : Directive adopted in 2022
Implementation : 2024 for first publication in 2025
Author : European Commission
Target : Companies
Adopted in 2014 as part of the European Green Deal, the NFRD framed until now the non‑financial performance disclosures of European companies. The NFRD was then applied in France via the DPEF. Deemed incomplete, this first directive is set to be replaced and consolidated in 2025 by the CSRD.
The CSRD (Corporate Sustainability Reporting Directive) is thus the new directive proposed by the European Commission that aims to strengthen the non‑financial reporting system of companies, through the integration of new measures (standards, comparability, external assurance).
What are the objectives of the approach?
The series of new CSRD standards aims to improve corporate ESG reporting across Europe by promoting better transparency and standardisation of companies’ non‑financial disclosures. The CSRD aims to increase investors’ and consumers’ trust in the data provided by companies while facilitating their interoperability.
From 2025, the companies concerned shall include in their management reports indicators in accordance with the European sustainability reporting standards, the European Sustainability Reporting Standards (ESRS).
What is/are the target(s) of the approach?
The CSRD is intended for European companies and will ultimately affect around 50,000 companies, compared with 11,700 currently under the NFRD. This gap can be attributed to the extension of the scope to smaller entities.
The alignment obligations with the CSRD begin as early as 2024 and extend until 2028:
From the 2024 financial year (publication in 2025): large companies (in Europe and outside Europe) meeting 2 of the following 3 criteria: more than 500 employees, more than €25 million in total assets and/or €50 million in turnover already subject to the NFRD
From the 2025 financial year (publication in 2026): large companies not subject to the NFRD and which meet 2 of the following 3 criteria: more than 250 employees, €25 million in total assets and/or €50 million in turnover.
From the 2026 financial year (publication in 2027, possible derogation until 2028): listed SMEs
These figures were revised by the European Commission in 2023 and were transposed into French national law in Ordinance No. 2023‑1142.
Does the approach rely on a shared scientific basis?
TheEFRAG was appointed by the European Commission to develop detailed reporting standards: the ESRS. These aim to facilitate comparison of European companies’ non‑financial reports. Currently there are 12. New sectoral standards or standards specific to listed SMEs on regulated markets will be introduced shortly.
The first two ESRS "General Disclosure" have a generalist and cross‑cutting scope.
ESRS 1 "General principles": defines the architecture, principles and general concepts of the ESRS, including the characteristics and structure of information, double materiality...
ESRS 2 "General disclosures": details the information companies shall present in relation to material sustainability matters. This information covers four reporting areas: governance, strategy, the process of identifying and managing sustainability impacts, risks and opportunities, as well as sustainability metrics and targets.
Among the 10 thematic ESRS, 5 criteria are related to the environmental pillar.
ESRS E1: Climate change
ESRS E2: Pollution
ESRS E3: Marine and freshwater resources
ESRS E4: Biodiversity and ecosystems
ESRS E5: Use of resources and circular economy
ESRS S1: Company workforce
ESRS S2: Employees in the value chain
ESRS S3: Affected communities
ESRS S4: Consumers and use
ESRS G1: Business conduct
Does the approach rely on a specific methodology?
The new CSRD introduces the concept of double materiality which consists of analysing all ESG criteria (environmental, social, governance) through a dual lens:
the financial materiality : impacts of sustainability matters on the company's financial performance
the impact materiality : impacts of the company on its economic, social and natural environment
Once the double materiality analysis has been carried out, the organisation shall draft its report in accordance with the ESRS. Only the general disclosures remain mandatory to provide within the reporting framework. For the other ESRS, it is for the company to specify what it considers relevant to publish following its double materiality analysis. However, it shall be able to justify its choices on the basis of that analysis. Only companies that do not include ESRS E1 "Climate change" are required to publish a justification systematically.
In principle, the whole value chain, including scope 3, shall be taken into account (provided that this corresponds to the spectrum covered by the double materiality analysis). Data must relate to the previous fiscal year, similar to financial reporting: a publication in 2024 will thus be based on 2023 data. The organisation shall present its current reference year and shall update it for its GHG reduction targets every 5 years after 2030.
Each ESRS includes a set of DRs (82 in total, of which 32 relate to the environment), representing the specific information that companies may be required to disclose under the CSRD. These data relate to crucial aspects of the company, such as its financial, environmental, social and governance performance. To publish this specific information, companies must collect and present data points, in a total number of around 1,200. Each DR is associated with data points, which may be narrative, semi‑narrative, percentages or monetary data. The number of DRs and data points may evolve subsequently.
The CSRD requires a transition plan including a specific action plan for decarbonisation. This plan shall detail emission reduction targets, adaptation policies and any other relevant initiative to address climate impacts. It shall include one or more emission reduction pathways consistent with applicable carbon budgets (such as those of the SBTi) and a detailed action plan, quantifying the measures envisaged to achieve these targets.
Furthermore, reliefs are provided for certain companies to facilitate the transition from the NFRD to the CSRD.
All companies will be able to defer by one year the consideration of the anticipated financial effects of physical and transition climate risks.
Possibility to defer by one year the publication of scope 3 greenhouse gas emissions and to defer by two years the application of the biodiversity standard for companies with fewer than 750 employees
A lightened reporting for SMEs which only have to comply with 6 standards and several DRs become optional.
Does the approach rely on tools?
No calculation tool is provided. However, a specific reporting format is required: ESRS XBRL (eXtended Business Reporting Language). This choice is intended to strengthen transparency and comparability. The publication of reports is then made available on an open access platform: theESAP.
Can other low-carbon transition methods and tools be used to achieve the objectives of this approach?
Among the DRs that address environmental aspects, those dealing with carbon‑related issues are grouped inESRS E1 entitled "Climate change" and partly in ESRS 2 "Pollution". To provide comprehensive information, both quantitative and qualitative, different methods and tools can be used as support to obtain this information. Indeed, carrying out a Bilan Carbone® or participating in the ACT® programme enable organisations to meet ESRS E1 requirements.
For example, during the data collection and processing stage of the Bilan Carbone®, the information necessary for DR 5 on energy consumption and the energy mix, as well as for DR 6 on gross GHG emissions for scopes 1, 2, 3 and total GHGs, can be obtained. Similarly, the action plan stage of the Bilan Carbone® would provide qualitative information for the DR concerning the transition plan for climate change mitigation, as well as for the DR on targets related to mitigation and adaptation to climate change.
As for the ACT® programme, it can provide relevant elements on the organisation’s low‑carbon strategy and transition pathways, as required in the DR on policies related to mitigation and adaptation to climate change, as well as in the DR on actions and resources associated with climate policies.
Does it allow third-party recognition? If so, in what manner?
The CSRD makes mandatory the verification and audit of the information communicated by a third party, and not internally as was the case with the NFRD.
The sustainability report shall be assured by:
a statutory auditor
or an independent third‑party body (ITB)
ITBs shall receive accreditation from the COFRAC, and all auditors shall be under the supervision of the H2A.
In case of non‑compliance with the CSRD, sanctions have been provided :
€3,750 will be payable in the event of failure to publish the report or publication of partial or erroneous information.
In the event of failure to audit the non‑financial report, a fine of up to €30,000 and a custodial sentence of up to 2 years may be imposed.
In the event of interference with auditors' verifications or controls, a fine of up to €75,000 and a custodial sentence of up to 5 years may be imposed. In addition, indicators must be reviewed every three years.
Besides these sanctions, other measures may be envisaged:
Reputational sanction: public disclosure of the company’s name and the nature of the infringement.
Regulatory sanction: order to cease activities related to the infringement.
Financial sanction: imposition of a fine proportionate to the company’s financial situation and the benefits derived from the infringement.
These sanctions vary depending on the transposition of the CSRD into the national law of each EU Member State. For example, in the Netherlands they may reach up to €10 million or 5% of the company’s annual turnover.
Can this approach be harmonised with other international frameworks?
In order to avoid multiplication and competition between international standards, the CSRD has been designed as a framework compatible with other frameworks.
For harmonisation with US standards, a mapping table between IFRS and ESRS was published in 2023, showing strong convergence on the financial materiality of climate issues between EFRAG and theISSB.
EFRAG has also signed a compatibility protocol with the GRI.
In this context of standards harmonisation, the future Climate Indicator of the Banque de France will be aligned with the CSRD after consultation with business representatives.
The fact sheets of the Overview of carbon accounting methods and tools are the result of a synthesis work by ABC. We remain open to your feedback or questions on this form.
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