Extension of the reporting obligation on sustainability
The Corporate Sustainability Reporting Directive (CSRD) expands the scope of affected companies that have to prepare a sustainability report. You will learn briefly about what the CSRD is, who is affected by the directive and what it includes.
In addition to the economic responsibility that companies have with their business activities, social relevance is getting more important. Because it is known that a company’s actions have consequences for society and the environment.
Sustainability Report & CSRD: background
Currently, large companies that are in the public interest must publish non-financial information as part of mandatory sustainability reporting. This is stated in the NFI Directive, which was implemented in Austria by means of the NaDiVeG (Nachhaltigkeits- und Diversitätsverbesserungsgesetz). The NaDiVeG contains requirements for sustainability reporting, but these are very narrowly defined and therefore only oblige very few companies to prepare a sustainability report. Therefore, the guidelines for non-financial reporting were revised. The result of this is the “Corporate Sustainability Reporting Directive”, called CSRD.
Sustainability Report & CSRD: Goals
The CSRD improves the previously existing problems and includes a significant expansion of the reporting obligation. Nevertheless, the majority of companies do not have to prepare a sustainability report.
With the CSRD, the reporting standard is to be raised and the external audit obligation is supplemented. This should ensure increased transparency and better comparability of sustainability reports. In the near future, the reports will be audited and must be published.
Sustainability Report & CSRD: companies with reporting requirements
Companies that meet at least two of the three criteria below fall within the reporting requirements of the CSRD:
– Net sales over 40 million euros
– Balance sheet total of more than 20 million euros
– Average number of employees of more than 250 during the business year
Any listed companies, for example SMEs, may also be required to report.
Sustainability Report & CSRD: Legal validity
The proposal has already been adapted at EU level and must now be implemented into national law. The first reports according to the new CSRD standard are to be prepared for the year 2023, which will subsequently be published from 2024 on.
Sustainability Report & CSRD : Environment, social and governance
The sustainability reporting proposal will in future be accompanied by its own EU reporting standards, which will then exist in addition to the international frameworks (e.g. GRI).
Reporting includes future strategies, goals and progress of the company. In doing so, business developments and results as well as the actual and potential impacts of the activitys must be dealt with in an understandable and comprehensible way. In addition, the opportunities and risks of all sustainability aspects are highlighted – a great opportunity for sustainable and resilient corporate development. Similar to the ESG concept, CSRD reports must publish key figures from the three areas of environment, social affairs and governance.
Sustainability Report & CSRD: Double materiality
Double materiality plays an important role. Two different perspectives of sustainability reporting are included. On the one hand, the perspective from the outside to the inside must be considered, i.e. the influence of sustainability aspects on the company’s activities. On the other hand, it is important to look from the inside out, i.e. what impacts economic activities have on people and the environment.
Sustainability Report & CSRD: Contents
As part of the sustainability report, companies subject to CSRD report information relating to all aspects of sustainability, such as:
– Resilience of the company
– Risks & opportunities related to sustainability aspects
– Consideration of the goals of the Paris Agreement
– Description of business model & strategy in relation to sustainability aspects
– Description of goals, strategies and progress already achieved
– Role allocation & experience of the different bodies in the company
– Corporate guidelines
– Description of the due diligence process carried out
– Actual and potential impacts on own business operations and on the value and supply chains of sustainability aspects
– Measures taken to prevent, mitigate or remedy actual or potential negative impacts, including their results
– information on intangible assets
– any indicators relevant to the above points
– Reporting on procedures to identify the information