Latest updates to the CSRD


Alberto Bailin, Co-Founder of Lienzo

Photo by David Leveque

As part of the latest milestone in the Corporate Sustainability Reporting Directive (CSRD), the European Commission has released its revisions to the initial draft of the European Sustainability Reporting Standards (ESRS) . If you're curious about the nature of these recommendations, the remaining steps towards finalization, and the potential implications for your company, you've come to the right place!

As mentioned in our previous articles, the main objective of the CSRD is to enforce transparent, comparable, and reliable sustainability reporting from approximately 50,000 companies and subsidiaries based in the European Union. To facilitate this, the European Financial Reporting Advisory Group (EFRAG) has been assigned the responsibility of formulating the ESRS, which comprises a set of standards outlining the reporting requirements that companies must adhere to in order to comply with the CSRD.

EFRAG has developed an initial set of draft standards, which underwent a review process after a consultation. The second draft was subsequently submitted to the European Commission for their assessment, ensuring alignment with the CSRD requirements. After completing their review, the Commission has now released the "European sustainability reporting standards – first set," also known as the draft delegated act. At the same time, they have initiated a brief, four-week consultation period that concludes on July 7, 2023. If there are no objections from the European Parliament or the European Council, the final standards will be officially adopted through the final delegated act.

Formalities aside, what are the changes being proposed now?

While the overall scope remains largely unchanged, the Commission has proposed several significant updates aimed at providing companies with greater control over their disclosure requirements and timelines. The main updates are as follows:

That said, what are the next steps?

After the public consultation ending July 7th and which can be accessed by clicking here, the final ESRS will become EU law by means of a delegated act adopted by the European Commission. This adoption process is anticipated to occur by the end of July 2023 or the beginning of August 2023. As per the Corporate Sustainability Reporting Directive (CSRD), the delegated act must be adopted before the end of August 2023 to ensure the applicability of ESRS for financial years commencing on or after January 1, 2024. Consequently, all companies subject to CSRD will directly adhere to ESRS.