The Corporate Sustainability Reporting Directive (CSRD) represents a significant shift in how companies report on their environmental, social, and governance practices. As businesses prepare to comply with these new standards, understanding the CSRD timeline is crucial.
Introduced by the European Union, the CSRD is set to replace the existing Non-Financial Reporting Directive (NFRD), bringing with it stricter reporting requirements and a broader scope.
The goal of this article is to walk you through a complete CSRD timeline and talk about what companies need to do to stay ahead of the curve. If you want to read a complete guide on the specifics and current status of the CSRD instead, click here.
CSRD timeline: what is the CSRD?
The CSRD aims to enhance transparency and accountability regarding sustainability practices among companies operating in the EU. It expands the scope of reporting beyond large public-interest entities to include all large companies and listed SMEs (excluding listed micro-enterprises).
The directive requires companies to report detailed information on how their activities impact people and the environment, thereby addressing the growing demand for corporate accountability in ESG matters.
Read also: WHO guidelines for environmental monitoring – what to know
Key changes under the CSRD
Before delving into the timeline, it’s important to understand some key changes introduced by the CSRD:
- Broadened scope of companies
The CSRD applies to all large companies and SMEs listed on regulated markets in the EU, except listed micro-enterprises. This is a significant expansion from the NFRD, which only applies to large public-interest entities. - Detailed reporting requirements
Companies must report on a wider range of ESG issues, including climate change, social rights, human rights, and anti-corruption policies. This information must be provided in a standardized format to ensure comparability. - Mandatory assurance
The CSRD introduces mandatory assurance of sustainability information, meaning that reported data must be independently audited. - Digitalization
Companies are required to prepare their sustainability reports in a digital format, using the European Single Electronic Format (ESEF) to facilitate access and analysis.
CSRD timeline: key milestones
Understanding the CSRD timeline is essential for businesses to ensure compliance and avoid penalties. We will divide the list into two parts: current and future developments.
Current developments
- April 2021
The European Commission adopted the proposal for the CSRD, marking the beginning of the legislative process. - November 2022
The European Parliament and the Council of the European Union reached a political agreement on the CSRD. This agreement sets the stage for the directive’s formal adoption. - December 2022
The CSRD was formally adopted by the European Parliament and the Council, making it a binding legislative act. This milestone confirmed the directive’s entry into force, with companies starting to prepare for compliance. - January 2023
The CSRD officially entered into force, setting the timeline for its implementation in various stages. Companies began assessing the directive’s impact on their reporting processes and the necessary steps to align with the new requirements. - July 2024
The European Financial Reporting Advisory Group (EFRAG) delivered the final version of the European Sustainability Reporting Standards (ESRS). These standards provide detailed guidance on how to comply with the CSRD, covering various ESG topics. Companies should familiarize themselves with these standards to ensure their reporting meets the required criteria.
Future developments
- January 2025
Large public-interest entities with more than 500 employees will need to start reporting under the CSRD requirements, covering the 2024 financial year. This marks the first wave of companies required to comply, and these entities should be well-prepared by this date. - January 2026
All other large companies not previously covered by the NFRD will be required to comply with the CSRD for the 2025 financial year. This includes many companies that are new to sustainability reporting, and they should begin preparations as soon as possible to ensure compliance. - January 2027
Listed SMEs will start reporting under the CSRD for the 2026 financial year. These companies will benefit from a longer preparation period, but they should not delay their efforts to align with the new standards. - 2028 and Beyond
The CSRD will be fully implemented, and all companies under its scope will be required to provide detailed ESG disclosures. This is an ongoing commitment, and companies should establish robust reporting processes to ensure long-term compliance.
Preparing for CSRD compliance
To comply with the CSRD, companies should take several proactive steps.
The most important one is the evaluation of existing sustainability reporting practices and the identification of gaps in alignment with the CSRD requirements. This will help in understanding the scope of changes needed.
Developing a compliance strategy is also pivotal. Companies must create a comprehensive plan to address the new requirements. This strategy should include data collection, internal controls, and processes to ensure accurate and consistent reporting.
The engagement of stakeholders is also likely to be of extreme importance, including senior management, investors, and customers. Their input can provide valuable insights and support for the necessary changes.
It is also necessary to ensure that the relevant teams are well-trained and equipped with the necessary tools and resources to meet the CSRD requirements. This may include hiring new talent or investing in technology to enhance data collection and reporting.
Finally, given the mandatory assurance requirement, companies should engage with independent auditors early in the process to ensure their sustainability reports meet the necessary standards.
Read also: What industrial IoT solutions can do for your company
CSRD timeline: challenges and opportunities
While the CSRD presents several challenges, including increased reporting burdens and the need for more comprehensive data collection, the CSRD timeline also shows us significant opportunities in the future.
By enhancing transparency and demonstrating a commitment to sustainability, companies can strengthen their reputation, attract investors, and gain a competitive edge in the market.
The CSRD timeline represents a significant shift in corporate sustainability reporting, with broad implications for companies operating in the EU. By understanding the key milestones and preparing adequately, businesses can navigate this transition smoothly and position themselves as leaders in sustainability.
As the demand for transparency and accountability continues to grow, the CSRD is set to play a pivotal role in shaping the future of corporate reporting. Companies that act now to align with these new standards will be well-placed to thrive in an increasingly sustainability-focused world.
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