Focus on Corporate Sustainability Reporting Directive (CSRD)

The Corporate Sustainability Reporting Directive (“CSRD”) is the latest step of the
European regulation to harmonize and standardize non-financial reporting and
obligations. This Directive reinforces the NFRD obligations, and the notion of double
materiality already introduced with the revision of NFRD.

CSRD  will impact 50 000 companies in Europe to publish coherent and standardized disclosures on ESG impacts of their activities. Corporates and financial market participants such as Banks, Asset Managers or Insurers will be concerned to assess the sustainability profile of their portfolios and allocate capital effectively.

CSRD introduces a new paradigm with the establishment or reinforcement of measures such as double materiality or due diligence  through the entire value chain. CSRD entry in force is planned of january 5, 2023.

Focus on double materiality

The CSRD proposal emphasizes the concept of double materiality, whereby entities need to consider both the impact of sustainability topics on the company’s value (financial materiality), and the entity’s impact on the economy, the environment, and people (impact materiality).
The double materiality implies the need to assess the interconnectivity of the two.
EFRAG (expected before the end of November 2022) willdevelop a coherent and comprehensive set of reporting standards, covering all sustainability matters from a double
materiality perspective.

EFRAG standards (ESRS) for CSRD

The EFRAG is currently developing the European Sustainability Reporting Standards (ESRS), the first set of draft with more than 130 disclosures requirements and 600 data points has been delivered yesterday to the European Commission

EFRAG-ESRS Disclosure Requirements – 620 qualitative and quantitative data points for E, S and G dimensions:

• CLIMATE CHANGE [17 Disclosure Requirements]
• ENVIRONMENT [33 Disclosure Requirements]
• SOCIAL [44 Disclosure Requirements]
• GOVERNANCE [20 Disclosure Requirements]

With the first report due in 2025 (on FY 2024), it’s already time for financial market participants to start thinking about their ESG data and processes. Our Global Aurexia experts are at your disposal if you have any questions about this directive and share with you in which proportion your companies could be impacted.”