CSRD – An update on the current state of CSRD

CSRD is one such regulation– applicable from 1 Jan 2024, governing how companies inform stakeholders oftheir ESG-related risks and opportunities within annual reports from 2025 (for large and listed companies) andbeyond

CSRD aims to improve on the quality of sustainability-related reporting, emphasising the requirements toprioritise planet, people and profitability

Replacing the Non-Financial Reporting Directive (NFRD), it increases the breadth of those companiesrequired to report, and increases the scope of topics to be reported, including greater emphasis on factorsincluding people, water and marine resources, pollution and biodiversity

Underpinning CSRD are the European Sustainability Reporting Standards (ESRS)– a framework governingwhat companies should disclose and how under CSRDThe ESRS consists of 10 topical and 2 cross-cutting standards across environmental, social and governancetopics, with sector-specific standards for sectors due in june 2026 such as oil and gas, food and beverage andagriculture

The ESRS includes the EU Taxonomy’s classification systemfor sustainable economic activities within itsframework, further aligning EU regulations

CSRD introduces the concept of double materiality– a mandatory assessment to consider how a companyimpacts the environment and society (impact materiality or outward view), and how the environment andsociety influences a company’s financial value and performance (financial materiality or inward view)

Coupled with additional factors such as third-party assurance and digitalization,CSRD brings about a stepchange in the importance and complexity of sustainability reporting