On 21 April 2021, the European Commission adopted a draft of a new Corporate Sustainability Reporting Directive (CSRD). This is an extension of the 2014/95/EU– Non-Financial Reporting Directive (NFRD), which is already in operation and lays down rules for publication of non-financial information and diversity information by specified large companies. A translation into all European languages is expected by the end of May 2021.

The European Commission has been working on the development of reporting of non-financial information by selected companies within the European Union in the long term. The now applicable directive 2014/95/EU (NFRD) requires large public interest companies, with more than 500 employees (including banks, insurance companies, companies listed at the stock exchange or other companies specified by local law as public interest entities) to provide/publish information on their attitude to the environment, social matters and treatment of employees at the company and respect for human rights, measures against corruption and bribery and last but not least information about the structure of supervisory board members from the perspective of age, gender or educational and professional backgrounds. This is basically the information that large company were obliged to state in their annual reports in order to comply with the requirements of the accounting act (in which this European directive is incorporated).

The new CSRD directive widens the group of economic entities, which will be obliged to report non-financial information about the company. These will be all large companies, which on the local level meet at least one of the below-mentioned conditions (according to the NFRD directive it was possible to report on a consolidated level for an entire group of companies).

The conditions, the meeting of which sets the obligation to report non-financial information:

• number of employees higher than 250 persons,
• annual turnover higher than EUR 50m,
• balance sheet total higher than EUR 43m,
• publicly traded company (does not apply to microbusinesses).

In case a medium or small company meets one of the conditions, the directive includes a three-year delay in application.

When the directive itself may be applicable has not been exactly specified yet, everything depends on the legislative process now. It is expected, however, that the first reported data may be the data for the year 2023.

Source: Corporate sustainability reporting | European Commission (europa.eu)

(https://ec.europa.eu/info/business-economy-euro/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_cs)