Introduction to CSRD

CS…SRD… CSR-what? 📑

You have probably heard of this acronym within the last two years, especially if you work in accounting, sustainability, or management positions. The Corporate Sustainability Reporting Directive (CSRD) refers to the EU legislation which was first proposed in 2021 and entered into force in January 2023. 📅

It is no longer sufficient to assess the companies’ performance based solely on the financial information – environmental and social impacts are of great importance as well due to concerns for climate change and fair labour practices 👩‍💻. The CSRD aims to strengthen the sustainability (social and environmental) reporting, which will increase the availability of sustainability data on par with financial information.

Improvements in the transparency of companies’ sustainability performance are seen as greatly demanded by investors, consumers, and other stakeholders, and pursuing a common framework enables comparison.

Furthermore, the CSRD is a regulatory driver for a transition to a sustainable economy, which encourages circular and low carbon business practices through the double materiality principle, which we will cover in our next post 🔜.

📣 Who does the CSRD apply to? 📣

The first CSRD reports will be required in 2025 (for financial year 2024) for large undertakings already subject to the Non-Financial Reporting Directive (NFRD), the predecessor of CSRD. In 2026, reporting for financial year 2025 will be required for other large undertakings, which meet at least two of the following criteria: 250 and more employees on average, 40 million EUR net turnover, 20 million EUR on the balance sheet. Additionally, listed small and medium-sized companies (excluding micro-companies) will be required to start reporting in 2027 (financial year 2026). Though the CSRD is an EU-based legislation, certain companies outside the EU are also liable to reporting, starting in 2029 for 2028 data.

Despite the anticipated positive impacts the CSRD is expected to instigate, we at Xylo Sweden understand that it also represents an additional workload to companies, especially those who have limited in-house sustainability expertise. However, worry not – we can guide you through the process and help you master the CSRD requirements.