What is the Corporate Sustainability Reporting Directive (CSRD)?
The Corporate Sustainability Reporting Directive (CSRD) is the European law establishing mandatory environmental, social, and governance (ESG) reporting to be used alongside financial reporting. Its goal is to ensure that investors and other key stakeholders have pertinent information regarding the company's impacts, risks, and opportunities associated with ESG-related issues, including climate change.
Approximately 50,000 companies in the European Union (EU) and beyond will have to comply with CSRD in the coming years. It’s a sweeping, mandatory requirement and is being phased in from 2024 to 2029. Beginning in January 2024, it applies to EU-based companies and subsidiaries in scope. Then, over the next four years, the law will extend to more organizations in the EU, plus companies that do business in the EU — even if they are based elsewhere.
Companies initially in scope for CSRD must start collecting data in 2024 to be prepared to report in 2025. And data collection will take time, particularly for companies currently not tracking or reporting on any ESG metrics. By 2029, all organizations impacted by CSRD will need to be in compliance.