The European Commission announced today the publication of a new set of set of frequently asked questions (FAQs), aimed at supporting companies and other stakeholders such as auditors in implementing sustainability reporting requirements of the EU’s Corporate Sustainability Reporting Directive (CSRD), with the first reports set to begin next year, based on the 2024 financial year.

The CSRD is a major update to the EU’s Non-Financial Reporting Directive (NFRD), the previous EU sustainability reporting framework, significantly expanding the number of companies required to provide sustainability disclosures to over 50,000 from around 12,000. Based on new underlying European Sustainability Reporting Standards (ESRS), the CSRD introduces more detailed reporting requirements on company impacts on the environment, human rights and social standards and sustainability-related risk.

The CSRD took effect from the beginning of 2024 for large public-interest companies with over 500 employees, with the first reports to be issued in 2025, followed by companies with more than 250 employees or €40 million in revenue in the following year, and listed SMEs one year later.

According to the Commission, the new FAQ reflects input received from companies, and is intended to help reduce the administrative burden on companies, providing greater clarity and certainty, with a goal to “facilitate the compliance of stakeholders with the regulatory requirements in a cost-effective way and to ensure the usability and comparability of the reported information on sustainability.

Key topics covered by the FAQ include the scope of the rules, determination of company size categories for compliance dates, exemptions, which sets of ESRS to use, considerations to take into account for the use of estimates if companies are not able to obtain value chain information, in addition to the sustainability information requests SMEs should expect to receive as a result of the CSRD. The FAQ also covers auditing and assurance-related issues, such as approval and training requirements for auditors, and accreditation requirements for independent assurance providers.

Mairead McGuinness, Commissioner for Financial Services, Financial Stability and Capital Markets Union, said:

“The EU has taken major steps in building a comprehensive sustainable finance framework over the past six years, encouraging companies to embark on their transition paths. Our focus now is to ensure that our tools are usable and effective, while continuing to reduce the administrative burden on companies.”

Click here to access the FAQs.