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What is the CSRD (Corporate Sustainability Reporting Directive)?

The Corporate Sustainability Reporting Directive

The CSRD (Corporate Sustainability Reporting Directive) is an EU directive that obliges companies within the EU to report on their sustainability aspects. The directive includes clear guidelines on how these sustainability reports must be compiled. The so-called ESRS (European Sustainability Reporting Standards) are an integral part of this directive and define exactly what information companies must report.

A current standard in the ESRS, which is mandatory for all companies, is called "ESRS 2 General disclosures". This standard stipulates that companies must explain in their reports the role of management, administration, and supervisory bodies with regard to sustainability. They also have to define their risk management and internal control mechanisms for the sustainability report. The ESRS 2 also prescribe how companies must perform a so-called materiality analysis. This analysis determines which additional topics and key figures must necessarily be included in the reports.

The CSRD also stipulates that external auditors will review sustainability reports in the future. It is also stipulated that companies should use the European Single Electronic Format (ESEF), which is already being used for accounting. This format is readable both for humans and for machines. Furthermore, the sustainability information should be part of the management report.

For whom and from when does the CSRD apply?

The CSRD applies to a wide range of companies, including listed companies, banks, insurance companies, and large unlisted companies. Companies that are already reporting under the Non-financial Reporting Directive (NFRD) will apply the CSRD for the first time for the reporting year 2024. In total, about 50,000 companies in the EU are likely to be affected. The regulations apply to both large companies (usually those with more than 500 employees) and listed small and medium-sized enterprises (SMEs), although there are some transitional measures for the latter.

Here you will find the frequently asked questions briefly explained:

This primarily depends on the size of the company. Companies with 500 employees or more are required to report under the CSRD from the reporting year 2024 and companies with more than 250 from the reporting year 2025. However, the legal form, the balance sheet total, and the net turnover also play a role in whether a company becomes liable to report.

The CSRD gives EU member states some leeway on this. In Germany, only auditors are likely to carry out the audits under CSRD.

ESRS stands for European Sustainability Reporting Standards. These standards describe what content and metrics a company that falls under the CSRD must report.

According to the current regulation, all companies obliged to report are required to adhere to the "ESRS 2 General disclosures". This also includes a mandatory materiality analysis. Companies must carry out this analysis as described in the regulations. Once a company has completed the materiality analysis, the company can accurately determine which additional content and metrics it must report.

The EU taxonomy, along with the CSRD and SFDR, is part of the essential EU regulations set out in the EU Sustainable Finance Framework. These three sets of rules are closely linked. The EU taxonomy provides a classification system that is applied under the CSRD and SFRD.

It's less about the difference between the two regulations, and more about how they relate. The CSRD as a regulation describes the disclosure requirements for large and listed companies in the European Union (and also for non-EU companies).

The ESRS, on the other hand, is the framework (also set of metrics) that companies falling under the CSRD regulations must use for their publication of sustainability information.

SCOPES - fully automated software solution for the ESRS (CSRD)

Under the ESRS, most companies must account for their CO2 emissions. We offer you the fully automated solution for this. All necessary data is already in your accounting. Our software SCOPES offers interfaces to the common ERP and financial applications, e.g. SAP, LucaNet, Microsoft Dynamics, DATEV, Oracle, Sage, ABAS. From the existing CO2-relevant data, SCOPES automatically extracts the greenhouse gas balance of your company.

Manual efforts are eliminated. With SCOPES, you are quickly "ready-to-go".

With our software solution, we implement the Supply Chain Act easily in your company, get advised now

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