Reporting requirements
Comparison NFRD/CSRD
Aside from the already mentioned additions to company reporting requirements, such as mandatory audits and more detailed reporting, the CSRD will ensure that this information is digitally tagged and linked up with the European Single Access Point (ESAP), currently being developed by the co-legislators.
Companies will also need to ensure that their strategy is geared towards achieving sustainability goals. Among other things, the strategy will need to include wording on resilience to sustainability risks, outline its alignment with the Paris agreement, how it considers stakeholders in its decision-making, as well as information on its value chain. Information on sustainability-related policies, processes, targets, and leadership will all need to be included in company reports.
SMEs will have a narrower scope of requirements, while micro-entities will be able to report on a voluntary basis.
Please find below a more detailed overview per category of company covered.
Public interest entities above 500 employees
All large entities under CSRD
Listed SMEs
Non-listed companies and micro enterprises
Requirements
Mandatory
Existing requirements (NFRD)
Mandatory reporting of information related to:
- environmental matters
- social matters and treatment of employees
- respect for human rights
- anti-corruption and bribery
- diversity on company boards (in terms of age, gender, educational and professional background)
Mandatory public disclosure documents (annual reports, sustainability reports, integrated reports to include the above information).
A “comply or explain” system, which means that if no policy is in place in one of the above matters, the company must explain the reasons behind this.
The Commission has published Guidelines on non-financial reporting (methodology for reporting non-financial information) (2017/C 215/01) with Examples and KPIs, and Guidelines on reporting climate-related information supplementing the general guidelines (2019/C 209/01).
New requirements (CSRD)
The CSRD proposal imposes new requirements. More specifically:
- it requires the audit (assurance) of reported information (i.e., reporting must be certified by an accredited independent auditor or certifier)
- it introduces more detailed reporting requirements*, and a requirement to report according to mandatory EU sustainability reporting standards
- it requires companies to digitally ‘tag’ the reported information, so it is machine readable and feeds into the ESAP envisaged in the Capital Markets Union Action Plan.
“Sustainability matters” includes “sustainability factors” as defined under SFDR (environmental, social and employee matters, respect for human rights, anti‐corruption, and anti‐bribery).
* The new version of Article 19a (sustainability reporting) of Directive 2013/34/EU lists general sustainability information that large undertakings must publish:
- a brief description of the business model and strategy (resilience to sustainability risks, sustainability-related opportunities, plans to ensure alignment with Paris agreement goals, how stakeholders’ interests are taken into account)
- a description of sustainability-related targets
- a description of the role of the administrative, management and supervisory bodies regarding sustainability matters
- a description of sustainability policies
- a description of the due diligence process, principal potential and current adverse impacts with the value chain, prevention and mitigation measures
- a description of the principal risks relating to sustainability matters
- indicators relevant to the above disclosures
Where applicable, the above should include information about the value chain of the company (operations, products, services, business relationships, etc.), and explanations relating to the amounts reported in the annual financial statements, etc.
Reporting should be in line with mandatory sustainability reporting standards to be adopted (based on EFRAG advice).
Undertakings must report the process to identify the data included in the management report, taking into account short, medium and long-term horizons.
Requirements
Mandatory
Existing requirements (NFRD)
Not applicable
New requirements (CSRD)
The same requirements as set out above will apply to large undertakings.
Requirements
Mandatory specific requirements
Existing requirements (NFRD)
Not applicable
New requirements (CSRD)
Listed SMEs need only produce a narrower disclosure, to include:
- a brief description of the business model and strategy
- a description of sustainability policies
- principal actual or potential adverse impacts with regard to sustainability, prevention and mitigation measures
- a description of the principal risks relating to sustainability and steps taken to manage them
- indicators relevant to the above disclosures
Reports must be prepared in line with proportionate standards for SMEs adapted to the resources of such companies, to be adopted by the European Commission by 31 October 2023 at the latest.
Requirements
Voluntary
Existing requirements (NFRD)
Not applicable
New requirements (CSRD)
Same as listed SMEs on a voluntary basis.
Explore all sections of the guide
Reporting template and tools
ESG reporting template ESG life cycle tool SFDR tools TCFD tools Timelines
Mapping of voluntary frameworks and standards
Definitions and distinctions Who is who Scope of information
Deep dive for VCs and investors
ESG reporting from a VC perspective ESG reporting from an investor perspective
