CSRD: Holy Grail of the European Union ?

The European Commission has launched a vast project to regulate and standardise sustainability reporting. The backdrop is the support of the European Union’s “carbon neutrality” strategy. Brussels’ stated objectives are to redirect capital flows towards sustainable investments and to promote the transparency and comparability of information between companies.

The CSRD (Corporate Sustainability Reporting Directive) follows on from the 2014 NFRD (Non-Financial Reporting Directive), the cornerstone of sustainability reporting for European companies.

The development of the CSRD standards was entrusted to the European Financial Reporting Advisory Group (EFRAG), which, with a view to standardisation, published 12 draft common standards covering areas E, S and G in November 2022. The proposed standards provide a comprehensive basis for sustainability reporting at the international level, designed to meet investors’ needs for transparency in assessing the value of companies.

30 June 2023 is the deadline set for the publication of delegated acts – the final standards adopted by the Commission under the supervision of the European legislator. For some weeks now, Brussels has been under scrutiny from all sides. Several calls to slow down the pace of legislation have been made – by companies and employers’ organisations in particular – criticising the “burden” that delegated acts would place on companies’ reporting.

The Commission had already taken a step towards European companies by asking EFRAG to slow down its work on the development of sectoral standards and to focus its efforts on the implementation of the 12 common standards. In her speech on 15 March, Ursula von der Leyen went a step further and announced that “by autumn we will come forward with concrete proposals to simplify reporting requirements and, in fact, reduce them by 25%”[1].

Business Europe considered this to be a positive first step, but that “for example, the European Commission has the opportunity to significantly reduce the reporting requirements in […] the forthcoming proposal for a delegated act on reporting standards under the Corporate Sustainability Reporting Directive. The draft published by EFRAG last November, in its current form, represents a huge amount of extremely granular reporting requirements”[2], comprising no less than 1,144 datapoints. In the face of these calls, the trend would therefore be to simplify the regulatory package.

In the wake of the anniversary of Robert Schumann’s historic declaration, it is to be hoped that the CSRD will not be – in the long run – emptied of its substance, under the guise of a desire to conciliate all stakeholders, but that it will always be borne in mind that “Europe will not be made at once”[3].

VPWhite is at your side to support you in all the preparatory phases of implementing your CSRD approach. Our Impact teams will advise you on how to decipher the ESRS standards, mobilise and train your teams on the consequences of this directive on your organisation, and plan the adaptation of your reporting and its effective deployment.