Guía Completa sobre la CSRD

The Transparency Revolution: Comprehensive Guide to the CSRD

The Corporate Sustainability Reporting Directive (CSRD) marks a milestone in the way companies report on their environmental, social, and governance (ESG) impacts. Its clear objective is to promote transparency and comparability in sustainability information, enabling investors, regulators, and other stakeholders to access clear, precise, and standardized data on companies’ ESG performance.

What is the CSRD?

The CSRD, successor to the Non-Financial Reporting Directive (NFRD), establishes stricter requirements for ESG information disclosure. The directive aims to provide a uniform and detailed framework so that companies can offer clearer and more comparable reports, thereby improving the evaluation of their sustainability and commitment to sustainable development goals.

Who Does the CSRD Affect?

The CSRD significantly expands the scope of the NFRD. While the previous directive applied to around 11,700 companies in the EU, the CSRD will affect over 50,000 organizations. This new directive will be gradually implemented, covering large companies, listed SMEs, and non-EU companies with a significant presence in the EU.

Implementation Timeline

  • 2024: Large public-interest companies subject to the NFRD.
  • 2025: All large EU companies not previously subject to the NFRD.
  • 2026: Listed SMEs and small financial institutions.
  • 2028: Non-EU companies with significant activity in the EU.

Main Innovations of the CSRD

  • Double Materiality: Companies must report not only on how their activities affect the environment and society but also on how ESG risks impact their development and financial stability.
  • European Sustainability Reporting Standards (ESRS): Developed by EFRAG, these standards provide a common framework that facilitates comparison and consistency of ESG reports across Europe.
  • Digitalization and Electronic Tagging: Reports must be submitted in XHTML format and digitally tagged using the XBRL taxonomy, enabling automated analysis and accessibility through the European Single Access Point (ESAP).
  • Mandatory Verification: The CSRD requires that ESG information be verified by an independent third party. Initially, limited assurance is required, with the aim to move towards reasonable assurance by 2028.

Benefits of the CSRD

The new regulatory framework offers several advantages for companies and their stakeholders:

  • Greater Transparency and Comparability: Detailed and standardized reports allow investors and stakeholders to effectively compare and analyze the ESG performance of different companies.
  • Improved ESG Risk Management: Companies adhering to the CSRD can proactively identify and mitigate ESG risks, avoiding potential sanctions and reputational damage.
  • Boost to a Sustainable Economy: The CSRD promotes sustainable practices, encouraging companies to integrate sustainability into their corporate strategy and contributing to the development of a greener and more responsible economy.

How to Prepare for the CSRD

To comply with CSRD requirements, companies should take the following steps:

  1. Understand the CSRD and ESRS Requirements: Familiarize yourself with the details of the regulation and ESG reporting standards to ensure compliance.
  2. Conduct a Materiality Analysis: Perform a double materiality assessment to identify and evaluate the most relevant ESG topics for the company and its stakeholders.
  3. Optimize Data and Reporting Systems: Companies should adapt their data management systems to ensure accurate and timely collection of ESG data.
  4. Internal Training: Educate teams on the new ESG obligations and standards, ensuring they understand the importance of these changes and their role in implementing the directive.

Comparison with NFRD: Key Changes Introduced by the CSRD

The CSRD introduces fundamental changes compared to the NFRD, expanding the scope of the directive and improving the precision and comparability of ESG information:

  • Expanded Scope: The CSRD covers a wider variety of companies, including listed SMEs and non-EU companies.
  • Common Reporting Standards (ESRS): These standards provide a common language for ESG reporting, facilitating comparability and eliminating ambiguity.
  • Double Materiality: The CSRD requires companies to consider both the external impact of their activities and internal ESG risks.
  • External Verification: The CSRD enhances the credibility of reports by requiring independent verification, providing greater confidence in the reported information.

What Types of Companies are Subject to the CSRD?

The CSRD affects a wide range of companies:

  • Large Public-Interest Companies: Includes those with more than 500 employees and large entities previously subject to the NFRD.
  • Large Companies: Any company that meets at least two of the following criteria: 250 employees, €40 million net revenue, or €20 million in total assets.
  • Listed SMEs: SMEs listed on regulated markets with the option to defer application until 2028 if justified.
  • Non-EU Companies with Significant EU Activity: Companies from third countries generating more than €150 million in the EU and meeting specific size criteria.

Double Materiality: A Comprehensive Approach

The CSRD differs from other regulations by adopting the concept of double materiality, requiring companies to consider two dimensions:

  1. Impact Materiality: Evaluates how the company’s operations affect the environment and society, including both positive and negative impacts.
  2. Financial Materiality: Analyzes how ESG issues may financially affect the business, enabling investors to better understand long-term risks and opportunities.

Verification Requirements and ESG Standards

The CSRD requires ESG information to be verified by an independent third party, starting with limited assurance and aiming for reasonable assurance by 2028. Additionally, companies must adhere to the European Sustainability Reporting Standards (ESRS), which provide a detailed and consistent framework for sustainability reporting.

CSRD General and Specific Objectives

The main objective of the CSRD is to improve the transparency and comparability of ESG information, creating a robust and uniform framework across the EU. Specifically, the directive:

  • Equates ESG Information with Financial Information: Ensures that ESG data holds the same importance as financial statements.
  • Prevents Greenwashing: By setting clear standards, it reduces the possibility of companies presenting misleading information.
  • Promotes Transparency: Facilitates access to ESG information for all stakeholders, promoting greater accountability.