CSRD: update on the new European directive

Since 2017, the European NFRD* directive requires EU companies with more than 500 employees (and with a balance sheet over €20M or a turnover over €40M) to produce extra-financial reporting. In France, it applies in the form of a DPEF* containing general information on the company as well as an analysis of the main risks and ESG* data, based on performance indicators. Each Member State having its own reporting methods and the NFRD only concerning a limited number of companies, the European Commission launched its review in 2020: this was the birth of the CSRD*.

Goals of the CSRD

Like the Green Taxonomy, the directive will have a central role in directing investments towards so-called green activities. The CSRD therefore tends to encourage organizations to commit to sustainable development.

Through its standardization and regulation of extra-financial information, the CSRD directive aims to guarantee greater transparency and ESG comparability between companies in different Member States. This objective of transparency is also part of the European strategy to fight against greenwashing, a technique that consists in amplifying the CSR* commitment of a company which nevertheless has no or few sustainability-driven concrete goals and actions.

Application of the CSRD

Published in December 2022, the final text will come into effect in 2024 for the largest European companies, in order to gradually include VSEs and SMEs by 2028. It should also be noted that international companies with subsidiaries or branches in Europe will also be included. Find all the details of the schedule for the new regulations on the AMF* website.

To complete the directive and define its concrete application for the companies concerned, EFRAG* has been mandated by the European Commission to draft a series of ESRS* standards currently in the process of being validated. 12 of the 13 proposed sustainability standards have been selected and should be validated by winter 2023.

A consultation of this list is also open and companies can provide feedback before July 7, 2023 on the website of the European Commission.

Double materiality, at the core of the CSRD

While the ISSB* does not include the assessment of environmental impacts in its first extra-financial standards announced on Monday July 3, 2023, in Europe, double materiality will indeed be the keystone of sustainability reporting published from 2025. Companies will have to demonstrate, via various indicators, what are the environmental and social impacts on their activities, but also their own impact on the environment and populations.

To prepare you for this, EFRAG is currently developing guides to support companies on these topics, and we will talk about them in more detail shortly. Stay tuned!



AMF: Autorité des Marchés Financiers (French Financial Markets Authority)

CSR: Corporate Social Responsibility

CSRD: Corporate Sustainability Reporting Directive

DPEF: Declaration of Extra-Financial Performance

EFRAG: European Financial Reporting Advisory Group

ESG: Environment, Social et Governance

ESRS: European Sustainability Reporting Standards

ISSB: International Sustainability Standards Board

NFRD: Non Financial Reporting Directive