On December 14, 2022, the European Union published new corporate reporting rules on sustainability that oblige companies to report regularly on the impact of their activities on people and the environment.
On 14 December 2022, the European Union published a new regulation requiring companies to report regularly on the impact of their activities on people and the environment. We provide answers to its main key points:
It is the Directive (EU) 2022/2464 of the European Parliament and of the Council of December 14, 2022., amending Regulation (EU) 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU. In English, known as Corporate Sustainability Reporting Directive, for its acronym in English (CSRD).
To bring sustainability reporting in line with financial reporting, in response to the exponential increase in demand for sustainability information that has occurred in recent years (especially from the investment industry), allowing access to reliable and comparable data.
These are the main changes it introduces:
This new rule on corporate reporting on sustainability will force large companies to report regularly on the impact of their activities on the environment, human rights and the social sphere.
It aims to end the greenwashing of some companies, strengthen the social market economy in the EU and lay the groundwork for global sustainability standards..
In addition, this new legislation will eventually bring sustainability reporting in line with financial reporting, giving the public access to reliable and comparable data.
The Council approved the text on November 28 and it entered into force 20 days after its publication in the Official Journal of the European Union (December 14, 2022). Spain, like the other member states of the European Union, has 18 months to apply the rules.
This standard will be mandatory for companies in the following 3 phases:
In addition, in 2029, third country companies with at least one subsidiary or branch with a registered office in the EU (or with a net turnover of more than EUR 150 million in the European Community) will be required to report for the 2028 financial year.
They will be subject to independent audits and certification processes. In addition, digital access to sustainability information is guaranteed.
Compared to around 11,700 companies covered by the previous rules, the new Directive will apply to almost 50,000 companies in the EU.
The European Directive came into force 20 days after its publication in the Official Journal of the European Union (December 14, 2022). Spain, like the rest of the European Union member states, has 18 months to apply the rules.
On March 4, 2023, the prior public consultation process opened by the Ministry of Economic Affairs and Digital Transformation on the future rule transposing the CRSD Directive ended.
With this consultation, the transposition of the Directive on corporate information on sustainability, which will be enforceable in the coming years, has been set in motion.
The approval of the Corporate Sustainability Reporting Directive represents a paradigm shift, an adaptation to the needs of the planet and the promotion of a global economy where not only finance rules. The new Directive will allow the public to have access to a more homogeneous and transparent communication and to promote sustainable business strategies.
Delegated acts: non-legislative acts adopted by the Commission to supplement or amend certain non-essential elements of a legislative act. The Commission also consults experts, including experts appointed by each Member State, before adopting delegated acts.
EFRAG: an entity that advises the European Commission on the adoption of international financial reporting standards.