- Large EU companies will have to disclose information about the impact of their activity on people and the planet, and also about the sustainability risks they face
After the approval of the European Directive on Sustainability Reporting by Companies, new information rules for organizations in European territory come into force.
The European Directive on Corporate Sustainability Reporting (CSRD) is one of the fundamental pieces of the Green Deal and the Sustainable Finance Agenda.
It is also part of the EU's commitment to respect human rights and reduce their impact on the planet.
Fundamentally, the new rule will improve the accountability of companies to the public. With it, they are forced to report regularly on the effect of their activity on people and the environment.
It will also put an end to greenwashing of some corporations and the social market economy in the EU will be strengthened, assuming progress towards the establishment of global standards on sustainability.
The main objective is to equate sustainability information with financial information, allowing the public to finally access reliable and comparable data.
Therefore, financial auditors need the knowledge of sustainability experts to identify non-financial risks. And non-financial information managers need the experience of financial auditors to quantify all the impacts generated.
The new legislation tries to cover gaps in the current regulations on non-financial information, considered insufficient and unreliable.
The law "introduces more detailed obligations on the impact of companies on the environment, human rights and the social sphere, based on common criteria in line with EU climate objectives." The Commission will approve the first standards in June 2023.
In addition, to ensure that they provide reliable information, companies will be subject to independent audit and certification processes. And digital access to information on sustainability will be guaranteed.
Which companies does it affect?
The new European regulatory requirements will apply to all large companies, whether or not they are listed on the stock markets. Non-EU companies but with a turnover of more than 150 million euros in the EU will also have to comply with them.
SMEs listed on the stock market will also be affected, although they have a longer adaptation period.
According to the data that the European Union is considering, almost 50,000 companies in the EU will be affected by this regulation, in relation to the collection and exchange of information on sustainability.