Filip Gregor
Head of the Responsible Companies Team
The European Parliament has adopted the Corporate Sustainability Reporting Directive (CSRD), which clarifies transparency obligations for large companies operating in the EU on their sustainability impacts, risks, and opportunities. Pursuant to the CSRD, companies across all sectors will report against the European Sustainability Reporting Standards, which were developed by the European Financial Reporting Advisory Group (EFRAG), submitted to the European Commission and published on 22 November.
The new rules and EU standards will tackle major problems on the quality, consistency and comparability of sustainability information disclosed by companies, as well as root out widespread greenwashing practices.
Once the legislation is published in the Official Journal of the EU, Member States have a maximum of 18 months to implement CSRD into national law.
The swift CSRD implementation is key for a successful transformation of the EU's economy. To direct finance flows toward sustainability, private investors, banks and public institutions need consistent and reliable ESG data from companies.
Read our Brussels office's detailed analysis of the next steps needed here.
A company will report ESG information under the new standards if:
When do reporting obligations come into force?
The Directive is expected to enter into force in 2024, but some companies will be given extra time. The year 2024 is fully binding only for the largest EU companies, which have been required to report sustainability information under the previous NFRD legislation.
All companies under the CSRD scope will report sustainability data according to European Sustainability Reporting Standards. They will direct businesses on key ESG data and reduce companies’ administrative burden. Recently, the Board of the European Financial Reporting Advisory Group (EFRAG) approved cross-cutting reporting standards and submitted them to the European Commission.
Among other things, the standards require companies to report on their carbon footprint, analysis of climate transition risks, and the significant impacts on people and the environment in their supply chains.
The standards cover strategic cross-cutting ESG information and 10 thematic areas including climate, pollution, water resources, biodiversity, circular economy, own workforce, workers in the value chain, communities & consumers, and business conduct. They also reflect a number of international initiatives, including TCFD, GRI, emerging international standards under IFRS, plus UN and OECD standards for sustainability due diligence.
The European Commission is expected to adopt the standards in the first half of next year, while EFRAG is also starting work on follow-up standards for climate-risk sectors (energy, transport, agriculture, etc.) being the first in line. The adoption of sectoral standards by the European Commission is expected in 2024. Filip Gregor, Head of the Responsible Companies Section at Frank Bold, participates in the standards’ development as a civil society representative in the EFRAG's Sustainability Reporting Board.
The Frank Bold Society and the Neighbourhood Association Uhelná called on the Czech government today to be more consistent in its negotiations with Poland over mining at the Turów brown coal mine. According to both organisations, the government did not have enough information or time to prepare an agreement that would truly protect Czech interests. Moreover, the government has acted in a non-transparent manner by failing to inform the public in advance of the terms of the agreement being prepared, which should lead to the withdrawal of the action against Poland at the EU Court of Justice. The organisations have therefore drawn up a document with seven basic demands on which the Czech side should insist.
The European Commission recently introduced a draft of the revised EU ETS Directive which, among other things, proposes that 100 % of ETS revenues should be used for environmental measures. We welcome this idea but we’re also sceptical about how the ETS revenues are used in the Czech Republic. Therefore, we have prepared an analysis mapping the use of ETS revenues in Czech Republic and sent it to the European Commission as an input for the recent public consultation. The main conclusions are presented below.
We have analysed hundreds of pages of technical documents and prepared a comprehensive overview of the sustainability reporting requirements under the forthcoming EU legislation. We summarise what ESG data will be critical for companies, banks, and investors in sustainability strategy and management and in the areas of climate change, environment, sustainable activities, employees and supply chains, due diligence, and anti-corruption measures.
