From as early as 2024, more European and global companies will be required to disclose their ESG activities in greater detail.
On 10 November 2022, the European Parliament adopted the final version of the Corporate Sustainability Reporting Directive (CSRD). The CSRD mandates that large EU companies (including privately held companies) and some global companies with significant operations in the EU report ESG-related information on a regular basis, providing more detailed information that is prevalent. puts us at the forefront of trends towards the development of more robust ESG disclosure regimes. World wide.
How will the CSRD change ESG reporting standards?
The CSRD aims to address issues that the EU has identified as shortcomings in its previous ESG reporting framework, the Non-Financial Reporting Directive (NFRD). The final version of the CSRD will effectively implement the version that Congress and the Board politically agreed to in June 2022 (for more information on the politically agreed version, see this Latham blog post. please refer to).
The CSRD broadens the scope of the NFRD by applying it to more companies, and also introduces more detailed disclosure requirements for companies within the scope. The specific disclosure requirements are set in the European Sustainability Reporting Standard (ESRS), recently approved by the European Financial Reporting Advisory Group (EFRAG), following initial public consultation on the exposure draft in early 2022. The Commission will review the draft submitted by EFRAG and will be requested by CSRD to formally adopt the first set of ESRS by 30 June 2023 (additional ESRS will be developed by EFRAG and will be available by 6 June 2024). It will be adopted by the committee by March 30). Once the ESRS is formally adopted, it will provide details on the disclosure requirements that companies must comply with under his CSRD, thus determining which ESG companies affected by the CSRD will be required to collect and report. increase.
next step
The Board will likely adopt the CSRD on November 28, 2022, after which it will be signed and published in the Official Gazette. The CSRD will officially come into effect 20 days after he is published in the journal, but its substantive provisions mean he won’t start affecting companies until 2024 at the earliest.
Latham & Watkins will continue to monitor the development of ESG reporting standards in the EU and globally.
