Your rating 0 from 0 votes

Directive (EU) 2022/2464 on corporate sustainability reporting

From January 2023, Directive (EU) 2022/2464 on corporate sustainability reporting (CSRD – Corporate Sustainability Reporting Directive), which includes mandatory reporting of sustainability information under the European Sustainability Reporting Standards (ESRS) reporting framework. European Financial Reporting Advisory Group (EFRAG) have developed a set of ESRS which has been submitted to the European Commission and is expected to be adopted by the Commission by mid-2023.
This first set of ESRS includes 12 standards and covers Environmental, social and governance issues. The set includes cross-sectoral and thematic standards. It is planned to publish standards specific to economic sectors and standards for small and medium-sized enterprises (SMEs), which have not yet been included in the public consultation.

Reportable information includes:

Environmental impact,
social issues, including in relation to employees,
respect for human rights,
countering corruption and bribery,
diversity in management (age, gender, professional experience, education).

Organizations must report:

management,
strategies,
impact, risk and opportunity management,
indicators and targets.

The reporting should include qualitative and quantitative information, forecasts and hindsight for short, medium and long-term periods, as applicable, and other data consistent with ESRS requirements.

Cross-cutting standards
1. General cross-cutting standards
ESRS 1 and ESRS 2 are cross- cutting standards and apply to all sustainability issues.
ESRS 1 prescribes the mandatory concepts and principles to be applied when preparing sustainability statements under the CSRD. ESRS 1 requires covered companies to disclose sustainability information, regardless of their assessment of materiality, including information on governance, strategy, risk management and impact opportunities, and climate change-related indicators and targets.
Sustainability information can influence stakeholder decisions. Companies should identify their two main stakeholder groups:

affected stakeholders: individuals or groups that have interests that are or could be affected by the company's activities and through its value chain
users of sustainability reporting: stakeholders with an interest in an enterprise, which includes:
- primary users of general purpose financial reporting: existing and potential investors, lenders and other creditors (including asset managers, credit institutions, insurance companies),
- other users, including business partners, trade unions and social partners, civil society organizations and NGOs.

ESRS 2 sets out the disclosure requirements for sustainability reports. This includes general characteristics of the company and an overview of the company's business, but also specific disclosures about governance, strategy and business model and the process of dual assessment of the materiality of impacts, risks and sustainability opportunities. The structure of this standard replicates the four-pillar structure – governance, strategy, risk management, metrics and objectives – allowing alignment with other current reporting standards.

2. Topical cross-cutting standards
Topical standards include disclosure requirements on topics covering Environmental, social and governance issues independent of the sector of economic activity. They aim to enable users of sustainability statements to understand the company's impact on these dimensions, the company's material risks and opportunities related to these areas, and ultimately their impact on the company's ability to create corporate value.
Topical standards prescribe disclosure requirements that cover:

(i) a description of the processes for identifying and assessing significant impacts, risks and opportunities;
(ii) impact, risk or opportunity management, including related policies, objectives, action plans and resources; and
(iii) indicators and targets in relation to specific topics.

These requirements apply in addition to cross-sectoral standards.

Environment topical standards (ESRS E1–E5) outline the disclosure requirements for companies related to climate change, pollution, water and marine resources, biodiversity and ecosystems, as well as resource use and the circular economy.
Social topical standards (ESRS S1–S4) provide a framework for businesses to report on topics related to their own workforce, the workers in their value chains, the communities affected by their operations and the consumers and end users of their products or services.
Governance topical standards (ESRS G1) sets out disclosure requirements that seek to improve users' understanding of a company's strategy and approach, as well as processes, procedures and performance in relation to its business conduct.

All ESG standards will be audited by a second and third independent party.
The adoption of sector-specific standards is pending.

Companies within the scope of the Directive (EU) 2022/2464, deadlines and reporting period
Who are the affected companies?
The CSRD provisions apply to all large and small and medium-sized enterprises (SMEs), whether listed on the stock markets or not, and listed companies (except registered micro-companies) meeting at least two of the following three criteria:
a. total balance sheet amount: 20 million euros;
b. net turnover: EUR 40 million;
c. average number of employees during the financial year over 250 people.
Non-EU companies with significant activity in the EU (with a turnover of more than €150 million in the EU) that have at least one subsidiary (major or registered) or branch (with a net turnover of more than €40 million) in the EU will also have to comply. Approximately more than 50,000 companies in the EU will have to publish sustainability information under the ESRS.

When do companies have an obligation to disclose sustainability information under the ESRS?
Consistent with the CSRD above, the standards will come into effect between 2024 and 2028 as follows:

From January 1, 2024 for companies already subject to the Non-Financial Reporting Directive (reporting in 2025 on data from 2024)
From January 1, 2025 for large companies not currently subject to the Non-Financial Reporting Directive (reporting in 2026 on data from 2025)
From January 1, 2026 for registered SMEs and other enterprises (reporting in 2027 of data from 2026); SMEs will be able to defer disclosure until 2028.
From January 1, 2028 for non-EU companies with significant EU establishments (reporting in 2029 on 2028 data).

Directive (EU) 2022/2464 on corporate sustainability reporting

Implementation of management standards

CONSEJO EOOD is a consulting company formed by a team of consultants with over 15 years of experience in management systems in the field of international standards. The focus of the company is the provision of consulting services in the development and implementation of management systems that meet the requirements of international standards for quality, the environment, safe working conditions, information security, good production practices based on international standards: ISO 9001, ISO 14001, ISO 45001, ISO 22000, ISO 27001, IFS Food, HACCP and others.

The CONSEHO team has participated in the realization of projects in all branches of the economy. The projects implemented by the CONSEHO team are over 1000, in the fields of production and design, construction, trade, information and communication technologies, transport and forwarding, hotel and restaurant industry, special production, energy, design, food industry, services, etc. The company has established a strict procedure for monitoring the compliance with the agreed requirements with the clients, both the terms of the contracts and the quality of service performance. The established working style of the company consists of developing real management systems together with our customers, on the basis of conducting multiple trainings and providing full assistance in the implementation process. Through its approach to work, CONSECO ensures and guarantees trouble-free certification of the built systems in extremely short terms.

Partners