The EC has released a comprehensive set of FAQs aimed at aiding companies and auditors in implementing the stringent sustainability reporting demands set by the CSRD.
According to ESG Today, this move is expected to help over 50,000 companies navigate the complexities of sustainability disclosures that the CSRD mandates.
The CSRD represents a significant overhaul of the EU’s previous Non-Financial Reporting Directive (NFRD), expanding its scope from around 12,000 companies to more than 50,000. The Directive, which came into effect at the start of 2024, mandates large public-interest entities with more than 500 employees to start reporting in 2025, with smaller entities following in subsequent years.
It sets out detailed requirements on how companies should report their impacts on the environment, human rights, and sustainability-related risks, utilising the new European Sustainability Reporting Standards (ESRS).
The FAQ launched by the Commission aims to reduce the administrative load on companies by clarifying key aspects of the CSRD, including the scope of the rules, company size categories for compliance dates, and exemptions.
It also provides guidance on the use of ESRS, the employment of estimates for inaccessible value chain information, and what SMEs can expect in terms of sustainability information requests. Furthermore, it addresses auditing and assurance issues, detailing requirements for auditor approval and training, as well as accreditation for independent assurance providers.
European Commissioner Mairead McGuinness highlighted the EU’s commitment to fostering a robust sustainable finance framework, stating, “The EU has taken major steps in building a comprehensive sustainable finance framework over the past six years, encouraging companies to embark on their transition paths. Our focus now is to ensure that our tools are usable and effective, while continuing to reduce the administrative burden on companies.”
The launch of the FAQ is seen as a pivotal effort by the EU to facilitate the compliance of companies with new sustainability regulations in a cost-effective manner and to enhance the usability and comparability of reported sustainability information.
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