Corporate Sustainability Reporting Directive (CSRD)

The Council of the European Union on November 28, 2022, definitively approved the Corporate Sustainability Reporting Directive (hereinafter the “CSRD” or the “Directive”), already adopted at first reading on 10 November 2022 by the European Parliament1.

The CSRD is the cornerstone of the European Green Deal and the Sustainable Finance Agenda and part of a wider EU policy to commit companies to respect human rights and reduce their impact on the planet.

The Directive introduces more detailed reporting requirements on companies’ impact on the environment, human rights and social standards, extending the scope of application of the Non-Financial Reporting Directive (Directive 2014/95/EU, hereinafter the “NFRD”).

The CSRD, which will enter into force before the end of 2022, is the pivot of the European Union’s action on sustainable finance, aimed at pursuing the climate objectives of the Paris Agreements and the 2030 Agenda.

Through the CSRD, investors and consumers on the market will be allowed to benefit from better access to comparable, relevant and reliable information relating to sustainability with a consequent reduction of investment risks by companies that intend to direct financial flows to companies characterized by a greater degree of sustainability.

CRSD introduces relevant changes to the annual reporting process, and it will force companies to rethink their reporting. The sustainability declaration will be equated to the financial one and must be treated with the same degree of rigor. Companies will be subject to independent audits and certifications to ensure that the data provided is reliable.

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