Launched by the European Commission in 2021, the Corporate Sustainability Reporting Directive (CSRD) aims to unify non-financial reporting among businesses, elevating the uniformity and caliber of data accessible to the public. Significantly, these updated guidelines will influence a broad spectrum of entities, becoming operational from January 1, 2024.The term CSRD refers to the Corporate Sustainability Reporting Directive, initiated by the European Commission in April 2021. This regulatory structure for sustainability in Europe was officially documented on December 16, 2022, within the Official Journal of the EU.This directive mandates that large enterprises release non-financial disclosures in line with the standards set at the European scale (ESRS). The directive emphasizes transparency on risks, impacts, and opportunities, concerning social, environmental, and governance areas.At its core, the directive aims to realize the goals set by the European Green Deal, with the target of achieving carbon neutrality by 2050.

The CSRD is aimed at both financial and non-financial businesses governed by the Accounting Directive and the Transparency Directive, specifically encompassing:

- European companies traded on regulated markets, inclusive of listed SMEs, though micro-enterprises defined by the Accounting Directive are omitted.
- Additional large European enterprises, irrespective of their listing status, that surpass two out of the three specified benchmarks (250 employees or more, revenue over 40 million euros, and/or assets above 20 million euros).
- Non-European enterprises with branches or subsidiaries in the European Union generating more than 150 million euros in revenue.

SMEs will face a lighter reporting load. The stature of European branches and subsidiaries will be factored in as well. In the same vein, non-European businesses are only tasked with revealing data about their environmental and social repercussions. The exact set of “simplified ESRS reporting standards” is expected to be launched at the end of July 2024 by the EFRAG.

For clarity, SMEs that adhere to these specifications will have to comply:

- A staff count of 10 employees or fewer;
- A balance sheet total of 250,000 € or below;
- Annual revenues of 700,000 € or less.

To reiterate, the CSRD was showcased to both the European Commission and the European Parliament on April 21, 2021. Following its publication on December 16, 2022, in the Official Journal of the EU, it was incorporated into the national laws of all EU member states by the close of that year.
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The directive's implementation will be staggered across four specific dates

- January 1, 2025 (based on the 2024 FY) will cater to both European and non-European companies already reporting under the NFRD guidelines.

-January 1, 2026 (based on the 2025 FY) will target large European businesses and non-European entities listed on European regulated markets that aren't under NFRD obligations.

- January 1, 2027 (based on the 2026 FY) is dedicated to listed SMEs from both European and non-European regions. An important detail: these SMEs can avail an extra two-year deferment provided they present valid reasons.

- January 1, 2028 (based on the 2027 FY) will affect non-European corporations generating more than 150 million euros in European revenue via a branch or subsidiary. Below, we've encapsulated the CSRD schedule in a concise table format.

Opportunity and risk analysis regarding the EU directive and its significance for your company.

Establishing a CO2 footprint for Scopes 1, 2, and 3.

Setting emission reduction targets for your company.

Expanding energy/environmental management systems.

Aligning data management and control with a recognized reporting standard.

Monitoring the main sources of emissions.