The European Sustainability Reporting Standards, the Centerpiece of CSRD
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- The first set of draft European Sustainability Reporting Standards (“ESRS”), which was recently released, elicits further details on the scope and breadth of sustainability reporting requirements under the Corporate Sustainability Reporting Directive, which requires certain listed and large EU companies to include sustainability information in their annual reporting.
- The first draft ESRS include “cross-cutting” standards, which cover general reporting requirements and general disclosures and “topical” standards for environmental, social and governance disclosures. Further draft packages, yet to be released, will cover sector-specific standards and standards for small- and medium-sized companies, as well as for non-EU companies.
- The reporting standards require companies to report on impacts, risks and opportunities, which are “material” from a financial and an impact perspective. The sustainability report, which will track the scope of consolidation of financial reporting, will also have to reflect companies’ upstream and downstream value chains.
- Whilst certain aspects, such as the interplay between ESRS and other sustainability reporting standards, are yet to be finalised, companies are well advised to review the ESRS at this stage to understand the impact on their business and reporting practices.