December 22, 2022
- Directive 2022/2464/UE (“CSRD”) modifies, among others, the Non-Financial Information Disclosure Directive (2014/95/UE) (“NFRD Directive”) in order to correct some of the deficiencies detected in non-financial reporting and expand the number of enterprises obliged to report on sustainability issues.
- The CSRD represents substantial progress in terms of a greater focus on the social dimension of sustainability, with specific provisions related to disability included and reinforced in the Directive.
- The CSRD is expected to enter into force the first week of January 2023 (20 days after its publication). Thereafter, Member States will have 18 months (until July 6, 2024) to transpose the new rules into national law.
On December 16th, the final text of the European Directive on Corporate Sustainability Reporting (CSRD) was published in the Official Journal of the EU. The update reporting framework aims to increase transparency in corporate performance in relation to sustainability aspects. The CSRD also substantially increases the number of businesses that must report on a wide range of sustainability domains and are expected to meet a broad range of reporting requirements by January 1st, 2024. The changes would therefore affect the 2024 reporting cycle and will help increase corporate social responsibility, avoid divergent sustainability standards and ease the transition to a sustainable economy.
The CSRD introduces more detailed reporting requirements and ensures that large companies and listed SMEs are required to report on sustainability issues such as environmental, social and human rights and governance factors. The new rules will hold more companies accountable for their impact on society and guide them towards an economy that benefits people and the environment. Data on the environmental and social footprint would be publicly available to anyone interested in this footprint. At the same time, the new extended requirements accommodate different business sizes and provide them with a sufficient transition period to prepare for the new requirements.
With regard to disability, the final text of the Directive (available here) significantly increases its presence with provisions related to disability included and reinforced in the Directive.
Specifically, the CSRD
- Includes the UN Convention on the Rights of Persons with Disabilities (UNCRPD) among the international human rights frameworks and treaties referred to in the Directive (Recital 49 and Article 29b, Directive 2013/34/EU).
- States that disability-related sustainability standards should also specify information to be reported about accessibility measures realized by the undertaking (Recital 49).
- Includes disability as a factor for the description of the diversity policy applied in relation to the undertaking’s administrative, management and supervisory bodies (Article 20(1), Directive 2013/34/EU).
- Requires sustainability reporting standards to specify the information that undertakings are to disclose about social and human rights factors, including the employment and inclusion of people with disabilities, diversity, and respect for the human rights and principles established in the UNCRPD, among other Conventions (Article 29b, Directive 2013/34/EU).
- Requires the Commission to assess, as part of a report due by 30 April 2029, whether and how to ensure the accessibility for people with disabilities to the sustainability reports published by undertakings under the scope of this Directive (Recital 81 and Article 6).
The European Commission presented the CSRD proposal on April 21, 2021 as part of the European Green Deal and the Sustainable Finance Agenda. The CSRD will fill in the gaps in the existing rules on sustainability reporting and responds to the growing needs of financial markets of access to reliable, relevant and comparable environmental, social and governance information in order to facilitate the channeling of private capital to finance the just green transition. The disclosure of information on sustainability could attract additional investment and financing to facilitate the transition to a sustainable economy, as described in the Green Deal.
The Directive is expected to enter into force the first week of January 2023 (20 days after its publication). Thereafter, Member States will have 18 months (until July 6, 2024) to transpose the new rules into national law.