Why is the CSRD being amended?

Global regulation is constantly evolving making it challenging for business leaders to navigate. The latest update to the CSRD is presented by the European Commission in a bid to simplify reporting requirements for companies in scope. It proposes “a two-year delay of the date of adoption of the sector-specific European Sustainability Reporting Standards (ESRS), currently required in 2024”.

The reason for the amendment is to give more time to develop “effective and proportionate sector-specific ESRS”.  The ESRS comprise the detailed reporting standards developed by the European Financial Reporting Advisory Group (EFRAG) to translate the high-level rules and objectives of the directive into structured reporting requirements.

What is the change to the CSRD?

While the proposal is to move the deadline for adopting sector-specific standards and non-EU company reporting standards for non-EU companies in scope from 30 June 2024 to 30 June 2026, it does not push back the dates when non-EU companies must begin reporting – FY2028.

In fact, it means that non-EU companies will have a shorter window of opportunity to prepare to report following the non-EU company-specific standards and must instead be preparing to follow the full scope of the ESRS in their current form. This reinforces the importance of non-EU companies getting to grips with the detail of the ESRS sooner rather than later.

What are the new thresholds for companies in scope?

The Commission has also proposed to increase thresholds in the Accounting Directive in light of the impact of inflation. This is significant because it will affect which companies are in scope to report in 2026.

Companies are currently classified as ‘micro’, ‘small’, ‘medium’ or ‘large’ in relation to meeting two out of three criteria regarding:

  • Number of employees
  • Balance sheet total
  • Net turnover

While head counts remain the same, the proposal in consultation changes thresholds for:

Micro organisations – turnover from €700,000 to €900,000 and balance sheet from €350,000 to €450,000

Small organisations – turnover from €8m to €10m and balance sheet from €4m to €5m

Medium and large organisations – turnover from €40m to €50m and balance sheets from €20m to €25m

These changes will reduce the number of organisations in scope of the CSRD. However, companies that are growing or on the margins of existing thresholds should continue to prepare as they may find themselves required to report in the near future – and preparations require both time and resource.

What is the global regulatory picture?

While the current global regulatory picture remains fragmented and complex, with overlapping regional, national, and international standards, the direction of travel is in plain sight. Climate and nature regulation is targeting business and organisations must prepare for change.

Is preparing to adopt disclosure standards good for business?

Beyond meeting requirements, the process of preparing to report is good business practice. Understanding the carbon footprint of all operations across a global organisation can offer valuable insights about the business. Charting where and how risk reduction provides positive return on investment and identifying and quantifying risk and opportunity across the value chain provides a powerful lens for strategic decision-making.

  • Register for our webinar COP28: navigating the regulatory landscape as a business in 2024 on Tuesday 19th December at 9.30am. The webinar brings together an expert panel including Nigel Brook, Partner at global law firm Clyde & Co; Felicia Jackson, Editor at Sustainable Growth Voice; and Sarah Webster, Sustainable Business Director at Britvic. Moderated by Risilience Senior Climate Policy Analyst Andy Garraway, the hour-long webinar will review the key regulatory trends discussed at COP28 and what they mean for business in the year ahead.