La Française: CSRD, the beginning of a new era in sustainability reporting

La Française: CSRD, the beginning of a new era in sustainability reporting

January 31, 2024

Rules and Legislation ESG
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Business activities can contribute to sustainable economic growth while inflicting harm on the very resources their long-term prosperity depends on.

Increasingly, jurisdictions are promoting and enforcing standardized reporting rules to ensure that companies consider the positive and negative externalities occasioned by their business activities. However, when it comes to reporting, not all companies are equal. Few companies monitor and disclose associated risks and opportunities, and even fewer properly assess related externalities.

Under the European Green Deal, approved in 2020, the EU aims to direct capital flows to sustainable businesses and unlock investments needed to achieve its 2050 climate-neutral target. Aware that the Non-Financial Reporting Directive did not provide comparable and strategic ESG information, the European Commission (EC) proposed Corporate Sustainable Reporting Directive (CSRD) in April 2021.

The objective of CSRD is to improve the standards and comparability of ESG disclosures by extending both the scope and amount of information required. It also adopts a more prescriptive approach by specifying what information a company should publish and how it should be reported.

All companies subject to CSRD must report their sustainability information using the European Sustainability Reporting Standards (ESRS), developed by European Financial Reporting Advisory Group (EFRAG). More than 50k companies are expected to report under the ESRS between 2024 and 2028, including non-EU companies with a significant presence in the EU.

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