Issue 587 (Week ending 21/06/2023)

If you are a business in Ireland, you've probably heard about CSRD by now, the new mandatory Corporate Sustainability Reporting Directive. But what does it actually require? Who does it apply to? When does the reporting begin, and what will happen if your business fails to comply?

The framework underpinned by the new CSRD seems to have a lot of our clients feeling lost. But not to worry, we have the full break down of what businesses need to know when it comes to reporting on their sustainable actions.

What's Involved?

• Annual Director's Report: Legal Obligation to do so for in-scope businesses
• Report on ESG Impact Against Standards: 12 European Sustainability Reporting Standards (ESRS) currently in draft with more to be expected
• Supply Chain / Value Chain: There is expected to be a 3-year transition period for supply chain / value chain sustainability reporting
• Sustainability Reports Will Be Audited: Sustainability Reports submitted to the government are expected to be audited. There is a possibility of a new type of auditor being appointed

Who Is in Scope?

Reporting under "NFRD" (Non-Financial Reporting Directive):

An entity which on its balance sheet date has an average of 500 employees and meets at least 1 of the following criteria:

• Balance sheet > E20million
• Net Turnover > E40million

And is a 'Public Interest Entity':

• Listed on an EU regulated market
• Credit institution or insurance company
• Otherwise designated as a public interest entity by member state

Large EU Company

An entity which on its balance sheet date exceeds at least 2 of the following 3 criteria:

• Average number of employees: 250
• Balance Sheet > E20million
• Net Turnover > E40million

In scope Non-EU Entity

The ultimate parent of:

• At least one EU subsidiary in the EU subject to CSRD or
• Where there are no such subsidiaries, at least one branch in the EU that had a net turnover of > E15million for each of the last two consecutive financial years

When Will Reporting Begin?

• Those companies already subject to the reporting obligations of NFRD are due to report by 2025 in respect of the 2024 financial year
• All large EU companies whether listed or not that are not subject to the reporting under the NFRD in 2026 by 2026 in respect of the 2025 financial year
• SMEs with securities listed on an EU regulated market (excluding listed micro-enterprises), small and non-complex institutions and captive insurance/reinsurance undertakings by 2027 in respect of the 2026 financial year with optionality for the 2027 and 2028 reporting years
• In scope non-EU companies by 2029 in respect of the 2028 financial year

What Happens if You Fail to Comply?

1. Legal Consequences:

• Sanctions
• Fines
• Penalties

2. Reputational Consequences:

• Leadership
• Market
• Investments
• Procurement processes

If you require any further information, or you would like to learn more about how we can help your business with sustainability reporting, call us on Tel: 01 903 2660 or email us at solutions.vision-net@crif.com.