The Council and the European parliament have reached a provisional agreement on the corporate sustainability reporting directive (CSRD).
The rules will come into effect from 1 January 2024 for companies already complying with the non-financial reporting directive (NFRD). A year later for companies not subject to NFRD and by 1 January 2026 for listed SMEs, small and non-complex credit institutions and captive insurance undertaking.
In a press release the Council announced the provisional agreement stating that the rules will apply to companies with more than 500 employees and to all large companies and all companies listed on regulated markets. SMEs will have the possibility to be exempt from the rule until 2028.
Non-European companies generating a net turnover of €150m in the EU and which have at least one subsidiary or branch in the EU will have to to provide a sustainability report.
Companies will be able to choose between accredited independent auditors or other certifiers to give assurance on their reporting.
The press release also confirms that EFRAG will be the European standard setter putting an end to Brussels' corridors gossip.
Julien Rivals, co-managing partner for sustainability serives at Deloitte France, said in a linkedin post that a number of points have been validated in the press release but some areas remain blurry.
For one requirements for non-EU companies is not very precise in the press release. Second, how subsidiaries will be covered but it's unclear at this stage to which degree they will have to comply with the rules.
These questions should be answered by the full text of the agreement will become available.