The most important points in brief on CSRD:
- Scope reduction, simplified reports and more time: Only large companies with more than 1,000 employees and either over €50 million in revenue or a balance sheet total of €25 million will be affected. The goal is to significantly reduce the amount of information companies have to provide compared to the current system. Companies will be granted an additional two years for implementation. Voluntary simplified reporting standards will be introduced for smaller companies, allowing them to communicate with customers and investors.
- The proposals provide clarity for companies: These updates make it clear that the regulations are not "off the table." However, they delay much-needed progress, especially in terms of transparency and comparability, at a time when climate change continues to advance.
- Move forward now with myclimate's support: Companies can continue to gather essential knowledge about their own processes and communicate them in accordance with the requirements, thereby gaining a competitive advantage. We remain your experienced and competent partner on the road to net zero.
Introduction of the new proposals
Today, the European Commission presented its new proposals for the redesign of the mandatory non-financial reporting requirements (CSRD, CSDDD) and the taxonomy1. These proposals aim to simplify and harmonise sustainability reporting requirements and corporate due diligence obligations for companies.
The most important changes include a reduction of the scope of the CSRD to large companies with more than 1,000 employees and a turnover exceeding EUR 50 million or a balance sheet total of EUR 25 million2 and the introduction of a voluntary reporting standard for small companies2.
Assessment from myclimate’s perspective
This development was foreseeable based on the current discussions, economic developments and clear political signals, particularly from Germany and France. Under the guise of “reducing bureaucracy”, it is easy to sell and implement setbacks in climate and environmental protection, social responsibility and transparency vis-à-vis the public (but vis-à-vis donors). As obvious as this development appears, it is disappointing at first glance. Reducing the scope and simplifying the reporting requirements leave a bad taste. Companies that already meet their responsibilities continue to be penalised with a systemic disadvantage (higher costs), while the non-doers receive a further postponement.
Opportunities and clarity for companies
Despite this expected disappointment, the Commission's proposals, which still have to be adopted by the Parliament and the Council and then implemented by the individual member states, also offer opportunities. At least there is now clarity for many companies. It is clear that non-financial reporting will come and, sooner or later, will of course have the same status as financial reporting. As with financial reporting, companies will get used to the reporting after the initial outlay, implement the necessary processes and, above all, recognise the advantages. Smaller companies will also continue to have the opportunity to voluntarily align themselves with the requirements of non-financial reporting.
Advantages for responsible companies in times of climate change
Above all, the CSRD will provide important information to companies that are exposed to risks as a result of climate change. Non-financial reporting will give them important insights. As suppliers in particular, they can already appear credible to their customers. This process strengthens the position of companies and promotes sustainable economic activity.
While the implementation and scope of these very good initiatives is being delayed, climate change continues unabated. In uncertain times, companies need clarity, which is now at least partially available. It is crucial that companies continue to focus on sustainability and prepare for the challenges ahead. The global goal of ‘net zero’ remains in place and will not be achieved without the contributions of the companies community.
Timetable and next steps
The European Commission has submitted its proposal, which now goes to the European Parliament. It can be assumed that the start of the official reporting requirement will be further delayed2.
The myclimate foundation is monitoring the further process very closely. Our experts are available to assist you with any questions you may have. Our task remains to advise and support companies on their path to ‘net zero’. We are at your side as a pragmatic partner, helping you to implement the necessary steps to achieve your climate goals.
Sources:
1: European Commission
2: KPMG
