Publication
Compliance Quarterly Türkiye
In this issue of Compliance Quarterly Türkiye, we continue to inform you of global and local compliance rules and regulations impacting Turkish businesses.
Short update: the European Council adopts the Corporate Sustainability Reporting Directive (CSRD)
Global | Publication | December 2022
On 28 November 2022, the European Council approved the adoption of the CSRD. The CSRD requires businesses to report and disclose information on their societal and environmental impact and external sustainability factors affecting their business.
The move from “non-financial disclosures” to “sustainability” disclosures represents a significant shift by the EU towards a sustainable economy with increased corporate accountability and places financial and sustainability reporting on an equal footing.
The CSRD amends the existing Non-Financial Reporting Directive (2014/95/EU) and introduces mandatory sustainability reporting standards including qualitative and quantitative information on environmental, social and governance matters. A summary of the key changes is set out below.
The move from “non-financial disclosures” to “sustainability” disclosures represents a significant shift by the EU towards a sustainable economy with increased corporate accountability and places financial and sustainability reporting on an equal footing.
The CSRD amends the existing Non-Financial Reporting Directive (2014/95/EU) and introduces mandatory sustainability reporting standards including qualitative and quantitative information on environmental, social and governance matters. A summary of the key changes is set out below.
Content
Summary of key changes
| Requirement | CSRD |
| Scope - EU Companies |
Covers EU Companies which are: a) Listed on a regulated market in the EU; or b) A "large company" (listed or non-listed) which has at least two of the following:
|
| Scope – Non-EU Companies |
Extends to Non-EU Companies which have the following criteria: a) a turnover of over €150 million in the EU and; b) a subsidiary (which is a large or listed subsidiary) or a branch (with net turnover of €40 million) in the EU. |
| Reporting Requirements |
Information must be clearly identifiable in a section of the management report and will cover sustainability matters including:
|
| Standards |
Companies will be required to report on sustainability according to mandatory reporting standards. The European Financial Reporting Advisory Group (EFRAG) are developing a framework of reporting standards which will apply to (i) topics and (ii) sectors. Topical standards were drafted by EFRAG on 23 November 2022 which cover to the following topics:
Sectorial standards will be developed by EFRAG to cover:
The Commission is expected to adopt the standards in their final form in June 2023 and 2024 respectively. |
| Auditor’s assurance |
Mandatory requirement for review of disclosures and assurance by a statutory auditor or independent assurance services provider that there has been no material misstatement in company’s disclosures. |
| Digital Tagging |
Requirement to prepare annual financial reports in XHTML format and mark sustainability information in financial statements and management reports with a digital ‘tag’ so that it is machine readable. |
Timeline
The CSRD will enter into force 20 days after publication on the EU Official Journal. The provisions will be applicable in stages between 2024 and 2029:
- Stage 1 - Large public-interest companies within the scope of the NRFD from 1 January 2024, with reports due in 2025.
- Stage 2 - Large companies not within the scope of the NFRD from 1 January 2025, with reports due in 2026.
- Stage 3 - Listed SMEs and other undertakings from 1 January 2026, with reports due in 2027. SMEs can opt-out until 2028.
- Stage 4 - Non-EU companies from 1 January 2028, with reports due in 2029.
Implications
It is estimated that 50,000 companies will be covered by the new rules. Companies will need to assess their reporting strategies in light of the CSRD and develop mechanisms to collect and monitor relevant, verifiable data as well as disclose relevant information in a transparent and efficient manner backed by an independent verification.
The Norton Rose Fulbright Environment team will continue to monitor the CSRD as it gradually comes into force and we will keep a close eye on the accompanying standards as they are developed.
If you have any questions or would like any further information on these issues, please contact the team.
Head of Environment, health and safety, Europe, Middle East and Asia; Partner
Email
caroline.may@nortonrosefulbright.com
Recent publications
Publication
UK Pensions Briefing | New Pensions Ombudsman streamlined decision-making process | January 2025
The Pensions Ombudsman has rolled out some significant changes to its decision-making process following a root and branch review of its operating model. The result should be faster decisions, with ill-conceived complaints turned away much earlier in the process. However it will also impact trustees’ and employers’ processes too. The Ombudsman is expecting greater proactivity to settle complaints, and faster responses when an investigation starts.
Publication
Incentivising Long Duration Electricity Storage – Ofgem’s call for input
Following the Department for Energy Security and Net Zero’s (DESNZ) October 2024 announcement on a proposed cap and floor regime for Long Duration Electricity Storage (LDES), Ofgem published its ‘call for input’ on Role, Plan, and response to the DESNZ on 18 December 2024 (Call for Input).
Subscribe and stay up to date with the latest legal news, information and events . . .