Short update: the European Council adopts the Corporate Sustainability Reporting Directive (CSRD)

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:

• a turnover of above €40 million;
• a balance sheet total of over €20 million;
• an average number of over 250 employees per year.

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.

Information must be clearly identifiable in a section of the management report and will cover sustainability matters including:

• The company’s business model and strategy, noting resilience to risks and opportunities.
• The plans of the company group to limit global warming to 1.5 °C in accordance with the Paris Agreement and achieve climate neutrality by 2050.
• Relevant policies and roles of administrative, management and supervisory bodies.

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:

• Environmental: climate change, pollution, water and marine resources, biodiversity and ecosystems and resource use.
• Social: information on the use of the workforce, diversity and inclusion, communities impacted by business operations.
• Governance: business conduct internally including for example diversity and company boards, and externally including anti-corruption and bribery.

Sectorial standards will be developed by EFRAG to cover:

• Global Reporting Initiative (GRI) sectors: agriculture, coal mining, mining, oil and gas (separately for upstream and mid-to downstream);
• High-impact sectors: energy production, road transport, motor vehicle production, food and beverages, and textiles.

The Commission is expected to adopt the standards in their final form in June 2023 and 2024 respectively.