Corporate Sustainability Reporting (CSR)

On 5 January 2023, the EU Corporate Sustainability Reporting Directive (CSRD) – came into force after it was finally adopted by the European Parliament and the Council of the European Union. By July 2024 at the latest, the CSRD must be transposed into national law by the member states. It is expected that the contents of the CSRD will be transposed 1:1 into German law.

The Directive takes into account the goals of the 2019 European Green Deal, which brought the topic of sustainability further into the focus of politics, business and the public. One particular important is transparent and reliable reporting by companies on their activities in the area of sustainability.

Above all, the Directive has expanded the group of users significantly. Whilst only large capital market-oriented corporations and some banks and insurance companies were previously required to submit a non-financial statement and/or prepare a non-financial report, the scope of application has now been extended to all large corporations and equivalent commercial partnerships. This means that 15,000 companies in Germany are expected to be subject to reporting requirements in the future.

The CSRD provides for the following application timeline:

Furthermore, the CSRD provides that third country companies recording net turnover of more than €150 million in the EU and with a subsidiary or branch in the EU of more than €40 million are subject to EU sustainability reporting requirements.

The contents of the sustainability report will also be significantly expanded. The contents of the report under the CSRD will be fleshed out by EU standards (European Sustainability Reporting Standards). These standards are currently being discussed by the European Commission and are to be adopted by 30 June 2023 as delegated regulations which will thus be mandatory within the EU.

Opportunities and benefits

In addition to mandatory application for a certain group of companies, however, there are also many reasons for voluntary sustainability reporting, in particular:

• Employee recruitment: Diversity and flexibility increasingly play a greater role in the choice of employer
• Customer loyalty: Customers are increasingly interested in the origin and production conditions of the goods they consume
• Green financing: Banks will be obliged to look at the sustainability of the use of loans, but private investors will also pay attention to the sustainability of their investments
   

How can we support you on the journey to transparent and reliable sustainability reporting?

• Check-up of your sustainability report with a view to future requirements under the CSRD and the European Sustainability Reporting Standards (ESRS)
• Advice regarding the preparation or revision of a sustainability report
• Advice regarding the development of a sustainability strategy
• Support in the definition of sustainability goals and the identification of key indicators to measure goal achievement
• Advice regarding setting up, establishing and optimising processes and policies in the company in conjunction with sustainability goals and sustainability reporting
• Support in business analysis to identify opportunities, risks and impacts of business activities on the environment and the social environment
• Advice regarding stakeholder involvement and materiality assessment
• Advice regarding setting up (IT) systems for data collection and monitoring
• Audit of sustainability reports (certification according to ISAE 3000)
• Implementation support for the Act on Corporate Due Diligence Obligations in Supply Chains (LkSG, Gesetz über die unternehmerischen Sorgfaltspflichten zur Vermeidung von Menschenrechtsverletzungen in Lieferketten)