The CSRD, or Corporate Sustainability Reporting Directive, is a European Union (EU) directive

The CSRD, or Corporate Sustainability Reporting Directive, is a European Union (EU) directive aimed at standardizing and enhancing sustainability reporting by companies operating within the EU. It was officially published on December 16, 2022, as part of the European Green Deal and the broader EU strategy to promote sustainable finance and corporate responsibility.

The primary objective of the CSRD is to improve transparency and consistency in the way companies report on the environmental, social, and governance (ESG) aspects of their activities. It introduces a structured framework for reporting that aligns with the European Sustainability Reporting Standards (ESRS).

Under the CSRD, companies will be required to report on a wide range of sustainability-related topics, including their environmental impact (such as carbon emissions and water usage), social aspects (including diversity, labor conditions, and human rights), and governance practices (such as board composition and ethical behavior). Importantly, this reporting should provide a forward-looking perspective, indicating how companies plan to address these issues in the future.

The CSRD imposes reporting obligations on both large and listed companies, as well as small and medium-sized enterprises (SMEs). Large and listed companies are expected to start reporting under the CSRD for the financial year 2024, while SMEs will have more time to comply.

The directive also emphasizes the need for companies to report on the impacts of their supply chain and their products on sustainability issues, reflecting a growing focus on supply chain transparency and responsible business practices.

In summary, the CSRD is a regulatory framework introduced by the EU to standardize and improve sustainability reporting by companies, with the goal of increasing transparency, accountability, and comparability of ESG-related disclosures across the European corporate landscape.

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