Corporate Sustainability Reporting Directive (CSRD) 

On April 21st 2021, the European Commission published a draft of the Corporate Sustainability Reporting Directive (CSRD) as part of the Sustainable Finance Package which represents an extension of the Non-Financial Reporting Directive (NFRD). The aim of the proposed CSRD is to increase transparency by extending reporting requirements and to improve comparability by standardizing disclosure requirements. The CSRD is expected to enter into force in 2023.

Extension of Reporting Requirements
The current scope of the Non-Financial Reporting Directive (NFI-RL 2014/95/EU) already covers a large number of companies, but so far only applies to listed companies with more than 500 employees. The CSRD aims to extend reporting requirements to all organizations with more than 250 employees as well as to listed SMEs. However, SMEs will be granted simplified reporting standards, which they have to implement within three years. Micro-enterprises will not be subject to any new reporting requirements.
See Company size guide.

Standardization of Disclosure Requirements
The Non-Financial Reporting Directive (NFRD) introduced “uniform” rules for the annual sustainability reporting of large companies.  However, the reporting requirements of the NFRD are often perceived as a non-binding guideline rather than generally applicable standards. In order to improve the comparability of corporate reporting, the sustainability reporting standards will now be officially standardized. They are being developed as part of the CSRD and will apply starting from 2023. The European Financial Reporting Advisory Group (EFRAG), of which Austria has recently become a member, is responsible for the development of the standards. The first standards are expected to be presented as early as mid-2022.

Sustainability as Part of Corporate Reports
Additionally, the CSRD stipulates that sustainability information must be published as part of the official corporate report. This implies that the current possibility of disclosing this information in a separate report is no longer given. Thereby, duplication of reporting should be avoided, and complexity reduced.

External Review of Reports Becomes Mandatory
As the Non-Financial Reporting Directive currently does not require external auditing, only a few Austrian companies ensure that their published report is being reviewed externally. The CSRD therefore aims to implement that all reports must be audited by extern and independent assurance providers.