The European Union CSR Directive

Recently, the European Commission has released its CSR directive with the aim to build a socially responsible, transparent and profitable corporate atmosphere. This directive will require large companies to disclose non-financial and diversity information to help civil society organisations, consumers, policy makers and other stakeholders evaluate the non-financial performance of large companies, while also encouraging them to develop a responsible approach to business.

The EU CSR non-financial reporting currently applies to large public-interest companies with more than 500 employees. This covers approximately 11,700 large companies and groups across the EU, including listed companies, banks, insurance companies and other companies designated by national authorities as public-interest entities.

Under Directive 2014/95/EU, large companies currently must publish information related to:

These will be extended under the proposal for a Corporate Sustainability Reporting Directive (CSRD) to cover:

Even though CSRD will enhance reporting practices within the EU, according to the Climate Disclosure Standards Board (CDSB), there are still areas of improvement that will need to be dealt with accordingly as stated in their response to CSR Directive Proposal. These are as follows:

The first set of standards regarding CSR Reporting will be adopted by October 2022. For more detailed information, please see the EFRAG reports on development of EU sustainability reporting standards.

It is important that the EU does not only focus on applying the directive within itself, but to also pressure its neighbours to comply with the CSR reporting guidelines, while recognizing that their individual markets may need more time to adapt fully. In this regard, the EU must lead its neighbours to spread the ambitions of the Green Deal, since only European participation will not be enough to halt worldwide climate change.

For more details, visit the EC’s Questions and Answers: Corporate Sustainability Reporting Directive proposal link.

Disclaimer: Opinions expressed within the content are solely the authors’ and do not reflect the official opinions and beliefs of the companies that they represent.

Written by Ata Kösten with the contribution of Batuhan Ökten