Sustainability reporting

Legal requirements

02 November 2023 | Bericht

EU sustainability reporting obligations for companies: An overview of regulations and legal texts.

The EU measures intend to ensure that companies communicate and disclose their sustainability activities in a transparent and comprehensive manner. These measures should provide interested parties with access to independent records to allow comparisons to be made between businesses. The obligations include the Corporate Sustainability Reporting Directive (CSRD), the European Sustainability Reporting Standards (ESRS), and EU Taxonomy Regulation.

Corporate Sustainability Reporting Directive (CSRD)

The CSRD replaces the Non-Financial Reporting Directive (NFRD) and intends to improve the transparency and comparability of sustainability reports from European companies. The scope of the regulation is also broader than that of the NFRD. Whereas 500 companies in Germany were subject to sustainability reporting requirements under the NFRD, around 15,000 companies in Germany will have to comply with the disclosure requirements of the CSRD in the future. The directive determines the thresholds for the size of companies subject to disclosure obligations as well as when they must begin their reporting.

Link to the legislative text of the CSRD

European Sustainability Reporting Standards

Overview of the European Sustainability Reporting Standards (ESRS)PDF | 463 kB | Version as of: 17 April 2024

The ESRS are a key part of the CSRD and outline how sustainability disclosures are recorded in practice. The first set of the ESRS contains 12 cross-sector standards.

The cross-cutting standards contain the requirements for the creation and presentation of sustainability reports (ESRS 1) and the requirements that apply to all companies irrespective of their sectors and specific sustainability topics (ESRS 2). The topical ESRS (Environment, Social, Governance) elaborate on the requirements in their respective areas.

The topical standards are structured as follows:

Objective of the respective standard
Interaction with other ESRS standards
Disclosure requirements
Governance
Strategy
Impacts, risks and opportunities (IROs)
Metrics and targets
Appendix A: Application requirements

In 2024, two standards are expected to be published for small and medium-sized enterprises (SMEs):

An SME standard that is mandatory for listed SMEs and
A voluntary SME standard that serves as a guide for voluntary reporting.

In the future, the cross-sector standards will be expanded to include three further sets of sector-specific standards.

Link to the legal text of the ESRS.
Link to Corrigendum to Commission Delegated Regulation (EU) 2023/2772 – ESRS

EU Taxonomy Regulation

The EU has created a taxonomy to define sustainable activities. The regulation intends to increase transparency for investors and allow them to fund sustainable activities in a targeted manner. Thus, the EU aims to channel capital towards the activities that are required to achieve sustainability objectives and the green transition. The EU taxonomy also intends to increase the visibility of companies’ sustainability initiatives to highlight the progress that has already been made. An economic activity is considered sustainable if it offers a significant contribution to one of the six environmental objectives, does not preclude any of the other goals, and fulfills the minimum safeguards. The six environmental objectives of the taxonomy are: