CSRD – European Union (EU) Legislation   * Introduced under the European Commission’s Sustainable Finance Package to strengthen sustainable investment * Scope – Disclose Environmental and Social impacts

NFRD  – NON FINANCIAL REPORTING  DIRECTIVE Predecessor to CSRD; The European Union legislation on sustainability reporting from 2014 till 2023

CSRD is much more ambitious than NFRD Goal – to provide clarity to investors, analysts, consumers and other stakeholders to better evaluate the EU companies sustainability performance and the related business impacts and risks

European Sustainability Reporting Standards – ESRS The standards to be used for reporting in accordance with CSRD

Companies need to provide information that is * Qualitative and quantitative * Forward-looking and retrospective * Based in the short, medium and long-term

Almost 50,000 companies are expected to be impacted by CSRD Expected to cover 3/4th of the business in the European Economic Area

Applicable to – * Companies listed on regulated markets in EU – excluding the listed micro enterprise * Large companies ( meets any of the below 2 criteria) – More than 250 employees – Turnover of Euro 40 Million – Assets  of Euro 20 million – Listed SMEs – can opt out till 2028 – EU subsidiaries of non-EU companies with a turnover  of Euro 150 million in the EU

Changes for Business – More detailed reporting : in a dedicated section in the annual reports – Environmental Matters – including science based targets, EU Taxonomy and Climate risk-related reporting – Social Matters and Treatment of Employees – Respect for Human beings – Anti-corruption and Bribery – Diversity on Company board ( age, gender, education, professional background)

CSRD Assurance First year of CSRD disclosures -Obtain LIMITED ASSURANCE over the sustainability reporting standards,  materiality assessment  process and reported  indicators In Future – Moves to REASONABLE  ASSURANCE

A statutory or financial auditor or independent assurance service provider – To provide an assurance opinion over the sustainability report. The assurance report issued must be publicly disclosed with the financial report

• The European Commission (EC) aims at reducing the reporting costs over the medium and long term
• This is anyways to be borne due to the growing demand from investors I stakeholders for corporate sustainability

PHASE-IN OF CSRD REPORTING

The CSRD requires the sustainability information disclosure in a DEDICATED SECTION WITHIN THE MANAGEMENT REPORT

Companies must “DIGITALLY TAG” reported sustainability information in accordance with a “DIGITAL TAXONOMY” to help the users understand the information