Replacing the NFRD (Non-Financial Reporting Directive) is new regulation that will require companies to create an annual sustainability report using the European Sustainability Reporting Standards (ESRS) that is electronically readable and searchable. In addition to the five areas covered by NFRD, the CSRD adds further four requirements:

• A more structured and rigorous approach to environmental and social governance
• Double materiality – a company must report on how its business is affected by sustainability issues, as well as how its activities impact society and the environment
• Third-party assurance – companies must have an auditor to assure the claims they are making in their report are accurate; and
• Additional forward-looking information, including new targets and progress made against any previously established sustainability goals.

Rollout commences in 2024 for large EU companies and will continue until 2028 when the final tranche of non-European companies will need to comply.