EU Clarifies Corporate Sustainability Reporting Rules with New FAQs

The European Commission released a detailed set of frequently asked questions (FAQs) on 7 August 2024 to clarify the implementation of the EU Corporate Sustainability Reporting Directive (CSRD) (Directive (EU) 2022/2464).

These FAQs provide important guidance on various aspects of the CSRD, as well as its interaction with other key EU legislation, including:

• the Accounting Directive (Directive 2013/34/EU);
• the Transparency Directive (Directive 2004/109/EC);
• the Sustainable Finance Disclosure Regulation (SFDR) (Regulation (EU) 2019/2088).

The new guidance responds to input from affected companies and covers key areas such as the scope of the directive, timelines for compliance, and available exemptions. Among the practical tools included are a flowchart to determine an entity's coverage under the sustainability reporting requirements and of the applicable financial year, аs well as a table outlining the application dates for various types of entities required to report on sustainability.

Additionally, the guidance touches upon the European Sustainability Reporting Standards (ESRS), which are central to the EU’s sustainability reporting framework. These standards were developed by the European Financial Reporting Advisory Group (EFRAG), the Commission's technical adviser. EFRAG has issued separate implementation guidance on the ESRS, with the latest updates published on May 31, 2024. For more details, the EFRAG's guidance can be accessed here.

Further information on the FAQs is available at the following link: Frequently asked questions on the implementation of the EU corporate sustainability reporting rules – European Commission (europa.eu).

The release of these FAQs marks a significant step towards enhancing transparency and ensuring that companies across the EU understand and comply with evolving sustainability reporting requirements.