The CSRD directive

➡️ The Corporate Sustainability Reporting Directive (CSRD) is the European Union directive aimed at improving corporate sustainability reporting, and it defines the framework for its measurement.

But what is its origin?

The CSRD expands and replaces the previous European Directive Non-Financial Reporting Directive (NFRD) of 2014, implemented in Italy with Legislative Decree no. 254 of 30/12/2016, which required companies defined as Public Interest Entities (PIE) to include in their annual report information related to environmental, social, and governance issues in order to ensure information on the sustainability of investments.

But the global context soon made a revision of the NFRD necessary. We will limit ourselves here to mentioning at least the Paris Agreement ratified by the EU in 2016 (in which it is agreed to limit global warming to a maximum of 2 degrees Celsius) and the Green Deal of 2019 (in which the EU commits to reducing net greenhouse gas emissions and achieving a green transition for climate neutrality by 2050).

It is also joined by the new European regulation on taxonomy (Sustainable Finance Taxonomy Regulation) of 2020, a financial transparency tool that introduces solid scientific performance criteria in order to establish which economic activities can be defined as sustainable and thus support the Green Deal.

If for a long time the social, environmental commitment, and good governance practices of an organization have been a completely free and independent choice on the part of organizations, as well as their representation and related communication, the NFRD has introduced - at least for the EIPR - more qualitative obligations, while the CSRD introduces obligations both in substance and in method, with a vision that is not only retrospective but also forward looking in the short, medium, and long term.

On one hand, investors with their need for a reporting taxonomy that can objectively and sustainably guide their investments (what is a sustainable business?), and on the other hand, consumers with their growing sensitivity towards an environment that allows for living with dignity and well-being (Stockholm Declaration), have led to the synthesis of the CSDR, published in the Official Journal of the European Union on 12/16/2022, which must be adopted by all member states by 7/6/2024.

(to be continued)