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Corporate Sustainability Reporting Directive (CSRD)


Understanding CSRD: navigating new sustainability reporting standards

The Corporate Sustainability Reporting Directive (CSRD) is a new regulation that strengthens disclosures on a wide range of topics including climate and environmental data in the EU. It builds upon the Non-Financial Reporting Directive (NFRD) and requires a broader range of companies to disclose their environmental, social and governance (ESG) impacts and related risks / opportunities. The directive mainly targets large companies and listed entities and aims to increase transparency of sustainability information and inform stakeholders about companies’ sustainable performance. As critical adoption milestones approach, affected companies must prepare to comply with CSRD.

CSRD applicability

CSRD outlines the criteria and timelines for different entities to comply. While CSRD has been approved by the EU Parliament and the European Sustainability Reporting Standards (ESRS) were adopted by the European Commission in 2023, application of CSRD reporting requirements will also depend on how the legislation is transposed into Irish law (expected in summer 2024). The following are the key points to note:

  • Public Interest Entities (PIEs)* in the EU with over 500 employees and currently covered by the NFRD will have to follow the CSRD requirements beginning from the fiscal year 2025 (on FY2024 data).
  • For PIEs with less than 500 employees, the directive will become applicable in the fiscal year 2026 (on FY2025 data).
  • Any company operating within the EU that meets at least two of the following thresholds: more than 250 employees, a turnover of €40 million or total assets amounting to €20 million will have to comply by the fiscal year 2026 (on FY2025 data)**.
  • EU-listed small and medium-sized enterprises (SMEs) that meet at least two of the following thresholds: having 50 to 250 employees, a turnover between €8 million and €40 million or total assets ranging from €4 million to €20 million will be included from the fiscal year 2027 (on FY2026 data).
  • Furthermore, non-European companies generating a net turnover of €150 million in the EU and having at least one subsidiary that falls within the CSRD’s scope or an EU branch with a turnover of €40 million will need to adhere to the directive by the fiscal year 2029 (on FY2028 data).

This approach will ensure that a broad spectrum of companies are integrated into the CSRD framework, enhancing sustainability reporting across the EU.

* EU PIEs include companies with debt/equity listed on an EU regulated market, credit institutions and insurance undertakings.

** The European Commission has adopted amendments to the Accounting Directive that will see a 25% increase in thresholds for what is considered a micro, small and medium-sized company, and by default a large company. It is now up to the Irish Government to make the necessary changes in Irish company law for it to be legally effective.


Helping you prepare for CSRD

Reporting under CSRD is new for affected organisation, and guidance and standard practices are evolving. With a skilled core team focused on ESG reporting and assurance, PwC can bring a wealth of experience and practical know-how to help your organisation achieve value as well as regulatory compliance.

CSRD scoping

Companies must determine if they fall within the scope of CSRD, and if so, if there are reporting options they can avail of. These are strategic decisions in terms of how your organisation is portrayed to key stakeholders. It is also important to consider alignment with your broader sustainability strategy and existing disclosed ambitions (e.g. net zero target date).

Strategy alignment

In today’s rapidly evolving business landscape, aligning core business strategies with ESG principles is a moral and strategic imperative. Consideration of the relevance of ESG  should be a lens that is applied to core strategy—not something that is managed separately. Often, ESG considerations have been informally considered as part of the existing strategy, but the linkage between the topics is not clear. In other cases, opportunities to pursue new areas of growth are identified through the longer term consideration of ESG topics. Where risks are identified, plans to minimise reputational damage and financial losses are key, as stakeholders and regulators demand accountability and transparency. As business leaders navigate these challenges, they must focus on creating a synergy between profit and purpose, ensuring that their companies survive and thrive in the new ESG-focused global business landscape.

Double materiality assessment

CSRD’s double materiality assessment is a complicated process for businesses, but a core element of CSRD — acting as the bridge between a company’s core strategy and its ESG reporting. The concept requires the assessment of the two dimensions to double materiality: impact materiality and financial materiality, when identifying the information to be disclosed. This approach demands that companies evaluate their impact on environmental and social factors (the inside-out view) and assess how sustainability issues impact their risk profile and financial performance (the outside-in view). To fully understand their ESG impacts, companies need to carry out a comprehensive assessment of their operations and strategies. This involves collecting, analysing and reporting data—all of which requires significant resources and expertise as well as input from external stakeholders.

CSRD roadmap and implementation support for reporting

CSRD will apply to the first wave of in-scope companies for fiscal years starting on or after 1 January 2024 (filing reports in FY2025), so time is of the essence. Regardless of the maturity of existing non-financial reporting, this is a significant project for any organisation and identifying a roadmap and implementation plan at the outset is key. To ensure compliance, businesses must appoint a project owner, identify stakeholders and obtain their buy-in, analyse existing sustainability reporting processes, and engage with key internal stakeholders to understand existing data management processes.  

In-scope companies will need a robust internal framework for sustainability reporting, capable of adapting to changing requirements and withstanding rigorous external scrutiny. They will also need clear governance to support future reporting.

Given the requirement to report on a wide range of topics, and to then obtain limited assurance on that disclosure, many organisations have benefited by firstly focusing on a number of pilot projects whereby the data source and underlying processes and controls are established. This model can then be expanded to other areas of reporting.  

CSRD implementation can be a significant endeavour. The scale of the data collection challenge, spanning all aspects of an organisation, often requires complex delivery programmes covering changes to data models, systems and operating models. To ensure compliance, businesses must appoint a project owner, identify stakeholders and obtain their buy-in, analyse existing sustainability reporting processes, and engage with key internal stakeholders to understand existing data management processes.

Mandatory assurance

Mandatory assurance is required on CSRD reporting, which will increase the requirements for controls over the process and the data used for the increased disclosures. Initially requiring limited assurance, this mandate will evolve to reasonable assurance over time. The challenge is not only in achieving compliance, but also in maintaining it consistently as standards evolve. Many organisations benefit from completing pre-assurance readiness assessments prior to the live period of reporting. In-scope companies will need a robust internal framework for sustainability reporting, capable of adapting to changing requirements and withstanding rigorous external scrutiny. 

CSRD and tax reporting

Incorporating tax reporting in the CSRD framework is a crucial factor for businesses striving for comprehensive sustainability compliance. It guarantees that tax strategies not only comply with regulations, but also reflect a commitment to societal and environmental responsibility. Transparent tax practices are essential, showcasing how tax contributions support broader sustainability objectives. To navigate this aspect of CSRD, a comprehensive understanding of both tax and sustainability reporting is necessary, ensuring that financial practices contribute positively to the company’s reputation and stakeholder relations.

CSRD training

A significant challenge posed by the CSRD is embedding sustainability knowledge within organisational structures. This reporting requirement will drive changes across all businesses, from compliance to procurement to HR. Companies must acquire technical reporting knowledge on sustainability and integrate it into their operations. This involves understanding various ESG metrics, which vary significantly across industries and company sizes. Companies must ensure compliance by integrating sustainability into decision-making processes. To achieve this, companies must invest in training and development for their people, management and board, and stay up-to-date on evolving sustainability practices and standards.

Why partner with PwC?

We can assist you on your journey towards CSRD compliance. Our team of experts has a wealth of cross-industry experience to create effective and client-centric solutions. Our collaborative approach helps us understand your business and its CSRD needs. And with PwC’s global network, we can leverage niche expertise and best practices from other regions to guide your company through the evolving corporate sustainability reporting landscape. If you are facing CSRD challenges and want to discuss them with us, contact us today.

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Fiona Gaskin

Fiona Gaskin

Partner, PwC Ireland (Republic of)

Tel: +353 86 771 3665

Fidelma Boyce

Fidelma Boyce

Assurance Partner, PwC Ireland (Republic of)

Tel: +353 86 8128831

David McGee

David McGee

ESG Leader, PwC Ireland (Republic of)

Tel: +353 86 268 1522

Aidan Lucey

Aidan Lucey

Partner, PwC Ireland (Republic of)

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