CSDR: what is it and how does it affect your company?
Main new features of the CSRD
- Expanded scope: the number and type of companies required to report is expanded. Large companies with more than 500 employees subject to NFRD (Law 11/2018) were required to provide sustainability reports from 2018. The CSRD includes new types of companies required to report:
- Large EU companies with more than 250 employees, more than 40 million euros in turnover or more than 20 million euros in assets.
- Companies listed on regulated markets, including SMEs (with certain temporary exemptions).
- Non-EU companies with significant subsidiaries or branches within European territory (more than 150 million euros in turnover in the EU).
- Greater detail in reporting: stricter and more specific requirements are established for sustainability reporting. Companies will have to report on environmental, social and governance issues with more detailed and structured metrics. Information will be required on emission reduction strategies, impact on biodiversity, water management, human rights and gender equality, among others.
- Double materiality: the concept of double materiality is introduced, which implies that companies must report both on how environmental and social factors affect their financial performance and on the impact that their activities have on the environment and society.
- Financial materiality: how environmental, social and governance (ESG) factors impact the financial situation and performance of the company. This involves analysing risks and opportunities arising from climate change, environmental regulation, corporate reputation, among others.
- Materiality of impact: how the company's activities affect the environment and society. This includes the impact on carbon emissions, biodiversity, working conditions, human rights, diversity and inclusion, among others.
This approach seeks to offer a more complete and balanced view of sustainability, ensuring that companies not only assess the risks they face, but also the footprint they leave on their environment. With CSRD, companies must evaluate both aspects and report on them with quantifiable and verifiable data, promoting greater transparency and corporate responsibility.
- Digitalisation: reports are required to be published in digital format, labelled with the XBRL standard.
- External assurance: the obligation of verification by independent third parties is introduced.
- Uniform standards: mandatory use of the European Sustainability Reporting Standards (ESRS) developed by the European Financial Reporting Advisory Group (EFRAG).
The ESRS are a set of standards developed by the EFRAG (European Financial Reporting Advisory Group) that establish specific sustainability reporting requirements for companies. These standards ensure that ESG information is consistent, comparable and reliable, facilitating informed decision-making by investors and other stakeholders.
Period of adaptation to the CSRD directive
Depending on their size, income and number of employees, companies will be required to submit sustainability reports according to the following deadlines relative to the fiscal year:
CSRD TIMELINE
(According to fiscal year)
- 2024
2024
Large companies with more than 500 employees
Subject to NFRD (Law 11/2018)
- 2025
2025
Large companies that meet two of the criteria:
+ 250 employees
+ €50 million in turnover
+ €25 million in assets.
- 2026
2026
SMEs Listed
Except micro-SMEs
- 2028
2028
Companies from third countries:
Activities in the EU
+ €50 million in revenue
With subsidiaries or headquarters in Spain
- 2024
2024
Large companies with more than 500 employees
Subject to NFRD (Law 11/2018)
- 2025
2025
Large companies that meet two of the criteria:
+ 250 employees
+ €50 million in turnover
+ €25 million in assets.
- 2026
2026
SMEs Listed
Except micro-SMEs
- 2028
2028
Companies from third countries:
Activities in the EU
+ €50 million in revenue
With subsidiaries or headquarters in Spain
- 2024
2024
Large companies with more than 500 employees
Subject to NFRD (Law 11/2018)
- 2025
2025
Large companies that meet two of the criteria:
+ 250 employees
+ €50 million in turnover
+ €25 million in assets.
- 2026
2026
SMEs Listed
Except micro-SMEs
- 2028
2028
Companies from third countries:
Activities in the EU
+ €50 million in revenue
With subsidiaries or headquarters in Spain
Current legal framework
Directive 2022/2464 CSRD came into force in January 2023, replacing the Non-Financial Reporting Directive (NFRD). Member states are obliged to transpose it into their national legislation by July 2024.
The CSRD replaces and expands the current Non-Financial Statement (NFS), including new reporting standards aligned with the European Sustainability Reporting Standards (ESRS) framework and introducing more detailed criteria on governance, environmental, social and human rights impact, as well as double materiality (financial and social/environmental impact of business activities).
In Spain, the draft bill transposing the CSRD was approved by the Council of Ministers on 29 October 2024. It will be implemented through amendments to the Non-Financial Information Act (EINF, Act 11/2018) and the Commercial Code, among other regulatory frameworks.
Recommendations from the CNMV and the ICAC
Pending the final transposition of the CSRD directive, the CNMV (Comisión Nacional del Mercado de Valores) and the ICAC (Instituto de Contabilidad y Auditoría de Cuentas) have issued provisional recommendations for companies to start applying European sustainability reporting standards (ESRS) from the 2024 financial year.
These recommendations establish that from 2025 (financial year 2024), companies with more than 500 employees obliged to report on the Statement of Non-Financial Information (Law 11/2018) must apply more demanding standards in their reports, in accordance with the CSRD Directive and the European ESRS standards. The CNMV will consider sustainability reports that comply with the ESRS to be admissible and recommends that Spanish issuers that are in a position to do so reliably publish non-financial information in accordance with the ESRS as early as 2025.
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