The emergence of new sustainability reporting and disclosure requirements for companies and investors aims to improve the quality, comparability, and reliability of sustainability information. The goal is to enhance transparency and accountability. They also respond to the growing demand from stakeholders, such as regulators, customers, employees, suppliers, communities, and civil society organizations, for more transparent disclosures.
One of the most significant developments in this area is the adoption of the Corporate Sustainability Reporting Directive (CSRD) by the European Union. The CSRD will replace the existing Non-Financial Reporting Directive (NFRD). It will require all large companies (over 500 employees) and all listed companies in the EU to disclose information on their performance, risks, opportunities, and impacts. This will be the first time that a regulation requires companies to conduct a double-materiality assessment while engaging their stakeholders. The CSRD is expected to apply from 2024 onwards.
Another development is the adoption of the Sustainable Finance Disclosure Regulation (SFDR) by the EU. The SFDR is a European regulation introduced to improve transparency in the market for sustainable investment products, to prevent greenwashing, and to increase transparency around sustainability claims made by financial market participants. It imposes comprehensive sustainability disclosure requirements at both entity- and product-level.