The anticipated NFRD Proposal for a Corporate Sustainability Reporting Directive (CSRD) by the European Commission is out. Some key points include:

1.Reporting requirement will expand to 50,000 companies (from 11,000 today), addressing all Large or Listed companies.

Key success factor for this positive step is the degree of size and listing of European companies is actually aligned and corresponds to the impacts European Companies   have on Stakeholder Impact

Potential criticisms might focus on scale of expansion, which for some stakeholders could be higher.

2.EU sustainability reporting standards will be developed by European Financial Reporting Advisory Group (EFRAG) and adopted by the Commission.

Key success factor will obviously be the quality of these standards, whether they will focus on bottom line results (i.e. quantitative trends, efficiency indicators) or intention driven ‘policies’ and future looking ‘commitments’.

Potential concern could be whether a Financial Advisory Group is more suitable to develop non-financial reporting standards, when widely used Guidelines such as the Global Reporting Initiative Standards could also be used.

3.A EU audit requirement for reported information will be introduced.

Key success factor will be whether measures will also be taken to ensure the quality of assurance processes.

Potential concern could be how whether assurance being scrutinized for conflicts of interest.

A summary can be found here, the full proposal here and in case you have any questions you van also contact us.