As companies globally update their systems to meet the EU’s Corporate Sustainability Reporting Directive (CSRD), the European Commission (EC) has advised that they should make full use of available flexibilities and transitional provisions in their implementation plans, as highlighted at a recent ICAEW round table.

The round table, ‘CSRD compliance: challenges, opportunities, and global impact’, was attended by finance professionals in business and practice. The event was supported by The Directorate-General for Financial Stability, Financial Services and Capital Markets Union and the European Financial Reporting Advisory Group (EFRAG) and moderated by the Centre for European Policy Studies and Leicester University School of Business.

At the event, the EC pointed out that, to date, only six member states have notified the EC of their national transposing measures, despite the deadline being 6 July 2024. It made clear, however, that it has a standard infringement procedure in place. 

Where member states have already transposed CSRD into national law, the EC is currently ensuring conformity with the provisions of the Directive. Of the notifications received to date, the EC said there has been less uptake of the independent assurance services provider option than expected.

Getting started with CSRD

Companies and their advisers should consult the EC’s frequently asked questions document and the European Sustainability Reporting Standards (ESRS) Q&A platform for guidance on interpreting the CSRD and addressing technical implementation questions. 

Under the CSRD, companies are required to report according to the ESRS, for which EFRAG has developed detailed implementation guidance covering materiality assessment, value chain, and data points with explanatory notes.

The CSRD mandates the Commission to introduce limited assurance standards by 1 October 2026 and to adopt reasonable assurance standards by 1 October 2028, following a feasibility assessment. In the meantime, member states can apply their national assurance standards. 

The Committee of European Auditing Oversight Bodies (CEAOB) is working on non-binding guidelines for this interim period, with public consultation ongoing. Additionally, the CEAOB is contributing to the International Auditing and Assurance Standards Board’s development of the ISSA 5000 international standard for sustainability assurance, which is expected to be finalised in September 2024, although the EU has not yet committed to adopting it.

Article 40a of the CSRD will require non-EU companies with significant operations in the EU to report on their sustainability impacts starting from the 2028 financial year, with the first statement due in 2029. The adoption of specific standards for these companies has been extended to June 2026, with EFRAG providing advice to the EC by November 2025 and an Exposure Draft consultation planned for Q1 2025.

The IFRS Foundation and EFRAG have released guidance showing the alignment between the International Sustainability Standards Board’s IFRS Sustainability Disclosure Standards and the ESRS, detailing how companies can integrate both sets of standards, particularly in climate-related disclosures.

For further information, visit ICAEW resources European Sustainability Reporting and Assurance, which includes a recent article, PwC sets out three-step action plan for CSRD readiness.