Corporate Sustainability Reporting Directive Overview for U.S. Companies

This guide provides an overview of the Corporate Sustainability Reporting Directive (CSRD) and its implications for U.S. companies operating in the European Union. Adopted by the European Parliament in November 2022, the CSRD is designed to replace the Non-Financial Reporting Directive (NFRD) and will require many companies to disclose sustainability information according to the European Sustainability Reporting Standards (ESRS). The document outlines the reporting requirements, including the categories of companies affected and the corresponding timelines for compliance. It discusses the concept of double materiality, which necessitates that companies assess both their impact on sustainability and the financial implications of sustainability factors. U.S. parent companies with significant turnover in the EU will need to report on a consolidated basis beginning in 2029. The document also addresses the exceptions to the directive, as well as future developments in reporting standards for small and medium-sized enterprises (SMEs) and sector-specific requirements.