US company impact of EU ESG reporting requirements

Now adopted by the EU: The Corporate Sustainability Reporting Directive (CSRD) amends and significantly expands the existing EU requirements for sustainability reporting – both in terms of the number of companies in scope and the nature of the sustainability reporting. It is estimated that the scope would extend from less than 12,000 to nearly 50,000 companies just in the EU. The European Commission originally proposed the CSRD in April 2021. On November 10, 2022, the EU Parliament adopted the CSRD with strong support. Most recently, on November 28, 2022, the CSRD was formally adopted by the European Council.

Looking ahead, the CSRD will be signed and published in the EU Official Journal and take effect 20 days later. Thereafter, member states will have 18 months to transpose the directive into their local law for it to become effective for financial years 2024, as planned.

Source and applicability

• Companies with listed securities in the EU, some non-EU parents (including US companies) of EU subsidiaries, and non-EU subsidiaries of EU parents that meet the scoping requirements

CSRD development

• April 21, 2021 – Initial EU Directive proposals issued
• February 22, 2022 – Targeted revisions to the EU Directive proposals issued
• June 21, 2022 – European legislative bodies reached provisional agreement on the CSRD
• November 10, 2022 – EU Parliament adopted the CSRD proposal
• November 28, 2022 – EU Council adopted the CSRD

Proposed effective dates

Report contents

• Fast facts, impacts and actions
• Background
• Scoping requirements
  • General scoping
  • Non-EU parent scoping
• Reporting exemptions
  • The group exemption
  • The ultimate non-EU parent exemption
  • The equivalency exemption
• Examples
  • EU activity is not substantial
  • EU activity is substantial
• Application to public interest entities
• Use of other sustainability reporting frameworks
• Effective dates
• Next steps
• Resources

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