In addition to explaining which companies within a group are subject to the CSRD, this Hot Topic builds on our previous guidance to include a series of examples that illustrate the CSRD scoping and reporting considerations for common US group structures.
Applicability
- Most companies with listed securities in the EU, non-EU parents (including US companies) with substantial activity and a presence in the EU, and non-EU subsidiaries of companies that meet the scoping requirements
CSRD development
So far:
- Apr 21, 2021 – Initial EU Directive proposals issued
- Nov 10, 2022 – EU Parliament adopted the CSRD proposal
- Nov 28, 2022 – Council of the EU adopted the CSRD
- Jan 5, 2023 – The CSRD entered into force
Forthcoming:
- Jan 1, 2024 – The earliest effective date for the CSRD
- Jun 2025 – Deadline for Member States to transpose the CSRD into local law (i.e. 18 months from the date the CSRD entered into force).
Proposed effective dates
Company type |
Effective date |
Year of initial application |
|---|---|---|
Large PIEs (> 500 employees) and large companies listed on an EU-regulated market (> 500 employees) |
Jan 1, 2024 |
2025 (i.e. companies would have to issue their 2024 sustainability report in 2025) |
Other large companies (including large companies listed on an EU-regulated market) |
Jan 1, 2025 |
2026 |
Small and medium-sized companies (including non-EU based SMEs), except micro-companies, listed on an EU-regulated market |
Jan 1, 2026 |
2027 |
Includes an option to opt out of CSRD reporting until 2029 (i.e. effective date of 2028) |
||
Small and non-complex credit institutions and captive insurance entities |
Jan 1, 2026 |
2027 |
Ultimate non-EU parent companies with substantial activity and presence in the EU |
Jan 1, 2028 |
2029 |
Key impacts
Despite being an EU directive, US and other non-EU based companies will be impacted by the CSRD if they meet certain scoping criteria, which are discussed in our Hot Topic. The nature of these impacts will vary depending on the specific circumstances of the company.
US and other non-EU based companies that do business in the EU need to consider whether they will be subject to the CSRD. The complexity in applying the CSRD to those that meet the scoping criteria will vary based on a variety of factors, including their group structure and existing consolidated reporting processes.
Our Hot Topic can help US and other non-EU based companies understand the CSRD scoping requirements and consequential reporting obligations. It includes a series of examples that walk through the applicability of the CSRD to common group structures for US and other non-EU based companies.
The CSRD requires certain companies to prepare sustainability reporting in accordance with the European Sustainability Reporting Standards (ESRSs). The EU adopted the first set of ESRSs in July 2023 and they will become effective for companies starting from January 2024. For more information about the ESRSs, see our ESRS Resource Center.
Report contents
Fast facts, impacts and actions
Background
Scoping requirements
- General scoping
- Non-EU parent scoping
Effective dates
Reporting requirements
- Reporting
- Assurance
Reporting exemptions
- Group exemption
- Ultimate non-EU parent exemption
- Equivalency exemption
- Non-EU company impact
- As a company
- As a subsidiary
- As an ultimate parent
- Next steps
- Next steps for the European Commission
- Next steps for companies
- Examples
Related content
Subscribe to our newsletter
Receive timely updates on accounting and financial reporting topics from KPMG.
Receive timely updates on accounting and financial reporting topics from KPMG.
Sign up now
Accounting Research Online
Access our accounting research website for additional resources for your financial reporting needs.
Access our accounting research website for additional resources for your financial reporting needs.
Access ARO