We recently introduced our new ‘Legislation Updates’ series with Natural Diamond Council’s Head of External Affairs and Industry Relations, Raluca Anghel. Raluca will be summarising key legislation for our members which impacts on the watch and jewellery supply chain. This series aims to provide members with industry insight on topic areas such as; greenwashing and misleading claims, environmental claims, due diligence, corporate sustainability reporting and much more! Below, Raluca summarises the Corporate Sustainability Reporting Directive (CSRD).
Sustainability reporting gets a revamp from the EU
Overview:
- On 5 January 2023, the Corporate Sustainability Reporting Directive (CSRD) entered into force and requires companies to report on the impact of corporate activities on the environment and people, with an independent audit (assurance) of reported information.
- The new measures apply the very important double materiality concept: reporting of sustainability risk (including climate change) affecting the company + companies’ impact on people and environment
- A broader set of large companies, as well as listed SMEs, will now be required to report on sustainability, starting in 2025 already with some companies
- Companies subject to the CSRD will have to report according to European Sustainability Reporting Standards (ESRS).
How does this relate to the RJC Standards?
COP 1: Legal Compliance, this aligns with the CSRD’s requirement for companies to maintain compliance with applicable laws, including sustainability regulations.
COP 2: Policy and Implementation (Policy and Management Systems in new standard), the CSRD emphasises the need for a sustainability strategy. Which aligns with members documenting their commitment and conducting annual reviews.
COP 3: Reporting, the requirement for annual public communication and external assurance directly reflects the CSRD’s focus on transparent and reliable sustainability reporting.
COP 34: Impact Assessment, the CSRD’s double materiality principle corresponds with the need for comprehensive environmental and social impact assessments, ensuring companies assess their impacts and engage stakeholders.
The application of CSRD will take place in four stages:
1 January 2024 – for companies already reporting in line with NFRD (reporting in 2025 on 2024 data).
1 January 2025 – for large companies that are not currently subject to NFRD (reporting in 2026 on 2025 data).
1 January 2026 – for listed SMEs, small and non-complex credit institutions and captive insurance undertakings (reporting in 2027 on 2026 data).
1 January 2028 – reporting in 2029 on the financial year 2028 for third-country undertakings with net turnover above 150 million in the EU if they have at least one subsidiary or branch in the EU exceeding certain thresholds
By 2028, all of the following organizations, or undertakings, need to comply with the CSRD:
Listed undertakings
These include any companies listed on an EU-regulated market exchange—except for listed ‘micro undertakings’ that fail to meet two of the following three criteria on consecutive balance sheet dates:
at least EUR 450,000 in total assets;
at least EUR 900,000 in net turnover (revenue);
at least 10 employees (average) throughout the year.
EU-based large undertakings, listed or not
These include any listed or non-listed companies that meet two of the following three criteria on any two consecutive balance sheet dates:
at least EUR 25 million in total assets
at least EUR 50 million in net turnover
at least 250 employees (average) during the year.
“Third-country” undertakings
These include non-EU parent companies, with annual EU revenues of at least EUR 150 million in the most recent two years, and also own:
a large EU-based undertaking, or
an EU-based subsidiary with securities listed on an EU-regulated market exchange, or
an EU branch office with at least EUR 40 million in net turnover.
Disclaimer:
The information in this post does not constitute legal advice. Any information provided is intended to explain the law in general terms. You are advised to seek independent legal advice to ensure legal compliance as required for your type of business and geographical location.
