On 21 April 2021, the EU Commission announced its proposal to extend existing sustainability reporting in a new Corporate Sustainability Reporting Directive (CSRD).  The proposal, which revises the Non-Financial Reporting Directive (the “NFRD”), will extend the reach of sustainability reporting to more companies and will cover more sustainability topics.

This is part of a wider, concerted effort by the EU to legislate for greater E, S and G reporting and accountability standards, like the EU’s proposed mandatory human rights and environmental due diligence law.  It is also part of a larger global trend: for example, New Zealand recently introduced a new Climate Disclosure Law (see our Blog Post on this here). Companies are increasingly embracing voluntary sustainability reporting but there are increased demands for mandatory reporting – the Global Reporting Initiative (GRI) for instance called for mandatory reporting in December last year. However companies’ standards of  voluntary reporting are of variable quality and often do not address the impacts of companies’ business activities on people and the environment.

Key aspects of the proposed Sustainability Reporting Directive: