Nature and CSRD: Navigating the Corporate Sustainability Reporting Directive

What is CSRD and why does it matter?

In 2023, the EU Corporate Sustainability Reporting Directive (CSRD) entered into force in the European Union. This new directive modernises and strengthens the EU's rules concerning the social and environmental information that companies have to report.

Under CSRD, over 50,000 organisations worldwide will be required to disclose information regarding their environmental, social and governance (ESG) processes.  

CSRD requires all reporting to meet the standard of double materiality. This means that businesses are required to disclose; (i) how they have an impact on sustainability matters and; (ii) how that impact will affect the business's finances.  

What does the CSRD have to do with nature?

The CSRD is underpinned by a set of European Sustainability Reporting Standards (ESRS). These standards aim to improve the consistency and comparability of sustainability information.

ESRS E4 specifically focuses on Biodiversity and Ecosystems whilst harmonising various forms of guidance on nature, such as the Taskforce for Nature-related Financial Disclosures (TNFD).  

ESRS E4 requires companies to report their nature-related dependencies, impacts, risks and opportunities alongside the actions they are taking to prevent, mitigate or restore existing or potential adverse impacts on biodiversity and ecosystems.  

Who does the CSRD apply to?

The CSRD is being phased in from 2024 through to 2029.  

Starting in 2024, all businesses listed in an EU-regulated market with more than 500 employees (or already mandated by the Non-Financial Reporting Directive) will need to report.

From 2025, all large, listed companies who meet two of the following criteria (and not mandated by NFRD) will need to report in line with CSRD:

1. Companies with at least €350,000 in assets
2. Companies with at least €40 million in net turnover  
3. Companies with at least 250 employees during that year

From 2026, all small and medium sized enterprises (SMEs) listed on an EU regulated market who meet two of the following criteria will need to report in line with CSRD:

1. Companies with at least €5 million in total assets.
2. Companies with at least €8 million in net turnover.
3. Companies with at least 50 employees average throughout the year.