Get Ready For The Next Wave Of ESG Reporting (Podcast)

• Jurisdiction: European Union
• Law Firm: KPMG Malta
• Subject Matter: Corporate/Commercial Law, Environment, Corporate and Company Law, Corporate Governance, Environmental Law, Climate Change
• Author: Mr Jonathan Dingli and Rachel Decelis
• Published date: 29 March 2023

The EU's Corporate Sustainability Reporting Directive (CSRD) is transforming ESG reporting. Starting from 2024, almost 50,000 companies are subject to mandatory sustainability reporting, including non-EU companies which have subsidiaries operating within the EU or are listed on EU regulated markets.

As part of the CSRD, the first set of draft European Sustainability Reporting Standards (ESRSs) were released. The ESRSs are much more rigorous in scope and depth of disclosure requirements than the current Non-Financial Reporting Directive (NFRD). Affected companies must now report in accordance with ESRSs and disclose over hundreds of metrics and targets.

With the first CSRD reports due in 2025 ' for companies with year-ending 31 December 2024 ' the clock is ticking, and companies should be prepared to provide accurate information from different parts of the organization to support the new assurance requirements. In this paper we discuss potential impacts of the CSRD on your company and concrete steps to prepare for CSRD readiness.

Get ready for the next wave of ESG reporting

Helping you tackle the Corporate Sustainability Reporting Directive

The evolution of ESG reporting

Over the past two decades, ESG reporting has increased in transparency and importance, with greater integration of ESG-related information into mainstream financial reporting.

According to KPMG's 2022 Global CEO Outlook, 69 percent of CEOs see significant stakeholder demand for increased transparency and reporting on ESG matters (up from 58 percent in 2021). Next to this, 72 percent feel that stakeholder scrutiny regarding ESG issues ' such as climate change and gender equality ' will continue to accelerate. Additionally, more than one-third believe their organizations struggle to narrate a compelling ESG story.

The number of companies that publish a sustainability report has been growing steadily over the past decade. KPMG's 2022 Global Survey of Sustainability Reporting shows that 79 percent of the N100 group (the leading 100 companies in every country surveyed) report on sustainability. Among the world's top 250 companies (G250), this figure is 96 percent.

For smaller companies, however, these figures are likely to be considerably lower. With the CSRD taking ESG reporting to a new level, every organization that falls into the scope of the CSRD must start putting together a plan to prepare for the first reporting year under the new standards.

Companies need to continue to make urgent...