Companies subject to the CSRD will have to report according to European Sustainability Reporting Standards (ESRS). Specifically, this means that they will be required to report on the impact their activities have on society and the environment with an audit being conducted to provide assurance that the statements fairly present the company’s position.

Set to be introduced on a phased basis, over time based on size, the standards are applicable to large companies from 1 January 2025. They will require businesses to review their operations and strategically plan in a way that supports society and the environment and helps create a more sustainable future.

Fiona Murray, Head of EU Public Affairs, ACCA said: ‘The introduction of the ESRS is one of the most significant developments in the accounting profession in over 30 years. We would encourage any companies that have not yet reviewed their environmental footprint, to do so as a matter of urgency as it will increasingly influence the growth of their business in the years ahead.

‘While the standards will apply initially only to large companies, the requirement for all organisations to conform to the directive will be in place by 2028. They must also be ready to provide information relating to their approach and progress in managing sustainability-related risks and opportunities for their businesses.

‘With this new company law requirement in place, expectation and demand for environmental and sustainable reporting will extend beyond the organisation to its value and supply chains including suppliers, partners, regulators, investors, bankers and many other stakeholders. This means that the expectation on SMEs to provide clarity on their impact on society and the environment will also increase due to the crucial role they play in the value chain for larger companies.