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Sustainability reporting and the Corporate Sustainability Reporting Directive (CSRD)

As of the 2024 financial year, large public interest entities (PIEs) with more than 500 employees will be covered by the new reporting requirements of the Corporate Sustainability Reporting Directive (CSRD), i.e. the sustainability reporting directive. Many other entities will follow in the subsequent years. The CSRD requires companies to report more extensively on information about sustainability matters and, in doing so, they need to apply the European Sustainability Reporting Standards (ESRS) in their reporting. External auditors must also provide limited level of assurance on the sustainability reporting first, and (possibly) reasonable level of assurance of this sustainability-related information as of 2028.

From the 2024 financial year, the CSRD and ESRS apply to the large PIEs, and many other entities will follow in the subsequent years.

CSRD: transparency on environmental and social aspects

Transparency on companies’ impact on environmental and social aspects, results and their financial impact have become increasingly important and have thus been included in the CSRD. A company’s stance on these aspects is relevant information for users of annual reports.

Climate change, ecosystem destruction and human rights violations are all issues which companies can no longer ignore as these directly (such as loss of farmland), indirectly (for example due to court cases and/or pricing) or morally affect the company. This information is relevant to users, to determine, for example, whether investors want to or continue to want to invest in this company. The government, NGOs and investors can also assess whether companies adequately contribute to a more sustainable environment.

Transparent capital markets benefit from transparent reporting, which is exactly what the AFM promotes by its supervision of the reporting of listed companies. Sustainability is thus given priority in the 2023-2026 AFM Strategy.

Exploratory research among listed companies

In anticipation of the CSRD, the AFM carried out two exploratory studies focused on large PIEs’ current reporting methods. In its report ‘No time to lose!’, the AFM advised investing more in adequate fitness and capacity in relation to sustainability reporting and assurance and timely collecting available and reliable information on sustainability matters. 

The report ‘Transparent net zero targets require courage’ also showed that the large listed companies are moving in the right direction towards substantiating their net zero targets up to 2030 in their annual reports, but that the road to 2050 remains a blur. It requires courage to do this properly; to be transparent, including on matters which may be uncertain.

Get going

Curious where your company stands? A self-assessment has also been published along with our net-zero report.

In 2024, the AFM will conduct a follow-up research on the extent to which companies are including disclosures about their impact on people, the environment and society (ESG) in their reporting, and on how these factors affect the companies themselves (double materiality).