Regulatory Update: 2024 sustainability Reporting: Alignment to the EU Taxonomy and Preparation for CSRD
2024 is already proving to be a very busy year for sustainable finance regulation.
One of the biggest developments relates to the first reporting period for companies subject to the Corporate Sustainability Reporting Directive -or CSRD-. Organizations currently subject to the NFRD will need to report for the first time under CSRD in 2025, using 2024 as the reference period. CSRD reporting will involve disclosing in line with the European Sustainability Reporting Standards or ESRS: a collection of more than 1000 data points related to a broad array of environmental, social and governance matters. From 2026, the number of companies required to report under CSRD will steadily increase to an estimated 50,000 in Europe, with further overseas companies possibly subject to reporting.
As part of their requirements under CSRD, companies will also be required to report their eligibility and alignment to the EU Taxonomy. As of January 2024, the new technical screening criteria apply, covering objectives related to:
- Water and marine resources
- The circular economy
These objectives supplement existing objectives covering climate change mitigation and adaptation. Non financial companies will need to report their eligibility to these new objectives this year, with alignment coming next year.
Financial firms, on the other hand, are already subject to report the taxonomy alignment of their products on all six objectives, starting this year. They will also need to start reporting their entity level key performance indicators, covering climate change mitigation and adaptation this year.
Keeping track of all of this and accessing the data needed to report on taxonomy can be difficult. Please, get in touch to find out how we can support investment firms streamlining their ESG regulatory compliance.
Here’s to an action-packed 2024!