In 2023, the European Union will be moving from the Non-financial Reporting Directive (NFRD) to the CSRD as regards companies’ non-financial reporting obligations. More than just a change of acronym, the new text, which comes into force this year, imposes a new method: double materiality, which entails the analysis and publication of the financial impact of the environmental transition on companies and, reciprocally, of the consequences of the activities of private organisations on the climate and its stakeholders. This innovation is accompanied by an extended list of indicators to be provided in a report that must be certified. However, not all of these indicators are mandatory, and the number of companies concerned has been reduced.
Subcontractors at the heart of the new obligations
On the social front, the transparency obligations created by the CSRD have been partly extended to the value chain (direct and indirect commercial relations), particularly with regard to health and safety and wage levels. This is one of the points this new text has in common with the draft directive on corporate sustainability due diligence, on which a compromise was reached in mid-December by the European Parliament and the Council of the EU. If it is definitively adopted, it will impose a mapping of risks and, depending on this, the implementation of measures to prevent and remedy social and environmental damage. The text harmonises due diligence legislation, which is developing in Europe, following France’s 2017 duty of vigilance law. It establishes national authorities responsible for monitoring the implementation of the duty, with powers of investigation and sanction. Finally, in October, MEPs voted in favour of the Commission’s proposal to ban imports of products produced using forced labour.