There is no doubt that the NFRD has contributed to improving the availability of ESG information among EU companies . However, many stakeholders (including investors) expressed concerns that the information disclosed by companies was insufficient and difficult to compare due to the lack of a common, standardised ESG reporting standard. In addition, there was a need to align the NFRD requirements with provisions introduced at later stages within the framework of the EU Sustainable Finance Strategy, i.e. the EU Taxonomy and the SFDR.
Instead, a CSRD ( Directiva sobre memorias de sostenibilidad de las empresas ) was introduced. What makes it stand out on the EU regulatory map? The CSRD significantly expands the scope of non-financial reporting, increasing the number of entities covered by ESG reporting and broadening the scope of sustainability reporting. It applies to around 50,000 companies listed in the EU or with significant activities in the Union, regardless of where they are based. Under the Directive, these companies are required to report on their non-financial results more comprehensively than was required under previous legislation. In order to allow time for the implementation of ESG aspects in corporate entities' reporting, the Directive will be introduced gradually:
In order to pursue the sustainable development goals set out in the Paris Agreement (i.e. aiming for climate neutrality by 2050 at the latest) and in Agenda 2030, the European Union has introduced an EU Taxonomy which aims to standardise the classification system for companies' sustainability reporting standards. The EU Taxonomy determines whether a company can be defined as environmentally sustainable if it contributes significantly to one of 6 environmental issues objectives: