The CSRD and ESRS regulations must be transposed into the national legislations of each EU member country and EEA countries before they can be enforced. During the process of transposition, the member countries have a level of flexibility and discretion to extend (or “goldplate”) the legislations. In particular, they are allowed to extend the scope of the entities required to report under CSRD if they wish. They can also extend the requirements set out in the ESRS standards and impose sanctions for non-compliance. The member countries must also determine which parties can provide assurance over sustainability information.
The deadline for the transposition of CSRD into national regulations for EU member countries and EEA countries, which is July 6, 2024, has now passed.
What is the current status of the transposition across 27 EU member states and 3 EEA countries?
40% of the countries have completed the transposition
Twelve countries have partially or fully completed the transposition of CSRD into national regulations. They are France, Denmark, Hungary, Romania, Finland, Slovakia, Czech Republic, Ireland, Lichtenstein, Lithuania, Sweden, and Croatia.
France
- The transposition harmonises the definition of entities (i.e., “micro- undertaking”, “small undertaking”, “medium-sized undertaking” and “large undertaking”) in the French Commercial Code with CSRD. The detailed thresholds are yet to be published in a later decree.
- Companies must have the information contained in their sustainability report certified by an “auditor” specialised in sustainability issues.
- The penalties for non-compliance include the possibilities of seeking injunction to obtain the necessary information, criminal sanctions of fines up to €75,000 and imprisonment up to five years, impact on public procurement, and civil and administrative liability.
Finland
- Finland has decided to widen the scope of the application with large co-operatives and large pension providers added to the directive’s scope. Approximately 1300 companies in Finland will report their sustainability data according to the ESRS.
- The sustainability reporting of listed companies, credit institutions, insurance companies and pension providers will be monitored by the Financial Supervisory Authority.
- The sanctions are at this point administrative and include fines, late-filing fees and other sanctions that can be imposed by the Financial Supervisory Authority.
Denmark
- Denmark implemented increases in the threshold for company classifications which changes the categorisation of companies and their corresponding reporting obligations.
- An audit requirement is included in the transposed national legislation, meaning a qualified sustainability auditor must be appointed at a general meeting similar to the practice that a normal auditor is appointed currently.
Sweden
- The Swedish Parliament voted to adopt a bill to transpose the CSRD into local law in May 2024 and the new rules entered into force on July 1, 2024.
- The sustainability report must be audited by an auditor.
- Companies that do not comply with these new regulations risk facing consequences. Non-compliance can result in individual board members’ liability for damages and it can lead to criminal liability in the form of fines or imprisonment.
Ireland
- On July 5th 2024, the regulations amending current legislations and transposing CSRD into Irish law were finalised.
- The new regulations include provisions on how sustainability assurances will be carried out, including the process for adopting assurance standards, reporting requirements, details of how opinions should be presented and signed, and the process for individuals or firms to apply for approval to act as a sustainability assurance service provider.
- They also include provisions on the oversight of the system of quality assurance and how the assurance of sustainability information will be supervised and regulated.
Lithuania
- On 25 June 2024, the parliament approved the package of laws transposing the CSRD, which entered into force on 1 July 2024.
- No significant deviations or stricter rules are presented in Lithuania compared to the CSRD directive text.
Hungary
- Hungary partially adopted its CSRD legislation at the end of 2023, but substantial progress in the practical implementation of the CSRD is delayed. The detailed regulations necessary for auditing and assurance, and also the amount of the fines in case of non-compliance, have yet to be finalised.
Romania
- Romania has fully transposed the CSRD in January 2024.
- Additional rules for auditors' activities related to sustainability reporting are anticipated, though no timeline has been set for their publication.
Slovakia
- Slovakia has fully transposed the CSRD as of 1 June 2024. The amendments require companies to include sustainability reporting in their annual reports, with assurance provided by approved auditors. The assurance must be issued no later than one year after the end of the financial year and retained for at least ten years.
- The national tax authority oversees compliance with the sustainability reporting obligations. The assurance process involves verifying the accuracy of the sustainability information provided in the reports, and auditors are responsible for issuing assurance statements.
Czech Republic
- The transposition process of the Czech Republic takes place in two phases. The first concerns the companies subject to the NFRD and it has been concluded.
- The legislative approach for the second phase of the transposition will be implemented by amending the framework of the existing legislations. The draft legislation is going through the legislative process.
Croatia
- New regulations to transpose the CSRD were proposed on 26 June 2024 and adopted on 12 July 2024.
- The proposed legislation aligns closely with the CSRD, requiring companies to publish sustainability reports according to the ESRS. It also includes provisions for the verification of these reports by auditors and the imposition of penalties for non-compliance.
- The regulations ensure compliance for auditors and impose penalties for non-compliance. An audit firm may be fined up to €106,000, while an individual auditor may face fines up to €13,270. These penalties apply to a range of infractions, including the illegal performance of auditing services.
47% of the countries have published draft consultations or regulations
Fourteen countries have issued draft consultations or regulations, and are currently in the national legislative processes for the transposition of CSRD into national legislations. These countries are Belgium, Bulgaria, Cyprus, Estonia, Greece, Germany, Italy, Latvia, Luxembourg, Netherlands, Norway, Poland, Slovenia, and Spain.
Germany
- The Federal Cabinet adopted the government draft to transpose the CSRD into German law on July 24, 2024. The draft bill is a full adoption of the content defined in the CSRD. It confirms the auditor as the sole auditor of the sustainability report.
Netherlands
- In the Netherlands, significant progress has been made towards implementing the CSRD. While the drafts are not yet final, they closely adhere to the CSRD framework.
- The sustainability reporting and assurance statement must be published publicly in accordance with the Dutch Civil Code and electronic filing decrees. The assurance report on sustainability reporting should be included as a separate part of the auditor's report.
Norway
- In March 2024, the Norwegian Ministry of Finance published a legislative proposal for the implementation of the CSRD.
- Norway’s commitment to align with the EU’s CSRD implementation timeline is clear. The new sustainability reporting rules will replace the current sustainability reporting requirements in the Accounting Act.
- The updated proposal suggests that around 1,100 Norwegian businesses will be subjected to the new sustainability reporting obligations.
Italy
- The Ministry of Economy and Finance (MEF) launched a public consultation to transpose the CSRD in Italy in February 2024.
- The directive requires that the audit be performed by an accredited 'statutory auditor'. The auditors must be registered in the register of statutory auditors and also authorised to certify the sustainability reporting in accordance with the provisions in force.
- In terms of supervision and sanctions, the Consob (Commissione Nazionale per le Societa e la Borsa) will supervise listed companies. There is no additional supervision for unlisted companies subject to the CSRD. The Consultation proposes to maintain the same sanction framework as for periodic financial statements.
- Update (August 30, 2024): The Italian Council of Ministers on August 30, 2024, transposed the CSRD into national law.
13% of the countries have not submitted drafts or opened consultations
National legislations are not yet drafted in four countries. These countries are Austria, Malta, Iceland, and Portugal.
Over the next months, more countries are expected to fully transpose CSRD into national regulations and provide more details on the assurance requirement, compliance, and oversight. The first group of “large” entities will start to report sustainability statements following the CSRD and ESRS starting in 2025 (with data from FY 2024).
Other articles in this series
.png)
.png)