New EU Reporting Rules Will Also Apply to Non-EU Companies
The European Parliament recently approved the Corporate Sustainability Reporting Directive (the “CSRD”), requiring a large number of companies to report on sustainability matters. The CSRD is prepared as part of the European Green Deal, which sets targets with the aim of making Europe carbon neutral by 2050, fighting against climate change, achieving a green transition, creating a fair society with competitive economy and protecting the EU citizens from environmental risks and impacts. Accordingly, the CSRD will require companies to report on sustainability matters such as environmental and social rights and governance factors, by strengthening the existing rules introduced by the 2014 Non-Financial Reporting Directive (the “NFRD”) with the aim of increasing the accountability and transparency of companies and serving for an easier transition.
According to the CSRD, the European Financial Reporting Advisory Group will be responsible for establishing the European standards for these reports, upon consultations with the EU Member States and a number of European bodies.
The CSRD expands the reporting requirements both in terms of their scope and the companies subject to it. Accordingly, new reporting requirements will apply to all large companies which are public-interest entities exceeding on their balance sheet dates the criterion of the average number of 500 employees during the financial year and to all companies listed on regulated markets except for listed micro-undertakings. The CSRD will also be applied to certain small and medium-sized enterprises (“SMEs”) as of 2028.
Previously, the pre-existing rules solely applied to companies within the EU, while the new CSRD will apply to all companies that perform business activities within the EU. Apart from the application dates introduced for the companies in the EU and the listed SME’s, non-EU undertakings generating a net turnover above €150 million in the EU, having at least one subsidiary or branch in the EU exceeding certain thresholds, shall comply with the reporting rules as of 2029, starting from the financial year of 2028.
Turkish companies meeting the above conditions will need to take into account the new sustainability reporting standards imposed by the EU and to implement new procedures in that respect. In order to implement such procedures, please contact us for further details and actions required.
Posted by : Galya Kohen Benbanaste – Eda Envarlı