Non-European tech firms that turnover more than €150m in the European Union (EU) will need to adhere to a new set of stricter sustainability reporting rules – designed to clamp down on greenwashing.
The EU Council and European Parliament-backed Corporate Sustainability Reporting Directive (CSRD) is designed to tighten up the existing rules that dictate how companies should disclose non-financial information about the sustainability of their operations.
This includes details about their environmental credentials, as well as their track record on addressing human rights, social rights and other governance factors.
Presently, 12,000 firms are required to disclose information on all these topics through the 2014 Non-Financial Reporting Directive (NFRD), but this number will rise to 50,000 once the CSRD comes into force.
All large companies and those listed on regulated markets will be within the directive’s scope, along with their subsidiaries. The rules will also apply to small and medium-sized enterprises (SMEs), although they will have the option to opt out of adhering to the rules until 2028 if they so wish.
Non-European companies will also be required to make disclosures under the CSRD if they generate a net turnover of more than €150m in the EU, and if they have at least one subsidiary or branch in its jurisdiction.
As detailed in a statement, confirming the EU Council and European Parliament have reached a “provisional political agreement” on what the CSRD should cover, the NFRD needs replacing because of concerns that the disclosures companies make through it are not detailed enough nor subject to enough scrutiny.