Introduction:
Providing useful information about sustainability-related risks and opportunities
In October 2020, AICPA® & CIMA® started a programme of thought leadership to explore accountancy and sustainability, highlighted in Sustainability and Business — The Call to Action: Build Back Better.1 This Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS) summary report was created as part of a series of briefs exploring the topic of sustainability, business and the key role that finance professionals can play. These briefs will help organisations consider sustainability issues, how to integrate them into their long-term decision making and how to incorporate these issues into internal and external reporting.
This CSRD and ESRS paper has been designed as a summary of a specific standard or framework. Although it has been written from the management accounting perspective, attest and assurance issues will also be considered because they are vitally important in the evolving world of sustainability reporting.
A framework or a set of standards? The difference
A framework is a set of principles-based guidance for how information can be structured and prepared, and what broad topics should be covered. Standards are specific, replicable and detailed requirements for what should be reported for each topic; they are rules-based requirements.
Background
Within the European Union (EU), the CSRD was first proposed in 2021. The new legislation has been in effect since January 2023 and updates the previous Non-Financial Reporting Directive (NFRD). This new EU regulation requires companies to report on sustainability issues based upon 12 ESRS, which were adopted by the European Commission in July 2023.
