In January 2023, the new EU Directive on Corporate Sustainability Reporting (CSRD) came into force, replacing the previous Non-Financial Reporting Directive (NFRD) from 2014. From AK's point of view, the new Directive brings improvements in three main areas: (1) broadening the scope, (2) concretising and extending the reporting obligations (among other, uniform standards for the entire value chain), (3) establishing a mandatory external audit. The new provisions also increase the responsibility of both the executive board and the supervisory board for corporate sustainability reporting within the company. In Austria, the new provisions will increase the scope of users from around 100 to over 2,000 companies, which will then have to report on their sustainability performance in the areas of environment, social affairs and governance.

Until now, companies have been free to choose the type and publication method of their corporate sustainability reporting, even though the standards of the Global Reporting Initiative (GRI) are the most commonly applied. However, if companies rely on different frameworks, comparability suffers. When this happens, stakeholders find it more difficult to understand the reports. For this reason, the EU Commission instructed the European Financial Reporting Advisory Group (EFRAG) to develop uniform and binding European Sustainability Reporting Standards (ESRS). An initial set of standards prepared by EFRAG is currently being discussed and is to be adopted into EU law by a delegated legal act of the Commission in June 2023.

The new European Sustainability Reporting Standards (ESRS)
The ESRS are divided into overarching and thematic standards. In addition to basic definitions, comprehensive reporting requirements on strategy, governance as well as impacts, risks and business opportunities are also provided for. The thematic focus is on the six environmental goals of the EU, such as climate protection, adaptation to climate change or environmental pollution. Social obligations include, among other, equal treatment, inclusion of people with disabilities, measures against harassment at the workplace, working conditions, working time, social dialogue and responsibility for human rights.'

AK demands regarding the implementation of the reporting standards
A new AK EUROPA Policy Brief also shows the challenges of the new ESRS and suggests some points that need to be taken into account when implementing the reporting standards into European legislation or when developing further standards: It will be crucial that the CSRD standards are not reduced or watered down in the implementation process. In the current version of the ESRS, numerous terms are still ill-defined and may therefore be interpreted in different ways. Concerning the further development of these standards, it must be ensured that trade unions, labour representatives, civil society and other relevant stakeholders are sufficiently involved in the consultation process. From AK’s point of view, there is a need for a strict reporting obligation on working conditions, human rights, equal opportunities, environmental impacts and corporate governance. A lack of obligation to provide such information would jeopardise an effective social dialogue between trade unions or labour representatives and the corporate management on these issues.

Further information:
AK EUROPA: Agreement on sustainability reporting: Improved transparency on corporate activities
AK EUROPA Position Paper: Corporate Sustainability Reporting – Sustainable business requires co-determination
AK EUROPA: Corporate Sustainability Reporting: new review shows need for action
AK Wien: Nachhaltigkeitsreporting ermöglicht Mitbestimmung (German only)