CPA Bulletin

www.cpa.uk.net CPA Bulletin > November 2024 33 What is the CSRD? The CSRD aims to standardise sustainability disclosures, providing investors and stakeholders with consistent, reliable, and comparable data on companies’ environmental, social, and governance (ESG) impacts. It requires in-scope companies to assess their impacts from a “double materiality” perspective. This means companies must report on both the environmental and social impacts of their activities, as well as how sustainability issues affect their business. The CSRD itself is a framework; the actual standards companies will use for reporting - the European Sustainability Reporting Standards (ESRS) - are implemented as secondary legislation. The first set of ESRS, which applies to all sectors, was published in 2023. More detailed sector specific ESRS will be published over the coming years. How does CSRD Apply to UK Rental Companies? Although CSRD is an EU Directive, it extends to non-EU companies that meet specific criteria, especially those generating substantial revenue within the EU. For these companies, CSRD applies if they meet one or more of the following conditions: • The non-EU company is listed on an EU-regulated market (the first report on financial year 2024 performance is due in 2025); • The non-EU company generates over €150 million in annual EU revenue and has an EU-based branch generating at least €40 million (the first report on 2025 is due in 2026); • The non-EU company generates over €150 million in annual EU revenue and has an EU subsidiary meeting two of the following (the first report on 2025 is due in 2026): • More than 250 EU-based employees; • A balance sheet exceeding €20 million; • An annual EU revenue of over €40 million. Navigating the EU’s Corporate Sustainability Reporting Directive (CSRD): Key Considerations for UK Rental and Hire Businesses by Annemarie Tax OF the European Rental Association (ERA) GUEST ARTICLES: 1 In January 2023, the European Union (EU) Corporate Sustainability Reporting Directive (CSRD) entered into force, which significantly transforms sustainability standards by mandating sustainability reporting for numerous large EU and non-EU companies. For UK companies with significant operations in the EU, preparing for CSRD compliance is essential, not only to meet legal requirements but also to enhance transparency and answer customer requirements on sustainability.