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What the new European CSRD rules mean for U.S. companies

How CSRD Compares to the SEC’s Proposed Rule

- Both the CSRD and the SEC's proposed rule aim to standardize corporate sustainability disclosure.

- The SEC focuses mainly on "climate-related risks," while the CSRD has a broader scope, including social and environmental information.

- CSRD requires a "double materiality" perspective, meaning companies must report both how sustainability issues affect their business and how their business impacts people and the environment.

- CSRD mandates third-party audits of sustainability information, going beyond the SEC's proposed rule.

Why CSRD Matters to U.S. Companies

- CSRD applies to U.S. companies with substantial activity in the EU, including those with a net turnover of €150 million in the EU for each of the last two consecutive years.

- CSRD reporting covers the organization at a consolidated level, not just the EU-based subsidiary or branch. This means U.S. companies with significant turnover in the EU must publish sustainability information that covers their entire operations, including non-EU operations.

Important Dates and Reporting Information

- CSRD entered into force on January 5, 2023.

- By June 30, 2024, the European Commission will adopt CSRD sustainability reporting standards for non-EU companies.

- Starting January 1, 2028, U.S. companies meeting the criteria will have to start reporting according to the European Sustainability Reporting Standards (ESRS) at a consolidated group level.

Questions for U.S. Companies to Consider

- Companies should assess their current materiality data points with CSRD’s double-materiality requirements.

- They should also evaluate whether they have the right data solutions, controls, and partners to start collecting the required sustainability data and provide an audit of the information they report.

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