On 24 July 2024, the Federal Ministry of Justice published the draft CSRD Implementation Act, which transposes the EU's Corporate Sustainability Reporting Directive (CSRD) into German law. The aim of the law is to improve and standardise sustainability reporting by companies. It primarily affects larger companies and those that are active on the capital market. A total of around 13,200 companies in Germany will be subject to the new reporting requirements from the 2024 financial year.
In future, companies will have to publish comprehensive information on environmental, social and governance-related aspects in their reports. These reports must also be submitted electronically and provided with special XBRL tags that enable machine-readable and structured analyses.
Companies that do not fulfil these obligations must expect considerable sanctions, including fines and criminal prosecution. The tightening of reporting obligations has already been criticised by the business community, as it is seen as an additional bureaucratic burden and cost driver.
To fulfil the new requirements, companies will need to adapt their internal processes for data collection and reporting and may need to invest in new software and training. However, some aspects, such as electronic tagging, have been postponed until 2026 to give companies more time to adapt.
Next steps: As PWC reports, changes to the content are still possible until the legislative process is finalised. The draft bill will be forwarded to the Bundestag and Bundesrat for examination. In the Bundestag, the law is usually passed and put to the vote after three readings and consultations in the relevant committees.
Even if companies are not directly affected by the legal requirements, the complexity increases with rising customer requirements and specifications. These requirements are often passed on from customers to small and medium-sized enterprises, which leads to an indirect impact.
Is your company affected by the CSRD? Take precautions now in good time: The trade-e-bility management consultancy will work with the responsible employees in your company to set up a sustainability management system in small steps so that you are prepared for the new requirements by the time they are introduced.
Christopher Blauth and Jens Haasler will be happy to answer your questions via beratung@trade-e-bility.de
