Navigating CSRD: Essential insights for Australian business leaders

Discover how CSRD Impacts Australian entities: Key insights for business leaders

The Corporate Sustainability Reporting Directive (CSRD) is set to significantly impact Australian entities, especially those with connections to the European Union (EU). As businesses face new regulatory pressures, the need for reliable assurance services becomes critical. Here’s a breakdown of how CSRD may affect Australian companies and how DNV can help navigate these changes.

 

Who is affected by CSRD?

The CSRD primarily impacts Australian entities that fall into one of the following categories:

  • Companies listed on EU markets.
  • ‘Large’ entities with an Australian parent company that meet at least two of the following three criteria:
    • A balance sheet total exceeding 20 million Euros.
    • A net turnover exceeding 40 million Euros.
    • More than 250 employees.
  • Australian businesses with consolidated EU net turnover of more than 150 million Euros in each of the last two years.

Additionally, the future extension of the CSRD may include entities operating directly within the EU Single Market, even if they do not have a European subsidiary or branch. More detailed information on the impact of CSRD for Australian businesses can be found here.

 

Why CSRD matters for Australian entities

Due to the CSRD, certain Australian entities may need to prepare sustainability reports sooner than expected, depending on their connections to EU public interest entities. For example:

  • An Australian subsidiary of a large EU public interest entity must provide sustainability disclosures by December 31, 2024, as part of the group's consolidated report. This is earlier than Australia's own reporting deadlines for Group 1 entities.
  • An Australian group with a large EU subsidiary must prepare sustainability disclosures for the subsidiary by December 31, 2025. This is earlier than the expected deadlines for Group 2 and Group 3 entities in Australia.

CSRD also mandates third-party assurance of sustainability reports, with limited assurance for the first three years, transitioning to 'reasonable' assurance thereafter.

 

How DNV can help with your assurance needs

Navigating these new requirements can be challenging, but early preparation offers significant advantages. With decades of experience in providing independent, third-party assurance, DNV can help you ensure the accuracy, credibility, and compliance of your sustainability disclosures.

Our experts provide tailored assurance services, including:

  • Limited assurance during the initial years of CSRD implementation.
  • Guidance and support to achieve ‘reasonable’ assurance in line with evolving regulatory expectations.
  • Comprehensive gap analysis to align your reporting practices with both CSRD and the Australian Sustainability Reporting Standards (ASRS).

By partnering with DNV, you can not only meet regulatory requirements but also strengthen your market position and build trust with stakeholders through transparent and reliable sustainability reporting.

 

Understanding the Australian Sustainability Reporting Standards (ASRS)

On August 22, 2024, the Australian Senate approved the Climate-related Financial Disclosures Bill, which outlines the roadmap for mandatory sustainability reporting in Australia. Here's what you need to know:

  • Mandatory sustainability reporting will apply to financial years starting on or after January 1, 2025. Companies with December 31 year-ends will be the first to report, while those with June 30 year-ends will start by June 30, 2026.
  • The Auditing & Assurance Standards Board (AUASB) will phase in assurance requirements, aiming for full reasonable assurance on climate disclosures by financial years starting July 1, 2030.
  • AUASB plans to release an exposure draft outlining their proposed assurance phasing model in September 2024, with the final assurance standard expected by December 2024.

 

Conclusion

The introduction of CSRD and ASRS represents a significant shift toward more rigorous sustainability reporting requirements for Australian companies. By acting early and aligning with these standards, businesses can seize the opportunity to enhance their sustainability profiles and demonstrate leadership in transparency and accountability.

Reach out to our team to learn how we can support your assurance needs and help you build trust with your stakeholders.

16/9/2024 5:13:00 am