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The new Corporate Sustainability Reporting Directive (CSRD) has been signed off at EU level and is now in force. Member States will begin the process of transposing the CSRD into national law in the coming months. In the meantime, the Government has launched a consultation on the process, until 9th March 2023.

The Directive obliges certain qualifying undertakings (companies and co-operatives) to report annually on material sustainability matters relevant to the undertaking and its value chain. Those matters span environmental, social and governance concerns. The Directive widens the category of undertakings required to report and it adds depth to the level of detail required in that reporting. It brings sustainability reporting to the same level as financial reporting for the first time ever. 

For most co-operatives impacted by the Directive, the duty to report will not commence until 2026. That said, there are some important points and timeline events that will impact on a co-operative’s preparations to discharge its reporting obligations.

Companies and co-operatives coming within the scope of the Directive will be required to report annually in their management/directors’ report on environmental, social and governance (ESG) and human rights matters according to the EU mandatory standards to be known as the European Sustainability Reporting Standards.

The reporting standards will comprise, both, cross cutting standards and sector specific standards. The task of developing those standards is in the hands of the European Financial Reporting Advisory Group (EFRAG) and this is ongoing. It is hoped that the process will conclude in 2024 when the European Commission is scheduled to adopt the final version of the standards, following consultations with EU member states and other European bodies. Reported sustainability information will be subject to a limited assurance (independent audit) requirement in much the same way that financial statements are subjected to the audit of a statutory auditor.

The Directive provides a transition period for undertakings to commence reporting. Listed entities are amongst the first to report (in 2025 with respect to 2024). For co-operatives in the agri-food space meeting two out of three thresholds (turnover of €40m, balance sheet of €20m, employee headcount of 250), 2025 will be the first year in which sustainability information will be measured in full and so must be reported from 2026 onwards.

Ireland along with fellow Member States now have 18 months to transpose the Directive, that is, by 6th July 2024. While it should be noted that the Directive leaves limited scope for member states to customise implementation, the Irish Government has opened a public consultation on the subject.

ICOS strongly contends that by their design and operation, co-operatives possess strong sustainability credentials. Those credentials include the generation of local employment and support for small proximate production enterprises. Working through COGECA, the European umbrella organisation for agri-food co-operatives, ICOS has communicated those credentials and called for recognition of these co-operatives under the Directive. While those attempts have so far proved largely unsuccessful, ICOS believes that national implementation of the Directive should, where feasible, have due regard to these sustainability strengths.