Current status of the implementation of the CSRD in Germany

On March 22, 2024, the Federal Ministry of Justice (BMJ) took an important step towards implementing the European Corporate Sustainability Reporting Directive (CSRD) into German law. With the publication of the draft bill for a law to implement the CSRD and the accompanying press release No. 27/2024, the process of adapting German legislation to EU requirements was officially initiated. (https://www.bmj.de/SharedDocs/Pressemitteilungen/DE/2024/0322_CSRD-UmsG.html).

This means that sustainability reporting in Germany is at a turning point. With the publication of the draft bill for the implementation of the Corporate Sustainability Reporting Directive (CSRD) on March 22, 2024, the Federal Ministry of Justice has given the starting signal for a new era of corporate transparency. The draft, which is intended to transpose the EU requirements into German law, promises far-reaching changes. In the future, significantly more companies will be required to report in detail on their sustainability performance. The European Sustainability Reporting Standards (ESRS) are intended to serve as a binding guideline to ensure the comparability and quality of the reports. An external audit requirement and the requirement for digital publication underline the demand for credibility and accessibility of the information.

For affected companies, this means that 2024 will be the year of preparation. Internal structures must be adapted, employees trained and processes optimized. The integration of the ESRS into reporting, preparation for external audits and the implementation of digital reporting formats are at the top of the agenda. The draft law will now be coordinated with other ministries and associations before it is submitted to the Bundestag for discussion and adoption. The goal is clear: the law should come into force this year in order to implement the EU requirements on time. The CSRD marks a milestone in the development of sustainability reporting. It promises not only more transparency, but also a new quality in the presentation of corporate responsibility. For companies, this represents both a challenge and an opportunity - the opportunity to present sustainability as an integral part of their business strategy and to position themselves as future-oriented players. The coming months will show how companies master this transformation. One thing is certain, however: sustainability reporting will become a central element of corporate communication and management that goes far beyond mere compliance. It is a step towards an economy in which sustainability is not just reported, but lived.

Important points of the draft bill are:

1. Expansion of the scope of application: Significantly more companies will be required to report on sustainability in the future.
2. Introduction of uniform reporting standards: The European Sustainability Reporting Standards (ESRS) will become mandatory.
3. Requirement to audit: Sustainability reports will have to be externally audited in the future.
4. Digitization: The reports should be published in a uniform electronic format.
   

As a result, affected companies should start preparing in 2024:

1. Preparation for expanded reporting obligations: Companies should check whether they are subject to the new regulations and set up appropriate structures.
2. Adaptation of reporting: The requirements of the ESRS must be integrated into sustainability reporting. Training of employees: Specialist staff must be familiarized with the new requirements.
3. Preparation for external audits: Companies should align their processes and data collection with the upcoming audit obligation.
4. Implementation of digital reporting formats: The technical requirements for digital reporting must be created.

n summary: Companies are well advised to deal with the new requirements at an early stage and make the necessary adjustments to their reporting processes. The CSRD represents a significant step towards improving the transparency and comparability of sustainability information and will have a significant impact on corporate reporting in the coming years.