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European sustainability reports: a cord braided from three strands

From: Ondernemingsrecht | Wolters Kluwer 2023/74 by Mr. Alexandra Jurgens-Boot and Mr. Timo Wisse.[1]


In recent times, Europe has witnessed an overwhelming surge of sustainability-focused legislation. This robust framework of sustainability laws shifts across the entire spectrum of the investment value chain, influencing enterprises in pursuit of capital and the investors who provide financial backing to these enterprises. This article provides insight into the similarities, differences, and coherence between the CSRD, the SFDR, and the Taxonomy Regulation. The success of sustainability regulations depends on how these regulations are interwoven. In this way, disproportionate efforts and costs are avoided. However, practice is unruly. The regulations were introduced at different times, creating practical problems for companies that publish sustainability reports. The article further provides insight into what data should be collected and how it should be handled in the context of disclosure, policy, publicity, reporting, and IT systems. Lastly, the article also addresses risks, monitoring, and enforcement.


1. Introduction


In recent years, a tsunami of sustainability legislation has engulfed Europe. Sustainability legislation impacts the entire investment value chain, from companies seeking capital to investors financing these companies. This flood of regulations has been set in motion by the United Nations' 2015 release of the Sustainable Development Goals (SDGs) with the accompanying '2030 Agenda for Sustainable Development’.[2] Shortly afterward, the Climate Accord was signed in Paris.[3] Both events led to a turning point in the overall consensus about climate change and sustainable development. The European Union embraced the resulting sustainable goals and, in 2018, produced a Sustainable Growth Finance Action Plan to finance this sustainable transition.[4] Following this, the Sustainable Finance Disclosure Regulation (SFDR)[5] and the Taxonomy Regulation emerged[6], which aim to encourage investment in sustainable economic activities. To give expression to the Sustainable Development Goals (SDGs) from Agenda 2030 and the Paris Climate Agreement, the European Green Deal was presented in 2019.[7] The Green Deal is a package consisting of policy initiatives to help the European Union undergo a sustainable transition with the ultimate goal of being climate neutral by 2050. The Green Deal promised an overhaul of non-financial reporting that would result in reliable and comparable sustainability information. The Corporate Sustainability Reporting Directive (CSRD) was created to meet these goals.[8]


This article provides insight into the similarities, differences, and consistency between the SFDR, the CSRD, and the Taxonomy Regulation. These regulations were not introduced simultaneously, creating practical problems for companies that need to publish sustainability reports. In addition, the article provides insight into what data should be collected and how it should be handled in the context of disclosures, policies, publicity, reporting, and IT systems. The success of sustainability regulation depends on how the CSRD, the SFDR, and the Taxonomy Regulation are interwoven. Only a cord made from three different strands can effectively weave together the implementation of these sustainability laws.

In this contribution, we first outline the reporting requirements for large companies and listed SMEs under the CSRD (section 2.1), financial market participants, and financial advisers under the SFDR (section 2.2). We then discuss the Taxonomy Regulation (section 2.3). The discussion of this legal framework, partly because these regulations have been widely covered in previous issues of Company Law, is limited to providing a fundamental understanding with a view to the following sections. As mentioned above, the similarities, differences, and coherence between the regulations are discussed in Section 3. We then address the practical implications for data collection of the SFDR and the CSRD (sect. 4). Finally, we briefly discuss the risks, monitoring, and enforcement resulting from non-compliance with the mentioned regulations. (par. 5).


2. Legal framework: CSRD, SFDR, and Taxonomy Regulation


2.1 Corporate Sustainability Reporting Directive (CSRD)

Since 2017, around 11,700 sizeable Public Interest Entities (PIEs)[9] in the European Union have been required to disclose a non-financial statement under the Non-Financial Reporting Directive (NFRD)[10]. On 5 January 2023, the CSRD came into force, which, among other details, amends the European Accounting Directive [11] and replaces the NFRD. The CSRD significantly extends the scope of the NFRD to roughly all large companies and listed SMEs. [12] Unlisted small and medium-sized enterprises (SMEs) are outside the scope but will have to provide data from the supply chain of a CSRD-compliant company. From FY2024, the CSRD will apply to companies already required to report under the NFRD. This will be followed by large companies from FY2025 and listed medium and small enterprises from FY2026. [13] Around 50,000 companies in the European Union will have to include sustainability information in the management report under the CSRD.[14] In addition, sustainability reporting must be machine-readable and published in the European Single Access Point (ESAP), which is expected to be operational in 2024.


2.1.1 ESRS reporting standards

In November 2022, the European Financial Reporting Advisory Group (EFRAG) presented a proposal to the European Commission, elaborating on the CSRD with reporting standards. The so-called European Sustainability Reporting Standards (ESRS).[15] These standards are divided into two 'cross-cutting standards' (ESRS 1 and 2) regulating general requirements and general disclosures. In addition, there are ten 'topical standards', which elaborate on ESG topics. On 9 June 2023, the European Commission published the draft ESRS, which was amended in several respects in preparation for adopting and converting the ESRS into EU law.[16] The European Commission's main aim with the changes was to reduce burdens on companies. One of the changes concerns reducing the number of mandatory subjects on which the company must report. For example, companies with 250 or more employees are no longer required to report on (i) E1 'climate change'; (ii) data items arising from other European legislation (such as the SFDR); and (iii) ESRS S1 'own workforce' (S1-1 to S1-9). Companies are now only required to report on ESRS 2 'general disclosures'. This burden reduction creates the impression that climate change is not necessarily material. At the same time, in practice, it will be difficult for companies to reason why the subject is not material to them. Thus, this burden reduction is a formality for some topics.[17]

2.1.2 Double materiality assessment

Based on the company's double materiality assessment, it is determined which other topics from the ESRS should be reported on. Double materiality deals with the two perspectives from which the interaction between sustainability issues and the company is looked at: impact materiality (impact, from the 'inside-out perspective') and financial materiality (risks and opportunities, from the 'outside-in perspective'). The outcome of this double materiality assessment shows which topics from the 'topical standards' are most relevant (material) to the company. It must be reported using corresponding Disclosure Requirements and data points. The results of the materiality assessment should be used to shape the company's strategy. Achieving strategy requires cooperation within the company. The biggest hurdle lies in collecting the correct data (see par. 4).

2.2 Sustainable Finance Disclosure Regulation (SFDR)

The SFDR targets financial market participants with a financial product and financial advisers with three or more employees. Financial market participants include credit institutions, investment firms, asset managers, alternative investment fund managers (AIFs, including AIF light managers[18]), pension funds, and life insurers. A financial product includes pension schemes, insurance, and investment funds. The SFDR, which became applicable on 10 March 2021, imposes reporting requirements at entity and product levels. These reporting requirements are detailed in the Regulatory Technical Standards (RTS), which became applicable on 1 January 2023.[19]

2.2.1 From grey to light green

The SFDR distinguishes between a Section 6 (grey), Section 8 (light green), and a Section 9 (dark green) product. Realistically, financial market participants are primarily interested in the question, 'how do I get from grey to light green?'.[16] Moving from grey to light green is more manageable than venturing into the demanding dark green. For example, a light green strategy can assist residential and office investors in acquiring and selling their property. For instance, added value can be created by buying a property, part of a financial product, 'grey,' and making it sustainable. The SFDR identifies four shades of light green:[21]


1) The first category is promoting environmental and/or social features. This is such a broad definition that almost anything related to sustainability fits into it. The lack of threshold values can create a discrepancy between investors' expectations and the degree of sustainability of such a product, which can encourage greenwashing. However, the characteristics promoted must be reflected in the investment policy and the investee companies must follow good governance practices.


2) The second category sees a product that makes sustainable investments and promotes environmental and/or social characteristics. Such a product is 'greener' than a fund enabling only sustainability features. The second category falls into three subcategories:


i) Sustainable investments with an environmental objective that is Taxonomy aligned. This requires meeting a tight and demanding definition from the Taxonomy Regulation. See more on this in section 1.3.


ii) Sustainable investments with an environmental objective aligned with the SFDR [22] An investment must not seriously impair other environmental or social objectives, and the investee company must follow good governance practices. 'No serious impairment' is further fleshed out based on the PAI indicators. Still, due to the lack of a defined lower limit, the definition in the SFDR is broader than that of the Taxonomy Regulation.


iii) Sustainable investments containing a social objective aligned with the SFDR.

Thus, promoting social sustainability already makes a product light green. Although a social Taxonomy is in the making, few social sustainability frameworks are currently available. For instance, Bouwinvest's housing fund promotes liveable, affordable, appropriate, and inclusive housing for the target group it builds for. Other examples include combating loneliness in residential areas or promoting integration through community centres or gyms.

2.3 Taxonomy regulation

The Taxonomy Regulation (TR) is a classification system that sets criteria to determine whether an economic activity can be considered environmentally sustainable. These criteria cover six environmental objectives elaborated in Art. 9 TR, namely (i) climate mitigation and (ii) climate adaptation; (iii) sustainable use and protection of water and marine resources; (iv) the transition to a circular economy; (v) the prevention and control of pollution; and (vi) the protection and restoration of biodiversity and ecosystems.


Under Art. 3 TR, economic activities can only be classified as environmentally sustainable if they: (i) contribute substantially to one or more of the environmental objectives; (ii) do not seriously harm all other environmental objectives; (iii) are carried out in compliance with established minimum social guarantees; and (iv) meet the technical screening criteria. When this article is published, only the technical screening criteria of the first two environmental objectives (mitigation and adaptation) are available. [23] On 13 June 2023, the European Commission approved the draft text containing the technical screening criteria for the remaining environmental objectives, which will be published later this year.


For example, four (economic) activities for real estate have been elaborated on in this regulation, namely: (i) the 'construction of new buildings'; (ii) 'renovation of existing buildings'; (iii) 'installation and management of energy-related infrastructure'; and (iv) the 'acquisition and ownership of buildings'. For convenience, we omit category (iii) here. For the environmental objective 'climate change mitigation,' the following requirements apply:


(i) 'construction of new buildings' requires that the primary energy demand of the building is at least 10% below the threshold for energy-efficient buildings. The Nearly Energy Neutral Buildings (BENG) standard determines what constitutes an' energy-efficient building'.[24]


(ii) In 'renovation of existing buildings' cases, a major refurbishment or renovation must lead to a reduction of at least 30% in primary energy demand. Regarding a major renovation, the building’s energy performance requirements must be met.[25]


iv) For 'purchase and ownership of buildings', if the building is 'built before 31 December 2020', the building must at least have energy label A. To determine when the building was built, the date the building permit was applied is the primary indicator. For buildings built after 31 December 2020, the requirement is that the building must meet the criteria for 'construction of new buildings,' in short, BENG-10%.


Being aligned with the Taxonomy Regulation benefits banks and investors, assigning it a reduced risk profile and offering more favourable financing conditions in the context of real estate. After all, banks must also report on their portfolio's sustainability percentage (see section 3.3). To do so, they must demonstrate, for instance, the extent to which they finance Taxonomy-aligned activities. Through practical experience, we also identify risks. For instance, there are organizations in the real estate sector that provide their interpretation of Taxonomy Alignment that only partially covers the legal reality. This creates confusion and misinforms the market. For example, the Dutch Green Building Council (DGBC) uses different definitions and quantities in the BREEAM-NL In-Use V6 compared to the Taxonomy Regulation, suggesting that this fully aligns with the Taxonomy Regulation. Therefore, companies must adhere to the requirements of the Taxonomy Regulation and seek the appropriate advice.


3. Similarities, differences, and coherence CSRD, Taxonomy Regulation, and SFDR

3.1 Similarities and differences between CSRD, SFDR, and Taxonomy Regulation

The regulations in question share both similarities and differences. Their common objective is to increase transparency regarding sustainability, enabling stakeholders to make better-informed decisions. The SFDR and the Taxonomy Regulation directly influence the European Union. In contrast, the CSRD operates as a directive necessitating its transformation into national law. Whereas the SFDR covers the financial services sector, the CSRD covers a broader range of firms and goes beyond financial institutions. The CSRD also imposes more comprehensive reporting requirements than the SFDR. For the SFDR, sustainability information must be published in pre-contractual information and periodic reports on the website. For the CSRD, this information must be included in the management report and the ESAP.


Both the CSRD and the SFDR use the 'double materiality principle,' though explicitly in the case of the CSRD and implicitly in the case of the SFDR. The SFDR and the CSRD further cover all aspects of sustainability, while the Taxonomy Regulation currently only considers environmental sustainability. The Taxonomy Regulation has a limited number of six ecological objectives, while Article 2(17) SFDR covers unlimited ecological and social objectives. The legislation under discussion also contains a difference in perspective on data collection. Regarding the example of real estate given earlier, the data collection of the Taxonomy Regulation looks at the property itself, while the CSRD and the SFDR look at the property’s utilization. The CSRD accordingly views this from the perspective of its operations, while the SFDR views it from the investee companies’ perspective.

3.2 Taxonomy Regulation as the backbone for sustainability legislation

The Taxonomy Regulation plays a crucial role in European sustainability legislation. Through the classification system and reporting requirements of Art. 5 and 8 TR, the SFDR and CSRD are linked respectively to this regulation. From this, the consistency between these regulations becomes apparent. As a result, the Taxonomy Regulation can be seen as the backbone of European sustainability legislation.

3.3 Coherence CSRD and Taxonomy Regulation

Art. 8 TR imposes an obligation on companies already subject to the NFRD and later to the CSRD to report on how and to what extent their business activities are aligned with the Taxonomy. For non-financial companies, Art 8(2) TR requires them to report with three critical performance indicators (KPIs) what proportion of their turnover, capital expenditure (CapEx), and operational expenditure (OpEx) is environmentally sustainable. These KPIs measure the degree of sustainability of economic activities. For example, turnover shows the current situation regarding Taxonomy-aligned activities, and CapEx and OpEx give an outlook on plans to make business activities (more) sustainable. Financial companies, such as credit institutions, asset managers, investment firms, and insurance and reinsurance companies, must also comply with this reporting requirement. However, the previously mentioned KPIs are not relevant for assessing the environmental sustainability of financial activities, such as lending, investing, and insurance. Meanwhile, KPIs for financial companies have also been established.[26] The main KPI for credit institutions is the share of green assets (green asset ratio, also called Green Asset Ratio, GAR). This KPI reflects the share of Taxonomy-aligned investments or financings (numerator) compared to total acquisitions or financings (denominator). However, companies not required to publish sustainability information under the CSRD are excluded from the numerator of the GAR of financial companies, yielding a lower outcome. [27] This could challenge entities like development banks that fund sustainable projects in markets beyond Europe. Such circumstances might potentially weaken the “greenness” of sustainability aspirations.

3.4 Coherence of SFDR and Taxonomy Regulation

Financial market participants must report the extent to which their light-green and dark-green products are Taxonomy-aligned in the periodic reports under Art. 5 and 6 TR. This will help determine how and to what degree the activities they finance with their financial products qualify as environmentally sustainable. Furthermore, grey and light green products not Taxonomy-aligned must incorporate designated statements in their pre-contractual information based on Art 7 and 6 TR, respectively. Among other details, these statements must explicitly indicate that the underlying investments of the remainder portion of the financial product do not consider the EU criteria for environmentally sustainable economic activities. Financial market participants rely on the information provided by investee companies and use the Taxonomy Reports of companies subject to the NFRD and, later, the CSRD. Where this information is unavailable, financial market participants may use equivalent information obtained directly from the investee company or third-party providers for all other companies.[28]


4. Practical implications for data collection SFDR and CSRD

Sustainability legislation affects all levels of the company. Before reporting a company's sustainability performance, it’s essential to formulate a well-defined ESG strategy. Subsequently, this strategy must be set out in internal policies. Collecting data requires an understanding of what data to gather and its sources. Companies are required to make substantial organizational modifications and allocate investments toward enhancing their information systems, risk management, and control systems to comply with sustainability legislation.[29]


One of the challenges financial market participants face is the availability and reliability of data from investee companies. This arises from the fact that not all companies are obligated to disclose data, and the existing data does not always meet the requirements of the SFDR. In real estate practice, for example, non-financial benchmarks such as the Carbon Risk Real Estate Monitor (CRREM) and the Global Real Estate Sustainability Benchmark (GRESB) provide insight into GHG emission reductions. The problem is that CRREM, as a measurement tool, relies on a carbon calculation instead of the internationally recognized GHG Protocol's prescribed greenhouse gas calculation, taken as a starting point by the RTS. A company using CRREM thus possesses approximately 40% as per the RTS.


The CSRD offers a solution tailored to the financial market participant. To streamline the process, the decision was taken to include RTSPAI indicators directly in the ESRS where possible. Where this was impossible, measures were taken to guarantee that financial market participants could quickly locate and retrieve the necessary information for their sustainability report within the ESRS reporting requirements. This avoids disproportionate efforts and costs. In practical terms, the data that a company reports based on the CSRD can be used as input for the PAI statement. Considering the information needs of financial market participants, there might be a practical benefit in investing in companies required to report under the CSRD. However, there is a vital aspect to consider. While in EFRAG's proposal, data points needed for the SFDR were mandatorily regarded as material for CSRD-compliant companies, in the draft ESRS of 9 June 2022, the European Commission opted to make this component conditional on the dual materiality assessment. In reality, a company may publish a CSRD-based sustainability report that does not meet the information needs of the financial market participant.


Whereas the CSRD data might be the input for the financial market participant's PAI statement, the same principle applies to reports under Art. 5 and 8 TR. The output from the Taxonomy reporting of non-financial companies serves as the foundation for the required calculations employed by financial market participants in their own Taxonomy reporting. Consequently, financial market participants are dependent on the information to be provided by non-financial companies. In action, it means that financial market participants have to report on their own Taxonomy alignment before the data from the underlying non-financial companies is available. This is because financial market participants are currently obliged to report based on the SFDR/RTS, and the CSRD will apply from 2024. The same applies to the CSRD data required as input to the financial market participant's PAI statement. From this perspective, it might have been logical for the CSRD to have been implemented before the SFDR.


Companies will have to take the initiative to get value chain partners (CSRD) or portfolio companies (SFDR) to provide accurate, complete, and reliable data. For example, collecting data on GHG emissions will be required. Sources of GHG emissions are classified into three categories: Scope 1, 2, and 3. Scope 3 emissions contribute the most to total GHG emissions, while data availability and reliability pose the most significant challenge in this category.[30] Scope 3 deals with indirect emissions in the value chain, both upstream and downstream. A good starting point involves identifying suppliers and customers with the most significant emissions and cooperating with them to collect the required data. In addition, embedding data clauses within contracts with supply chain partners or portfolio companies can facilitate access to the necessary data.


As CSRD-regulated companies must publish their sustainability reports, including Article 8 TR reporting, in the European Single Access Point (ESAP), the ESAP becomes a CSRD and Taxonomy data database. The ESAP is a central EU access point for business information that is expected to be operational by 2024. This will require the sustainability information to be delivered in digital format (XHTML format)[31], with the sustainability reporting to be marked (tagged) using Inline eXtensible Business Reporting Language (XBRL) technology. This enabled the information to be automatically read and processed.


5. Risks, monitoring, and enforcement

The aim of sustainability legislation promoting transparency in the sustainability performance of companies. In this way, the reallocation of capital towards a sustainable economy is encouraged. Companies with high-quality sustainability reporting can enhance their access to capital.[32] Furthermore, it aids companies in acquiring an understanding of their risks and opportunities related to sustainability issues, which can improve their reputation. Moreover, companies that actively and comprehensively report can differentiate themselves from competitors and thus gain a competitive advantage. However, there are drawbacks linked to either not reporting or inadequately reporting. Such as fines imposed by the (financial) regulator, an auditor refusing to issue an unqualified opinion, and/or banks deciding not to offer financing or less favorable financing. Consequences might also apply to licenses and subsidies from municipalities and provinces. Furthermore, talented potential employees who value sustainability may choose to work elsewhere, and a company may lose consumers if sustainability lacks attention. Moreover, sustainability is emerging as an area for climate change mitigation, a topic that deserves a discussion in a separate article. Enforcement will take place not only from the top down but also certainly from the bottom up. Regarding public law enforcement, the Financial Markets Authority (AFM) has been designated as the authority to enforce the SFDR and the Taxonomy Regulation. The basis of that authority is outlined in the Financial Supervision Act (Wft) and the Decree Implementing EU Financial Markets Regulations (Besluit uitvoering EU-verordeningen financiële markten), derived from the Wft. Violations are ranked in the second category, meaning that fines may be imposed with a basic amount of EUR 500,000 up to a maximum of EUR 1 million. Under certain circumstances, the maximum amount may even reach EUR 5 million.[33]


The AFM will simultaneously be charged with monitoring CSRD compliance. The groundwork for this is the Financial Reporting Supervision Act (Wtfv). However, the reporting supervision of the Wtfv is rooted in civil law, setting it apart from other areas of supervision, which have an administrative law basis. This signifies that the AFM does not yet have all regular investigative powers at its disposal. For instance, when supervising sustainability reports under the CSRD, the AFM cannot independently deploy certain investigative powers and/or impose fines independently. Given the present situation, in exceptional instances, the AFM may need to request the Enterprise Chamber to intervene when further investigation or correction in sustainability reporting is deemed necessary, and the company refuses to cooperate. It is up to the legislator to guarantee effective and efficient CSRD supervision.


Sustainability disclosures under the CSRD must be included in the management report. This imposes risks for the company. An external assurance provider must audit the sustainability information. It is up to the member states to determine whether there will be an independent assurance service provider or whether this task will be entrusted to an audit firm. [34] This will place demands on companies and accountants, who must also become proficient in an entirely new area of expertise. Initially, limited assurance will have to be obtained, which may be extended to reasonable assurance in the future. This will require the European Commission to issue common standards for assurance, which is expected on 1 October 2028. Failure to report or inadequate reporting can cause the auditor to refrain from issuing an unqualified opinion, which could have far-reaching consequences. An unqualified opinion could potentially have a negative financial impact on the trust placed in the company. For instance, banks might request higher interest rates on loans or even hesitate to grant altogether. Raising capital could also become more challenging. Therefore, numerous risks are connected to inadequate or incomplete reporting of sustainability information.


6. Conclusion

The CSRD, the SFDR, and the Taxonomy Regulation do not stand alone but are meant to be complementary and intertwined. In this way, disproportionate efforts and costs are avoided. However, practice is more unruly. Financial market participants were required to publish their first PAI statement as early as 30 June 2023, requiring data from investee companies. Although the CSRD meets this information requirement, it will only apply from 2024. In this sense, it would have been more desirable for financial market participants if the SFDR was implemented as the gatekeeper. Although theoretically, the sustainability legislation resembles a cord with three strands; it has yet to be thoroughly interwoven.


Therefore, companies will have to work with the cards they’re dealt in the short term. The process of creating a sustainability report is no walk in the park. Companies will have to take significant steps to report on time. Large companies must start collecting data from 2024 to meet their CSRD obligations by 2025. The whole process requires coordination and cooperation between various company departments and partners in the value chain. Legal support is indispensable, as is an interdisciplinary approach. Moreover, it is a dynamic process, as reporting is an annual phenomenon, and improvements need to be made.


Considering the risks and enforcement in case of non-compliance or inadequate compliance, preparing and publishing the first reports will feel like a tightrope between ideal vision and reality for companies. The most significant risks related to fines imposed by the (financial) regulator, an auditor not issuing an unqualified opinion, and/or banks deciding not to offer financing or less favourable financing. The landscape of legal disputes will increasingly revolve around climate change. Lawyers will be asked to venture into uncharted territory. As time ticks away for humanity and the environment, this situation presents a window for the rise of fresh perspectives and skill sets.

Voetnoten [1] Mr A.A. (Alexandra) Jurgens-Boot (lawyer) and Mr T.B. (Timo) Wisse (jurist) work at Boot Advocaten in Amsterdam

[2] United Nations, 'Transforming our world: the 2030 Agenda for Sustainable Development', A/RES/70/1, 2015.

[3] See conclusions agreed in December 2015 at http://unfccc.int/paris_agreement/items/9485.php. 4 European Commission, 'Action Plan: Financing Sustainable Growth', COM(2018) 97 final, Brussels, 2018

[4] European Commission, 'Action Plan: Financing Sustainable Growth', COM(2018) 97 final, Brussels, 2018.

[5] Regulation (EU) 2019/2088.

[6] Regulation (EU) 2020/852.

[7] European Commission, "Communication from the Commission - The European Green Deal," COM(2019) 640, 2019.

[8] Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, in relation to sustainability reporting by companies (OJEU 2022, L 322). [9] Large PIEs are publicly traded companies, as well as unlisted banks and (certain) insurers with an average number of employees of more than 500 for the fiscal year, and in addition or a net sales of more than 40 million euros or a balance sheet total of more than 20 million euros.

[10] Directive 2014/95/EU.

[11] Directive 2013/34/EU.

[12] Companies that qualify as "large" exceed at least two of the three size criteria: (i) a net turnover of 40 million euros; (ii) a balance sheet total of 20 million euros; (iii) an average number of employees of 250 for the financial year.

[13] Listed medium-sized and small companies may, on the basis of of Art. 19a(7) Directive 2013/34/EU to opt out until the fiscal year of 2028, provided they indicate why the sustainability reporting has not been provided.

[14] L.J.M. Baks, L.K van Dijk & J.B.S. Hijink, ‘Reuzenstappen op het terrein van duurzaamheidsverslaggeving: de Europese CSRD en oprichting van de ISSB’, Ondernemingsrecht 2022/36, par. 3.

[15] The draft ESRS of Nov. 22, 2022 is available at: https://efrag.org/lab6.

[16] The June 9th, 2023 draft ESRS can be accessed at: https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/ 13765-European-sustainability-reporting-standards-first-set_en.

[17] L.K. van Dijk & J.B.S. Hijink, ‘Europese Commissie consulteert Europese standaarden voor duurzaamheidsverslaggeving (“ESRS”) – bijstelling van ambities onder het mom van lastenverlichting’, Ondernemingsrecht 2023/70. [18]Abi-light managers are managers of alternative investment funds with an AFM registration on the basis of Art. 2:66a Wft. They do not need to have a license..

[19] Delegated Regulation (EU) 2022/1288.

[20] This is evidenced among others by: H. Bioy, B. Wang & A. Carabia, 'SFDR Article 8 and Article 9 Funds: Q4 2022 in Review', Morningstar Manager Research, 2023

[21] As the prescribed templates of the RTS show.

[22] For the definition of 'sustainable investment', see Art. 2(17) Regulation (EU) 2019/2088.2019/2088.

[23] [1] Delegated Regulation (EU) 2021/2139.

[24] Art. 2 para 2 Directive 2010/31/EU.

[25] Directive 2010/31/EU.

[26] [1] Delegated Regulation (EU) 2021/2178.

[27] Art. 7 para. 3 Delegated Regulation (EU) 2021/2178.

[28] Art. 17 para. 2 point b jo. recital 35 Delegated Regulation (EU) 2022/1288.

[29] L.K. van Dijk & J.B.S. Hijink, ‘Finalisering van de Europese CSRD: een mijlpaal voor duurzaamheidsverslaggeving met grote impact op het ondernemingsrecht vanaf 2025’, Ondernemingsrecht 2022/87. [30]CSRD: geen tijd te verliezen! Verkenning toepassing nieuwe regelgeving duurzaamheid in jaarverslag (CSRD) bij beursgenoteerde ondernemingen en accountantsorganisaties (AFM-verkenning van 30 maart 2023), Amsterdam: AFM 2023.

[31] Art. 3 Delegated Regulation (EU) 2019/815.

[32] Recital 12 Directive (EU) 2022/2464

[33] [1] Art. 1:81 Wft jo. art. 5 (1) Decree implementing EU regulations on financial markets.

[34] Art. 2 point 23 Directive 2006/43/EC (after amendment by Directive (EU) 2022/2464).

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