The Corporate Sustainability Reporting Directive (CSRD) brings significant changes for companies that now must publish non-financial reports alongside financial statements, thereby establishing strict rules regarding the preparation of sustainability reports, specifically concerning social, environmental, and governance impacts. What can domestic companies then expect regarding CSRD?
– If you ask today’s large European and domestic companies, especially those listed on the stock exchange, what awaits them in the future, they will likely tell you two things. First, they will continue to seek ways to improve business results, but at the same time, they are facing an important historical change. In 2025, large companies whose securities are listed on exchanges across the EU will begin to publish non-financial reports according to CSRD standards alongside their financial statements. This is an opportunity that both companies and auditors in Croatia will certainly feel in the long term, says the president of Hanfa Ante Žigman.
Žigman also notes that the European Union is facing a significant challenge in its efforts to make Europe the first climate-neutral continent and reduce greenhouse gas emissions. – Despite long preparations in European regulations, it is only with the implementation of CSRD that we will see how the financial sector will change its investment strategy and what new financial products it will offer to accelerate the transformation process, adds the president of Hanfa.
Non-financial reporting will become as important as financial reporting because it will affect investments and the performance of companies, as well as their relationships with suppliers, consumers, and the community, says Žigman, adding that it is estimated that nearly 50,000 companies in the European Union will have to fulfill this legal obligation.
– The first obligated entities will be the largest companies, and over time, the obligation will extend to smaller ones. Although some companies already had a practice of non-financial reporting, CSRD will establish standards for all, and all reports will be audited exclusively by trained auditors with additional oversight from national regulators. Reports will cover not only environmental impacts but also social and governance factors, he adds.
Along with the Taxonomy Regulation and other standards, this will, according to Žigman, be a significant step for companies as it will require them to undergo deep internal transformation and a new approach to business processes. Research shows that many of them are aware of what awaits them, but they still need to work on collecting accurate data, educating professionals, engaging top management, and establishing effective internal reporting processes. Additionally, they will need to ensure they can quantify and interpret data in accordance with new requirements, emphasizes the president of Hanfa.
