CSRD implementation: German government does not reach an agreement in 2024

The delay is particularly associated with significant legal uncertainty for companies that are already subject to the CSRD starting from the 2024 financial year. Under the current legal framework, due to the lack of imple­mentation, reporting must still be done in accordance with the CSR Directive Implementation Act (CSR-RUG), which has been in effect since 2017. The reporting obligations under Article 8 of the EU Taxonomy Regulation remain unchanged. 

If the implementation law is passed in 2025 under a new federal government, the CSRD is likely to be retro­actively effective for financial years starting from January 1, 2025, according to a legal opinion commissioned by the IDW. For companies that will be subject to reporting obligations only from that point onward, the delayed implementation will initially not have significant consequences. However, affected companies should continue to focus on building audit-proof structures and processes for CSRD-compliant sustainability reporting. 

It remains to be seen how quickly a new federal government will reach an agreement on the CSRD implemen­tation law after the election in spring 2025. On December 17, 2024, representatives of the current government once again drew the European Commission's attention to the extensive reporting obligations imposed on companies by the European Sustainability Reporting Standards (ESRS). In addition to raising the thresholds for large companies, it has been suggested to postpone the CSRD reporting obligation for companies entering the scope from the 2025 financial year by two years. 

It is currently unclear how the European Commission will respond to these specific demands. However, bureau­cratic relief regarding the extensive ESG reporting obligations is being planned: According to an announcement by Commission President Ursula von der Leyen last November, the CSRD, the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy will be consolidated into a so-called “Omnibus Regula­tion”. The initiative primarily aims to revise redundancies and overlapping reporting obligations, while maintai­ning the core content of the regulations. A first draft is expected to be presented in February 2025. 

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Whether and to what extent adjustments will be made to the CSRD in light of these developments remains to be seen. For the time being, the CSRD remains valid EU law that must be transposed into national law by the member states, and some have already implemented it. Similarly, the ESRS, which are directly applicable as a delegated act, are already legally binding and must continue to be applied when preparing the CSRD sustaina­bi­​lity report. Therefore, the internal process for preparing the sustainability report should continue as planned. At the same time, it is advisable to closely monitor regulatory developments.