Sustainability and CSRD: regulatory framework by CNDCEC

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The Legislative Decree No. 125 of 6 September 2024 implements the Directive (EU) 2022/2464 (Corporate Sustainability Reporting Directive), introducing mandatory sustainability reporting, both individual and consolidated, for companies established according to specific legal models, including large companies and listed small and medium-sized companies (excluding micro-enterprises). One of the main objectives of the legislation is toimprove the reliability and transparency of sustainability information. Companies will have to provide, in accordance with the reporting standards adopted by the European Commission - the European Sustainability Reporting Standards (ESRS) - a minimum level of information on sustainability-relevant topics.

The new legislation also introduces the figure of the sustainability auditor, specifying the modalities of attestation on the compliance of sustainability reporting and making changes to Legislative Decree No. 39 of 27 January 2010. The transposition of the European standards on sustainability reporting underlines the fundamental role of members of the National Council of Chartered Accountants (CNDCEC). The National Council of Chartered Accountants and the National Foundation for Sustainability Reporting to support companies in their sustainability reporting activities and, fulfilling the requirements of Legislative Decree No. 39, have published a document entitled: 'The CSRD Implementation Decree, Regulatory Framework'. A guide to understanding the impact of the Decree on previous legislation, highlighting the ongoing focus of the CNDCEC on issues of great relevance and topicality for professionals in the sector.

The CNDCEC guide explains all the steps of the decree by illustrating the contents of the sustainability reporting separately the objectives of the strategies, policies and actions of companies related to sustainability issues, both for individual reporting (art. 3) and consolidated reporting (art. 4). Article 3 of the Decree focuses on individual sustainability reporting, specifying: 1. the mandatory companies, i.e. large companies and listed small and medium-sized companies, as outlined in Art. 3, para. 1; 2. the minimum content required for individual reporting, which must include information necessary to understand the company's impact on people and the environment, as well as how sustainability issues can generate risks and opportunities with financial effects; 3. the position of individual reporting, which must be included in a dedicated section of the annual report.

In particular, Art. 3(2) states that the report must contain a brief description of the business model and strategy, highlighting - the resilience of the model with respect to risks related to sustainability issues and opportunities related to these issues; - the company's plans, including implementation actions and financial plans to ensure compatibility with a transition to a sustainable economy; - the model and strategy applied considers the needs of stakeholders and their impact on sustainability issues: - how the strategy is implemented in relation to sustainability issues. In addition, a description of defined targets over time related to sustainability issues is required, including quantitative targets for the reduction of greenhouse gas emissions for 2030 and 2050, with a statement on the progress made and whether these targets are based on scientific evidence.

In the sustainability reporting and business model adopted, it will be necessary to specify 1. The role of the administration and control bodies with regard to sustainability issues, including their competences; 2. The corporate policies in relation to sustainability issues; 3. Information on incentive schemes related to sustainability goals for members of the boards of directors; 4. A description of the due diligence procedures related to sustainability issues, the main negative impacts related to the company's activities and the actions taken with a description of the main risks for the company related to sustainability issues and how these risks are managed; 5. Relevant indicators to communicate the information in the previous points.

Companies must disclose the procedures adopted to collect the information included in the reporting, in accordance with the European Reporting Standards (ESRS). In exceptional cases, subject to a reasoned resolution of the board of directors, certain information may be omitted if its disclosure would seriously jeopardise the company's business position. However, omission is not permitted if it would compromise the understanding of the company's development and performance.

The Decree provides guidance on the minimum content and reporting methods for sustainability information to be included in the consolidated reporting of parent companies of large groups. This reporting must comply with the ESRS and, if the parent company notes significant differences between the risks or impacts of the group and those of its subsidiaries, it must provide adequate explanations. The Decree also sets out the regime applicable to subsidiaries and branches of non-European parent companies that generate revenues in excess of EUR 150 million.

The Decree (in Article 8, paragraph 1) stipulates that the sustainability reporting must be certified by an auditor, known as a 'sustainability auditor', who must be qualified according to Legislative Decree No. 39/2010. The CNDCEC guide specifies that the auditor is responsible for expressing his or her conclusions as to: 1. the compliance of sustainability reporting with the rules of the Decree governing its preparation 2. compliance with the obligation to mark the report 3. compliance with the reporting requirements under Article 8 of Regulation (EU) 2020/852; 4. according to Art. 8(4), the conclusions of the attestation report (pursuant to Art. 14-bis, Legislative Decree 39/2010) are based on an assignment aimed at acquiring a limited level of assurance. After the adoption of the delegated act by the European Commission (Directive 2006/43/EC), the assignment will be oriented to obtain a reasonable level of safety.

The introduction of the figure of the 'sustainability auditor' has a direct impact on the structure of the legislative decree 39/2010, leading to the insertion of articles regulating the stages of sustainability auditing, similarly to what is already provided for the statutory auditor. According to Article 8, paragraphs 2 and 3, the auditor in charge of attesting the compliance of sustainability reporting can be: (a) the same natural person statutory auditor who performs the statutory audit of the financial statements (para. 2); b) a statutory auditing firm approved pursuant to Legislative Decree No. 39/2010, which may be the same as the auditor responsible for the statutory audit of the financial statements, provided that the attestation is signed by a sustainability auditor (paragraph 3).

With reference to CSRD regulations and sustainable reporting, the CNDCEC guide specifies that listed small and medium-sized companies can limit their reporting to specific information, such as a description of the business model, sustainability policies and the main impacts and risks related to these issues. In this context, the XNatura Platform, by 3Bee Ecosystem makes it possible to identify and close the nature, climate and biodiversity gaps of companies, municipalities and natural parks, by quickly and easily monitoring four key risk indices according to international standards and identifying a real climate and biodiversity strategy, based on the impacts detected and the dependencies on the ecosystem services directly involved.