Bill for the Corporate Sustainability Reporting Directive Implementation Act (CSRD) submitted to the Lower House
The Bill for the Corporate Sustainability Reporting Directive Implementation Act was submitted to the Lower House on 13 January 2025. The bill aims to implement the Corporate Sustainability Reporting Directive (CSRD) and focuses in particular on the parts of the CSRD that amend the Audit Directive and Transparency Directive. More details on the CSRD and its implementation can be found in our posts of 18 July 2024 and 13 January 2025.
The submission of the Bill has been considerably delayed. The CSRD should have been implemented by 6 July 2024. The delay has causes uncertainty for practitioners, especially for listed companies that qualify as large public interest entities (PIEs). Under the CSRD, these companies are required to publish a management report containing sustainability information for the first time in 2025 (covering the financial year of 2024). However, due to the delayed implementation of the CSRD, this obligation has not yet been recorded in Dutch laws and regulations.
Legislative process
A draft version of the Bill was consulted in 2023. Subsequently, in 2024, an (amended) draft of the Bill with accompanying explanatory memorandum was submitted for consultation to the Council of State, which issued a blank opinion on 28 August 2024.
Now that the Bill has been submitted to the Lower House, the rest of the legislative process can commence. After deliberation in the Lower House , the Bill must be submitted to the Upper House. Only then can the Corporate Sustainability Reporting Directive Implementation Act enter into force. It is anticipated that the Act will take effect retroactively (see below).
The Bill contains limited changes compared to the draft version submitted to the Advisory Division of the Council of State. We address the most notable changes below.
Extension of temporary arrangement for appointing the auditor
The sustainability reporting must be reviewed by an auditor. The authority to grant this assurance engagement is assigned to the general meeting under a new Article 2:393a of the Dutch Civil Code, similar to the appointment of an auditor to audit the financial statements. Because Article 2:393a of the Dutch Civil Code, which is part of the Bill, has not yet entered into force, there is currently no statutory basis for granting this engagement.
A previous version of the Bill already provided for a temporary exception for companies that have not been able to appoint an auditor in a timely manner for the assurance of the sustainability reporting for the financial year of 2024. In such cases, the supervisory board (SB) may grant the assurance engagement or, if there is no SB, the management board. This temporary arrangement has been extended by one additional financial year. This means that the SB is also authorised to grant the assurance engagement for financial year 2025. If the general meeting has granted the assurance engagement, that engagement is valid.
Engagements from financial years starting on or after 1 January 2026 follow the standard process, where the general meeting has authority. If the general meeting fails to grant the assurance engagement, the SB is authorised to do so. In the absence of a SB, the management board is authorised.
Amendment of Article 5:25a Wft
The Bill amends Article 5:25a(1)(b) of the Financial Supervision Act (Wet op het financieel toezicht, Wft) to clarify who is authorised to conduct the assurance on sustainability reporting. If the listed entity is based in another Member State, auditors from that other Member States will also be recognised, provided that they are authorised under the implementation legislation of that Member State.
It is important to note that when implementing the CSRD, Member States may opt to allow companies to have their sustainability reporting reviewed by an ‘independent assurance provider’ instead of an auditor. When a listed entity is based in another Member State, it is possible that the particular Member State has made use of this Member State option. In such cases, the assurance may also have been provided by that independent assurance provider.
The Dutch legislature has not made use of this Member State option (as of yet).
Linking entry into force of Implementation Decree and Bill
The Bill is only one of the legislative instruments through which the Dutch legislature intends to implement the CSRD. The proposed Implementation Decree for the Sustainability Reporting Directive (the Implementation Decree) is also of importance. This decree regulates the substantive obligations for sustainability reporting. The Implementation Decree has not yet entered into force either.
Answers to questions posed by the House Committee on Justice and Security indicate that the decree and the law will enter into force simultaneously.
Further timing remains unclear
In its submission, the legislature failed to recognise the pressing timeline: a large part of the first group of reporting companies will have to make the annual reporting publicly available by the end of April, with the CSRD requiring compliance with the new reporting requirements. However, it is likely that the implementation process will not have been completed by then, and there will therefore be no national legal obligation to disclose sustainability information at that time.
While most large PIEs continue to anticipate (timely) implementation of the CSRD and are expected to include sustainability information in their annual reports for the financial year of 2024, the timing – or lack thereof – raises questions about the interpretation of various obligations outlined in the Bill and the Implementation Decree. It is therefore unfortunate that the Dutch legislature did not provide clarity on these matters on submitting the Bill.
