In December 2023, we published a status update on the Corporate Sustainability Reporting Directive (CSRD), and it is time for an update.

Almost six months after the implementation deadline of the CSRD, the bill implementing the CSRD in the Netherlands was submitted to the Dutch House of Representatives on 13 January 2025. This update aims to provide further insight into the implementing bill and reflect on CSRD-related issues at both the EU and Dutch level, including the delayed implementation of the CSRD in the Netherlands.

Recent developments at European level

After the Netherlands missed the CSRD transposition deadline of 6 July 2024, the European Commission decided to open an infringement procedure against it for failing to notify national measures to fully transpose the CSRD. The Commission gave the Netherlands (and several other EU member states that missed the deadline) two months to respond and complete the transposition. The Netherlands missed this deadline, too. The Commission may now issue a "reasoned opinion", which is a formal request to implement the CSRD. So far, the Commission has not taken this step, possibly also in view of what we explain below.

The Commission has expressed its intention to amend the CSRD, the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU Taxonomy Regulation through a single coordinated package of amendments to reduce the administrative burden on companies. This "omnibus", or "Simplification Package" will be discussed during the Commission meeting of 26 February 2025. The European Council has already expressed strong support for reducing and simplifying reporting requirements for businesses – as a way to enhance the competitiveness of the EU economy. However, a coalition of leading European companies, investors and industry associations also sent a letter to the European Commission, voicing concerns that the omnibus package might weaken the regulations, thereby undermining policy certainty and legal predictability. At a member state level, Germany and France in particular publicly support reducing the regulatory burden, invoking responses by or on behalf of German and French companies setting out their concerns similar to those of the European Commission. To date, neither the Dutch government nor Dutch companies have actively participated in this debate.

Recent developments at national level

The recent proposals transpose the CSRD into Dutch law partly by means of: (i) an act covering the rules on assurance of CSRD statements and the CSRD's applicability to listed companies, and (ii) a decree covering the disclosure requirements for in-scope companies, rules on the assurance statement and the audit committee, and implementation timelines.

On 12 June 2024, the draft implementing decree was published, and members of parliament subsequently exercised their right to ask questions. The answers to these questions were published in December 2024 and January 2025. Members of the Dutch Senate will now have the opportunity to provide input for a second round of written questions on 11 February 2025. Once these questions are answered, the draft implementing decree must be submitted to the Dutch Council of State for advice.

On 2 September 2024, the Advisory Division of the Council of State published its (early) advice on the draft implementing bill. The Council of State had no comments and recommended submitting the proposal to the House of Representatives. However, the implementing bill – accompanied by its explanatory memorandum – was only recently submitted to the House of Representatives, on 13 January 2025.

It is unclear when the legislative process will end. However, the Dutch State Secretary for Legal Protection has confirmed that the implementing decree and the implementing act will enter into force at the same time.

Reflections on implementing bill and its explanatory notes

The implementing bill and accompanying notes contain limited changes compared to the draft version submitted to the Advisory Division of the Council of State. Below, we highlight the key issues and discuss: (i) the lack of a clear explanation on the application dates in light of the delayed implementation, (ii) the extension of the temporary arrangement that allows the supervisory board or the management board to appoint the assurance provider, and (iii) potential topics of debate in the remaining part of the legislative process.

Lack of clarity on application dates

The CSRD is clear that the 2024 financial year should be the first year of application. However, as set out above, implementation of the CSRD in Dutch law will not be completed before the first wave of companies in scope publish their annual report for financial year 2024 - and potentially not even before the end of April 2025 - which is the deadline for companies in scope to publish their annual reports.

In view of this, the implementing bill or the accompanying notes were expected to shed more light on the application dates, but no clear explanation was provided. However, the dates included in the implementing bill have not changed and are still in line with the CSRD application dates. This means that the reporting framework regarding the 2024 financial year is likely to change after companies have already published their 2024 annual reports, which raises the question whether such change should be considered to have retroactive effect. The legislature remains silent on this point.

In practice, we see that companies are already preparing their 2024 annual report in compliance with the CSRD and ESRS. This is also encouraged by the Dutch Authority for the Financial Markets (AFM) and the Royal Netherlands Institute of Chartered Accountants (NBA).

Extension of temporary arrangement regarding appointment of assurance provider

An assurance provider must provide an assurance opinion on the CSRD sustainability statement. Article 2:393a Dutch Civil Code, as proposed by the implementing bill, gives the general meeting the authority to appoint the assurance provider.

By way of a transitional measure, the implementing bill provides that for the 2024 and 2025 financial years, the supervisory board - or if there is no supervisory board, the board or one-tier board - may appoint the assurance provider.

Potential topics of debate in remaining part of legislative process

The CSRD leaves limited room for policy decisions by national legislatures. In addition, the Dutch legislature has announced that it will implement EU legislation without "gold-plating". As a result, no material issues are expected to arise in the remainder of the legislative process.

In addition to a potential discussion on the retroactive effect of the implementing legislation, as mentioned above, questions may be asked on the implementation of article 37(3) Audit Directive, as introduced by the CSRD. This article, in short, prescribes that shareholders or members of certain legal entities that alone or together represent more than 5% of the capital or voting rights should have the right to put a draft resolution on the agenda of the general meeting “requiring” that an “accredited third party” prepare a report on “certain elements of the sustainability reporting” and that this report be made available to the general meeting. According to the State Secretary for Legal Protection, implementation of this article is not necessary, but one could have a different view on this.

Another topic of further debate could be whether it is desirable to include a provision that the sustainability report must be adopted by the general meeting, just like the annual accounts. Various political parties have already raised this, but the State Secretary for Legal Protection has taken the position that granting this power to the general meeting would imply a fundamental shift in the division of powers within a company that would go far beyond the scope of the CSRD's implementation.