On 20 November 2023, a Dutch draft decree implementing certain CSRD obligations was published (‘draft decree’). This is the second part of the two-stage implementation of the Corporate Sustainability Reporting directive (CSRD) in the Netherlands.

Previously, on 17 July 2023, a draft implementing bill was published for consultation, addressing, amongst others, the assurance of CSRD reports in the Netherlands. The current second stage consist of a draft decree (Implementatiebesluit richtlijn duurzaamheidsrapportering) which encompasses several crucial definitions, outlines the member state options chosen by the Dutch legislator, and designates the European Sustainability Reporting Standards (ESRS) as the foundation for reporting. The ESRS were published in the Official Journal of the EU on 22 December 2023.

Content of the draft decree
The draft decree implements the obligation to report on sustainability information in line with the CSRD. It is facilitated by future Article 2:391a(2) of the Dutch Civil Code (DCC).

The draft decree will replace the Decree on Disclosure of Non-Financial Information (Besluit bekendmaking niet-financiële informatie). It will also amend three existing decrees:

(i) The Decree on the Contents of the Management Reports (Besluit inhoud bestuursverslag) regarding adjustments of the corporate governance statement and the obligation to report in the management report on certain intangible assets

(ii) The Electronic Filing of Commercial Register Decree (Besluit elektronische deponering handelsregister), for the purposes of the digital method of filing the management report

(iii) The Decree on establishing the Audit Committee (Besluit instelling auditcommissie) regarding the expansion of the duties of the audit committee concerning sustainability reporting

The draft decree applies to:

  • Listed companies (excluding micro companies)
  • All other large companies (vennootschappen, which for example includes NVs, BVs, CVs and general partnerships but excludes cooperations)
  • Listed banks or insurance companies regardless of their legal form (excluding listed micro-banks/insurance companies)
  • Large unlisted banks and insurance companies

These companies must include the sustainability report in the management report. The definition of ‘company’ (vennootschap) that is used limits the scope to Dutch NVs and BVs as well as CVs and general partnerships. Foundations (stichtingen) and associations (verenigingen) fall outside the scope. Only banks and insurance companies that qualify as public interest companies fall within the scope regardless of their legal form. This means that this draft decree considers Dutch cooperations (coöperatie) not to be in scope unless that cooperation is a regulated bank or insurance company.

Pension funds are only included if they meet the thresholds of the large company definition. Also note that investment funds (beleggingsinstellingen) and UCITS are not in scope. Managers of investment funds, managers of UCITS and investment firms managing individual assets do not fall within the scope of the decree insofar as investments made by their clients are concerned. However, these financial companies may fall within the scope of the decree when it comes to investments for their own account.

The sustainability reporting obligations also applies on a consolidated basis to EU-holding companies, banks and insurance companies that head a large group. In addition, the draft decree applies to large or listed subsidiaries, and branches with net sales of more than EUR 40 million in net turnover, of non-EU entities that have EUR 150 million in net turnover in the EEA. These subsidiaries or branches must publish a separate sustainability report including a number of specific components of sustainability information, whereby the information should cover the entire group of that ultimate non-EU parent company.

A Dutch company is considered large if it exceeds two of the three criteria of Article 2:397 of the DCC:

  • A balance sheet total of more than EUR 20 million
  • Net turnover of more than EUR 40 million
  • An average number of employees of more than 250

Future change in scope of ‘large’ companies
Important to note is that on 21 December 2023, the Directive to adjust the size criteria for SMEs was Published in the Official Journal of the EU (Delegated Directive (EU) 2023/2775). The Directive adjusts the financial size for small, medium and large undertakings criteria by about 25%. The number of employees remains unchanged. This increase in the size criteria reduces the scope of the CSRD.

The new thresholds will be that a company is large if it exceeds two of the three the criteria of Article 2:397 of the DCC:

  • A balance sheet total of more than EUR 25 million
  • Net turnover of more than EUR 50 million
  • An average number of employees of more than 250

Member States must apply the new size criteria in respect of financial years starting from 1 January 2024 but may allow companies to apply the adjusted size criteria already from financial year beginning on or after 1 January 2023. The Dutch draft implementation decree Directive Adjustments size criteria indeed provides for this. Currently this draft decree is pending before the council of state for opinion.

Regarding the change of the size thresholds by the proposed amended Accounting Directive, it is also important to note that a company falls into a certain size category only if specific thresholds are met in two consecutive financial years. If adjusted thresholds apply from 1 January 2023, as proposed in the draft implementation decree, the new criteria must be met on the balance sheet dates for the financial years 2022 and 2021 to determine the size category for the financial year 2023.

The change in thresholds will not only impact the scope of the CSRD, but also the scope of other legislation that 'large undertakings' must comply with, such as the Taxonomy Regulation, the Dutch Diversity Act and the proposed Dutch Responsible and Sustainable International Business Conduct Act.

Use of member state options provided by the CSRD
For international groups that must comply with the CSRD in various member states it is important to distinguish the choices made by the national legislator in view of the member state options provided in the CSRD. The draft decree covers the following member state options:

  • It allows the reporting company to omit certain information from the sustainability reporting following a decision by the board if such disclosure would seriously harm the company's commercial position.
  • It imposes language requirements for consolidate sustainability reporting of a subsidiary invoking the group exemption and not publishing its own sustainability reporting. Dutch, German, English and French are acceptable languages.
  • It requires that the assurance report on sustainability reporting is included as a separate part of the auditor's report to make it as recognisable as such.
  • It allows the assignment of duties with respect to sustainability reporting and assurance in its entirety to a sustainability committee in case where in addition to the establishment of an audit committee a sustainability or corporate responsibility committee has been established.
  • It takes a different approach towards the option to require branches or subsidiaries of non-EU entities to provide information on net sales generated in the EU. The Dutch proposal requires the auditor to include a statement in the assurance report whether the subsidiary was required to publish a (standalone) sustainability report in the previous financial year and, if so, whether the report was made public. In this way the subsidiary is not dependent on the cooperation of the parent company (or the other subsidiaries in the EU and EEA) to ascertain EEA sales if necessary.
  • It excludes the Dutch Central Bank (DNB), public development banks and credit unions from the reporting obligation following the exemption from the capital requirements directive.
  • No use is made of the option to report annually to the European Commission on the subsidiaries or branches that have disclosed a sustainability report on the group of their ultimate parent company located in a third country.

No need for implementation of general requirements that are further detailed in the ESRS
The draft decree does not have to implement the ESRS that specify in detail the information that must be provided as the ESRS are part of a regulation that does not require transposition into national law. The final ESRS were published in the Official Journal of the EU on 22 December 2023 (Delegated Regulation (EU) 2023/2772).

Consolidated reporting
The draft decree further contains detailed rules in view of exemption of subsidiaries from the obligation to prepare their own sustainability report if their sustainability information is included in the consolidated management report or consolidated sustainability reporting of the parent company. There are several exemptions available to subsidiaries in terms of having to publish a sustainability report. For non-EU parents companies there is also the possibility to opt for artificial consolidation until 2030 in case it has in its group a subsidiary company established in the Netherlands that falls under the scope as it can prepare a consolidated sustainability report that includes all subsidiaries of that parent company located in the EU or EEA. In this regard, the draft decree is aligned with the CSRD.

Next steps
The consultation of the draft decree ended 18 December 2023. Critical responses were submitted, which may result in further amendment of the draft decree. Regarding the previous first part of the implementation, the draft implementing bill, the feedback period ended 10 September 2023. So far, no bill has been submitted to Parliament. The CSRD needs to be implemented into national law by 6 July 2024, but we believe this deadline will be difficult to meet.

We will update this page if there are new developments.

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