Sustainability Reporting for companies

On 5 January 2023, the Corporate Sustainability Reporting Directive (CSRD) entered into force. It extends and prescribes in more detail the rules concerning the social and environmental information that companies have to report. In 2025,  large companies with over 500 employees, already subject to the previously applicable Non-Financial Reporting Directive (NFRD), will have to submit their first sustainability reports in compliance with the CSRD and the European Sustainability Reporting Standards (ESRS) for the financial year 2024. Moreover,  large enterprises that meet any two of the following criteria will have to submit their sustainability reports in 2026 for the financial year 2025: 

• 250+ employees 

• €50+ million in net turnover 

• €25+ million in assets 

Listed SMEs and non-EU companies generating over EUR 150 million on the EU market will also have to report in the CSRD in the future. 

The Leaseurope Task Force on ESG & Green Leasing is working on a potential common approach regarding the obligation of leasing companies to report on scope 3 GHG emissions stipulated in the CSRD. In particular, discussions are ongoing within the Task Force and with EFRAG (the European Financial Reporting Advisory Group) for reporting upstream and downstream CO2 emissions (scope 3) for assets where the lease period makes up most of the useful life. 

Leaseurope's key messages are: 

1. Financial reporting should be balanced, considering both risks and opportunities from sustainability. 

2. Any financial reporting should include both green (environmentally friendly assets, Taxonomy-aligned) and transition projects (most assets used as part of wider projects with clear environmental goals). Clear guidance is needed on how to measure and report transition finance, while avoiding greenwashing. 

3. The environmental impacts of the use of assets by lessees should be reported by the lessee as Scope 1 & 2 whatever the accounting treatment of the lease.  

4. Measuring the upstream and downstream (Scope 3) impacts should not require disproportionate efforts, so it should be done using readily available information without undue cost or effort (in line with ESRS E1 para 69). 

Leaseurope is also working on a potential definition of Green Transition Projects (GTPs). These would be projects that provide clear, quantifiable and attributable environmental benefit, without creating incremental material adverse environmental or social impacts in areas outside of the intended environmental benefit. For asset finance, the assets used should be necessary for the GTP project to work and should not worsen the lessee’s environmental and social impacts as compared to any asset they are replacing. 

For further background, you can find on our website the papers: 

• “The Use of ‘Reasonable Efforts’: Approaches to Assess Upstream and Downstream Environmental Impacts of Leased Equipment and Vehicles” 

• “The Role of Leasing in Enabling the transition to a climate neutral and sustainable economy”