Corporate Sustainability Reporting Directive
The CSRD broadens the scope of companies required to report, ensuring accountability for a wider range of businesses. Additionally, the directive standardizes metrics and disclosures, improving the clarity and comparability of ESG performance. The CSRD expands the reporting scope to encompass the full value chain, providing stakeholders with a comprehensive view of a company’s sustainability efforts.
Understanding the CSRD
The CSRD brings about major alterations in ESG reporting requirements for companies in the EU. This directive may present an opportunity for compliance and competitive advantage for some companies, while others face challenges due to inadequate preparation for ESG impacts.
Failure to meet CSRD requirements can lead to reputational and financial risks. The CSRD defines three categories of companies that must report and emphasizes double materiality and a comprehensive view of a company's ESG impacts and their effects on the company and stakeholders.
From Leaders to the New Standard: CSRD’s Sweeping Scope
CSRD fundamentally changes the way all companies must think about their impact, the visibility they have into their supply chains, and the technology needed to meet the requirements. Essentially, nearly 50,000 companies will be required to do what only leading companies are currently doing.Large EU companies: defined by having at least two of the following criteria: over 250 employees, more than €40 million net revenue, or more than €20 million total assets.Listed EU companies: including listed SMEs.Non-EU parent companies: with securities listed on EU-regulated markets and a combined group turnover in the EU of over €150 million.
Unified Framework for Sustainability Reporting
The Corporate Sustainability Reporting Directive unifies existing frameworks. Companies report on strategy, governance, implementation, and performance in specified topics. It ensures consistency for stakeholder evaluation.
- Climate change
- PollutionWater and Marine resources
- Biodiversity and ecosystems
- Resource use and circular economy
- Own Workforce
- Workers in the value chain
- Affected communities
- Consumers and users
- Business conduct
- Governance, risk management and internal control
What Makes CSRD Unique?
The Corporate Sustainability Reporting Directive (CSRD) emphasizes value chain reporting, mandating companies to evaluate and disclose their impact throughout their supply chains. The concept of double materiality is employed, encompassing the company's influence on society and the environment, as well as how external factors affect the business..
Areas of Reporting Include:
Direct and Indirect Emissions
Measure and report greenhouse gas emissions
Set targets and strategies to reduce them
Invest in renewable energy and efficiency
Worker Effects throughout the Supply Chain
Evaluate supply chain labor practices and conditions
Ensure fair pay, safe work, and labor law compliance
Support worker well-being and skill development
Impact of Upstream Activities on Nature
Assess environmental impact of raw materials
Promote sustainable sourcing
Support conservation and biodiversity
Transparency and Communication
Publish regular sustainability reports using recognized standards.
Share sustainability performance with stakeholders.
Engage with stakeholders for feedback and improvement.
Continuous Improvement
Continuously improve sustainability.
Regularly update targets and strategies.
Implement a feedback loop.
Collaboration and Partnerships
Collaborate with stakeholders to tackle sustainability challenges.
Participate in sustainability initiatives and partnerships.
Support sustainable research and innovation.
