What is the CSRD?
The Corporate Sustainability Reporting Directive (CSRD) is an EU regulation designed to enhance corporate transparency regarding environmental, social, and governance (ESG) issues.
It aligns sustainability reporting with financial reporting standards, requiring businesses to disclose how sustainability impacts their operations and vice versa. This principle, known as “double materiality,” ensures comprehensive accountability and insight into corporate sustainability efforts.
Who Needs to Comply?
• Companies listed on EU-regulated markets, excluding micro-enterprises.
• Large businesses meeting at least two of these criteria: more than 250 employees, €40 million turnover, or €20 million in total assets.
• Non-EU companies with over €150 million turnover in the EU and at least one subsidiary or branch in the union.
• Small and Medium Enterprises (SMEs) listed in the EU, with opt-out options available until 2028.
Key Requirements:
• Reporting Scope: Companies must address environmental impact, social responsibilities, human rights, anti-corruption efforts, and governance factors.
• Data Standards: Reporting must be qualitative, quantitative, forward-looking, and retrospective, covering short-, medium-, and long-term goals.
• Assurance: Reports must be independently verified to ensure accuracy and reliability.
• Publication: Sustainability reports should be integrated into annual management reports and submitted to digital open-access databases for transparency.
Timeline:
• January 2024: CSRD replaces the Non-Financial Reporting Directive (NFRD).
• Reporting begins based on the 2024 financial year for large companies, with SMEs following later.
Why is the CSRD Important?
The CSRD strengthens the link between sustainability and corporate strategy, responding to increasing demands from investors, regulators, and stakeholders for robust ESG disclosures. It positions companies to remain competitive in a market increasingly focused on sustainability while mitigating risks and uncovering new opportunities for growth.
How Can ECA Help?
ECA offers expert guidance to navigate the complexities of CSRD compliance. Our services include:
• Comprehensive gap analyses to assess current reporting standards against CSRD requirements.
• Support in setting up robust data collection systems and sustainability reporting processes.
• Assistance with developing a clear, compliant, and verifiable reporting framework.
• Ongoing monitoring and advisory to ensure evolving compliance needs are met effectively.
Ready to achieve compliance and unlock the benefits of CSRD? Contact us today.