Are you ready for CSRD?

The EU’s sustainability reporting directive has become active and it now requires nearly 50.000 EU companies to provide detailed insights on their enviromental and social responsibilities. All this with the main goal to achieve net zero by 2050 and to make sure investors and consumers are able to understand the sustainability impact of a business.

What Is The Corporate Sustainability Reporting Directive?

The EU introduced the CSRD framework to harmonise the way European companies report on their sustainability practices. The CSRD upgrades the Non-Financial Reporting Directive (NFRD). In short, the new legislation extends the reporting obligations to a broader range of businesses and mandates them to disclose more ESG information. Therefore, make sure to have a cost-effective ESG strategy in place.

  • The CSRD extends the reporting requirements to all large companies and all companies listed on regulated markets (except listed micro-enterprises). This significantly increases the number of companies that need to provide sustainability information.

  • The directive aims to standardize sustainability reporting across the EU, making it more consistent and comparable. This should help investors, consumers, policymakers, and other stakeholders to better assess companies' sustainability performances.

  • The CSRD requires companies to report on how sustainability issues affect their business and how their activities impact people and the environment. This includes aspects like environmental protection, social responsibility, treatment of employees, respect for human rights, and anti-corruption measures.

  • Sustainability information reported under the CSRD will need to be audited, ensuring its reliability and accuracy.

  • The reporting will be done in a digital format, making it easily accessible and usable.

CSRD Timeline & Scope

The CSRD was published in the Official Journal of the European Union in December 2022. Here’s the CSRD implementation timing broken down by company type:

  • Listed large companies that were already under the NFRD scope must start reporting in 2025, referring to their 2024 financial year.

  • Listed large companies which are outside of the NFRD scope must start reporting in 2026, referring to their 2025 financial year.

  • Listed small and medium enterprises (SMEs), except for micro undertakings, must start reporting in 2027, referring to their 2026 financial year. However, listed SMEs are eligible for a grace period of two years. In other words, they can postpone their first disclosure to 2029.

Sustainability Reporting Standards

Your disclosure must align with the European Sustainability Reporting Standards (ESRS), implying to report on 12 ESG topics. Also, the European Financial Reporting Advisory Group (EFRAG) just released 40 sector-specific ESRS (e.g., manufacturing, logistics, technology, etc.). However, the EU will only adopt these from June 2026. 

What is CSRD Materiality?

When reporting on each of the ESRS, you’ll have to conduct a double materiality assessment. The double materiality principle was already introduced by the NFRD and maintained by the CSRD. In particular, this concept discriminates between impact materiality and financial materiality. So, what does that mean in practice? For example, when it comes to the ESRS E1 (i.e., climate), the impact materiality represents the impact of your company on global warming (e.g., scope 1, 2, and 3 carbon emissions), while the financial materiality consists of the climate-related financial risks for your business (e.g., supply chain disruptions).

Third-party audits

Another key CSRD requirement is that an independent firm must verify the accuracy and reliability of the data you disclose. This organisation should be approved by the competent authorities of the Member State you’re based in.

How we can support you?

Kick off
Identify objectives, goals and set high level goals and expectations. What applies to your company and when. Engage with the right team and stakeholders. Get everybody aligned on the why.

GAP Analysis
Understand what you already do and what needs to be done. Highlight areas where there is a gap between the current state and where you want to be.

Action Plan
Clearly define specific sustainability goals based on the GAP analysis. Develop concrete strategies and initiatives to achieve your sustainability goals. Break down larger goals into smaller, achievable milestones.

Implement Changes
Articulate the reason for the change and be open and transparent. Keep communication ongoing. Provide training and resources. Lead by example from leadership. Recognize and reward positive contributions. Implement governance on sustainability best practices.

Build a team
Enagage with other departments and stakeholders. Allocate necessary resources, including personnel, finances, and technology, for each initiative. Raise awareness about the importance of sustainability and its benefits.

Continuous Improvement
Establish system to collect feedback. Regularly evaluate preformance. Gather insights to identify areas for improvement. Review key preformance indicators and adjust accordingly. Mistakes are opportunities for growth and learning.

Get started today.
Meeting the reporting standards for the CSRD is not something you can do overnight. Partnerships and expertise is required accross the board. Our team is eager to support you in this journey and get you started. Reach out today to learn more about how we support companies achieving this goal.