Corporate Sustainability Reporting Directive
What is CSRD?
Corporate Sustainability Reporting Directive
The Corporate Sustainability Reporting Directive (CSRD) is a new directive from the EU set to take effect in 2024, replacing the current Non-Financial Reporting Directive (NFRD). The directive mandates that companies disclose detailed and transparent information about their social and environmental activities. Its aim is to enhance and expand the framework for corporate sustainability reporting. The objective is to standardize and create more consistency and transparency in companies' sustainability reporting, allowing for comparisons between different businesses and facilitating the assessment of their sustainability performance. This includes detailed reporting on aspects such as working conditions, climate impact, human rights, and anti-corruption efforts. CSRD requires the measurement of the impact of products leaving the company and the impact of items or services brought into the company. In simple terms, it seeks to assess how the business influences the environment and how the environment influences the business.
- What is the goal with CSRD?
The aim of CSRD is to enhance the comparability of sustainability information reported by companies, to support the overarching sustainability and climate goals of the EU, to promote the integration of sustainability aspects into corporate decisions and strategies, and to create an honest and transparent sustainability landscape based on relevant and accurate data. CSRD also aims to facilitate stakeholders such as investors, consumers, and organizations in assessing the social and environmental impacts of companies. By providing sustainability information to financial markets, conditions for promoting sustainable growth can be established. The new regulation also aims to benefit individual companies. Reporting can facilitate financing while simultaneously raising awareness within the company regarding its own risks and opportunities related to sustainability. The information is to be integrated into the annual report, with requirements for external review and audit. This creates conditions to ensure that the report is reliable, relevant, and comparable.
To meet the requirements of CSRD, not only quantitative data is required but also an in-depth collection of primary data. Companies are now urged not only to review their own processes but also to obtain environmental data about the products they purchase through product life cycle analyses (product LCA).
- What and who should report according to CSRD?
CSRD encompasses all large companies either governed by EU legislation or listed within the EU, as well as those established in any of the EU member states. This scope also extends to global companies operating in the European market.
- Large companies already reporting under NFRD
Starting from January 1, 2024, it becomes mandatory for these companies to adhere to CSRD and incorporate its guidelines for measurement and reporting in their annual reports for the fiscal year 2024. The first annual report fully in line with CSRD standards must be published no later than 2025.
- Large companies currently not covered by NFRD
For large companies currently not covered by NFRD, there is an additional timeline to consider. Starting from January 1, 2025, these companies are obligated to adopt CSRD and integrate its requirements for measurement and reporting into their annual reports for the fiscal year 2025. The first annual report meeting CSRD requirements is expected to be published no later than 2026.
- The future for CSRD
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