The Corporate Sustainability Reporting Directive. It is the new EU legislation requiring 50.000 companies to publish regular reports on their environmental and social impact activities. What is this directive about? Four questions about CSRD answered.
What is CSRD?
As a result of the Paris Climate Agreement in 2015 the EU has been imposed with the task of getting the right legislation in place to ensure the climate goals are going to be met. By making organizations liable for their carbon footprint an social impact the EU is trying to make the economy environmentally sustainable and socially responsible.
The Corporate Sustainability Reporting Directive (CSRD) guarantees organizations to think about their sustainability and are held accountable for their environmental and social impact, not only in for their own local impact, but through the whole supply chain. For example if you have a factory in Europe and you want to move this to Asia, the company is still accountable due to the new directive.
Who is impacted by CSRD?
The Corporate Sustainability Reporting Directive (CSRD) is an extension of the current Non-Financial Reporting Directive (NFRD) that already has been implemented by governments. It embodies that companies are mandatory to report non-financial key figures and to integrate Environmental, Social and Governance (ESG) into the management report.
At this moment is NFRD applicable for 11.000 companies in Europe; the CSRD will be applicable for around 50.000 corporations in Europe. Businesses in the scope will be large enterprises which meet two out of three of the following criteria:
• More than 250 employees and/or
• More than €40 Million,- turnover and/or
• More than €20Millionin total assets
Furthermore, it will affect all listed companies and companies who do business with European organizations.
When will the CSRD become effective?
The first goal was to have the CSRD in effect for the Fiscal Year (FY) 2023, due to some difficulties about the pace of the introduction of the legislation the EU has postponed the introduction to give companies some time to implement the legislation. This means in FY 2024 every organization within the scope of CSRD should be ready.
What is next?
What can be concluded is that in FY 2024 it will mainly be about gaining insights (GAP-analysis) about your current impact on Social and Environmental Key Performance Indicators.
About the precise implementation still a lot is unknown due to sector standards which are to be announced by the European Commission. What is known is that CSRD will be implemented in FY 2024 and it will affect a lot of companies. It makes sense to check the impact for your organization and get started now to experience possible difficulties before 2024, especially regarding the Environmental and Social Governance (ESG) Management Report.
Regarding the carbon accounting, BigMile is able to significantly reduce your workload by providing helpful insights and useful analysis in an ISAE 3000 certified manner.
Do you want to know more? Please do not hesitate to contact us.