Corporate Sustainability Reporting Directive (CSRD)

What is Corporate Sustainability Reporting Directive (CSRD)?

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The Corporate Sustainability Reporting Directive (CSRD) is a new EU legislation that significantly extends the scope of sustainability reporting compared to the previously existing Non-Financial Reporting Directive (NFRD). It is not just a standard or guideline, but a directive that legally requires companies to report on their sustainability performance, encompassing environmental, social, and governance (ESG) aspects.

CSRD vs. NFRD

The CSRD expands upon the NFRD by:

Widening the range of companies that need to comply.
Enhancing the detail and scope of required reporting.
Introducing the need for an audit of sustainability information.

CSRD timeline with milestones by when companies must comply with regulation

Which Companies are Subject to CSRD?

The CSRD applies to:

All large companies, meaning those with more than 250 employees and more than €50 million in turnover and/or more than €25 million in total assets.
All companies listed on stock exchanges (except micro-enterprises).

Reporting Requirements Under CSRD

Companies need to disclose information related to:

Environmental Protection: Reporting on aspects like carbon emissions, resource usage, and environmental impact. This includes not just accounting and reduction efforts but also offsetting strategies. Companies are encouraged to set ambitious Net Zero goals.
Social Responsibility and Treatment of Employees: Including workforce policies, health and safety measures, and labor rights.
Respect for Human Rights: Ensuring that operations and supply chains are free from human rights abuses.
Anti-Corruption and Bribery Measures: Implementing and reporting on robust policies to prevent corruption and bribery.
Diversity on Company Boards: Promoting diversity at the highest levels of company governance.

Examples of Company’s CSRD Reports

A notable example from Germany would be Siemens AG, which provides comprehensive sustainability reporting, covering all aspects required by the CSRD, including detailed environmental strategies, social responsibility initiatives, and governance practices.

How Can My Company Set CSRD Targets?

To align with CSRD requirements, companies should:

Conduct a thorough analysis of current sustainability practices.
Develop a detailed reporting strategy that covers all CSRD aspects.
Implement necessary changes and policies to improve sustainability performance.
Prepare for regular and transparent reporting, including audits of the provided information.

The CSRD represents a significant step forward in corporate sustainability reporting, aiming to standardise and increase the transparency of sustainability practices across the EU. By adhering to its requirements, companies not only comply with legal obligations but also demonstrate their commitment to responsible and sustainable business practices.