EU - Corporate Sustainability Reporting Directive (CSRD)
What is the EU Corporate Sustainability Reporting Directive (CSRD)? 📰
Due diligence for the European Union. An introduction.
- Expected adoption by Council of the European Union on 28.11.2022. 20 days later the CSRD is expected to be put into force. EU member states will have 18 months to transpose this into nation law. (Source: Lexology.com)
- From 01.10.2024 (reporting year 2025) All large public-interest companies (>250 employees and/or >€40M turnover and/or >€20M total assets ) already subject to the Non-Financial Reporting Directive (NFRD) of 2018.
- From 01.01.2025 Non-EU companies with substantial activity in the EU (with a turnover over €150 million euro in the EU) will also have to comply.
- From 01.01.2026 Listed SMEs will also be covered, but they will have more time to adapt to the new rules
The Directive is one of the key measures to support the European Green Deal, the Sustainable Finance Agenda, and to declare the wider EU commitment towards reliable reporting on sustainability information
Specifically, the CSRD introduces more detailed reporting requirements on companies’ impact on the environment, human rights, and social standards, based on common criteria in line with EU’s climate goals. This will enable investors to re-orient investments towards more sustainable technologies and industries.
- To ensure companies are providing reliable information, they will be subject to independent auditing and certification.
- Financial and sustainability reporting will be on an equal footing and investors will have comparable and reliable data. Digital access to sustainability information will also have to be guaranteed.
Businesses will also have to start reporting on how sustainability risks might affect their performance. A few key methodologies and solutions will need to be considered:
✔ Complete Supply Chain Mapping and Traceability
✔ Vendor Management, Engagement and Assessments
✔ Full-scope Risk Management
✔ Prioritization decisions and strategy to inform Corrective and Preventative Actions (CAPA)
All affected EU companies must adopt measures for meaningful engagement with affected stakeholders – those people that are at risk of negative impacts from business activity. Listening to the voices of workers, community members and others is vital to a company’s understanding of risks to people and the planet and strengthens its due diligence.
Staying on top of the regulation requirements, data collection and disclosure best practices, and supplier network communications will be imperative. And retraced can help!
EU's CSRD - How to be ready
✔ Get a free intro to the EU's CSRD
✔ Learn about best-practices for data collection and analyses with retraced
✔ Next Steps for supplier network communication and prep for data disclosure