Discovery of the CSRD directive: what are the implications for businesses?

Sustainability is now at the heart of concerns for businesses and regulators. The new European directive CSRD (Corporate Sustainability Reporting Directive) is an important milestone in this transition towards increased transparency regarding sustainability.🍀 This blog explores what CSRD is, its objectives, and what it means for businesses.

What is the CSRD directive?

The CSRD directive, adopted by the European Union, aims to improve and extend the sustainability reporting obligations of companies. It replaces the old NFRD (Non-Financial Reporting Directive) and introduces stricter and more detailed requirements for companies regarding transparency about their environmental, social, and governance (ESG) performance.

Objectives of the CSRD?

🎯The CSRD directive has several main objectives:

1. Improve the transparency and comparability of ESG information provided by companies.

2. Encourage sustainable management by integrating ESG criteria into business decisions and strategies.

3. Strengthen investor and stakeholder trust by providing reliable and relevant information.

4. Align European standards with international sustainability reporting frameworks.

5. This directive is part of the many initiatives of the European Union to meet the ambitions of the European Green Deal: to comply with the Paris Agreement by reducing greenhouse gas (GHG) emissions by 55% by 2030 and achieving carbon neutrality by 2050.

Who is affected by the CSRD?

Unlike the NFRD, the CSRD expands the scope of application and now includes all large companies in the EU, whether listed or not 🇪🇺. It also includes companies exceeding at least 2 of the 3 following criteria:

• 250 employees compared to 500 previously.

• €25M in total assets

• €50M in net sales

• Listed small and medium enterprises (SMEs), with reduced requirements.

• Subsidiaries of large non-European companies operating in the EU.

Implications for businesses?

1. Increased reporting requirements

Companies will need to provide detailed information on a broader range of ESG criteria, covering aspects such as:

- Environmental impact, including greenhouse gas emissions, resource use, and waste management.

- Social issues, such as working conditions, gender equality, and human rights.

- Corporate governance, including governance structure, diversity policies, and anti-corruption efforts.

2. Integration of ESG criteria

Companies will need to integrate ESG criteria into their management and decision-making processes. This involves rethinking business strategies to align financial objectives with sustainability goals. 🎯

3. Audit and assurance

The CSRD introduces the requirement for an external audit of the ESG information provided by companies. This aims to ensure the reliability and accuracy of reported data, thereby increasing stakeholder trust.

4. Training and awareness

Companies will need to invest in training and raising employee awareness to ensure that all levels of the organization understand and comply with the new sustainability requirements. 🙋🏻‍♀️

What information/data will companies need to communicate?

• Environmental factors: climate change mitigation and adaptation, biodiversity, resource use...

• Social factors: equal opportunities, working conditions, and respect for human rights and fundamental freedoms...

• Governance factors: role of governing bodies, lobbying activities, management of relationships with business partners...

How to prepare for the CSRD?

Conclusion

The CSRD directive represents an important step towards increased transparency and sustainability for businesses in Europe.🍃 It imposes stricter ESG reporting requirements but also offers the opportunity to strengthen stakeholder trust and promote more responsible business management. For companies, preparing now for the implementation of the CSRD is essential to ensure a smooth transition.

👀To find out how Vesuv can help you navigate these new requirements and improve your project management and ESG compliance, visit our website at vesuv.fr.

Don’t miss this opportunity to turn your sustainability challenges into competitive advantages! 🚀