The Corporate Sustainability Reporting Directive (CSRD)
In the European Union, the Corporate Sustainability Reporting Directive (CSRD) is in the process of being brought into law by delegated acts and member state legislation aligned with the common minimum requirements. It requires all large companies (with >250 employees, >€40m net annual revenues or >€20m assets on their balance sheet) and listed SMEs, to publish regular reports on their environmental and social impacts.
The directive requires companies to disclose information as outlined in the European Sustainability Reporting Standards (the draft ESRS are available at this link). This first group of these standards, which apply to all industry sectors, will be adopted through specific delegated acts of the European Commission at the end of June 2023. There are twelve standards, two cross-cutting (ESRS 1 and ESRS 2) and ten that are aligned with environmental (ESRSs E1-E5), social (ESRSs S1-S4) and governance (ESRS G1) issues as shown in the diagram.
The information and data reported will be tagged electronically following a specific taxonomy to enable simpler comparison. Independent third-party assurance of sustainability reports published according to the directive will be mandatory in all member states. Bureau Veritas provides assurance of sustainability reports for existing voluntary frameworks such as the Global Reporting Initiative (GRI), AccountAbility (AA1000) and the Sustainability Accounting Standards Board (SASB) standards.
HOW DOES CSRD IMPACT MY BUSINESS?
CFO / FINANCE DIRECTOR
“Preparing data that shows the potential sustainability impact of the company on the environment and communities, in addition to the financial impact of sustainability issues on the company is new. My team has to understand how capital providers are considering CSRD in their lending and investment decisions. We are considering putting an internal price on carbon dioxide emissions.
We must define our sustainability reporting boundaries, develop an efficient approach and invest in capabilities to collect data for single electronic reporting. The regulations require limited assurance initially followed by reasonable assurance meaning evidence trials and verification will be required for ESG data. We need to select an external auditor or Independent Assurance Services Provider (IASP) with the right experience. We need a range of auditors to be available to make sure we get a good value, high-quality service.”
CEO / EXECUTIVE BOARD MEMBER
“Incorporating sustainability into board reporting with clear responsibility and capability is the new normal. It’s imperative to understand the relationship between sustainability and my company’s business model and strategy. We must ensure our business’ resilience to sustainability risks, and how to ensure our corporate strategy aligns with a decarbonising economy. We have to do our part to limit global warming to 1.5°C.”
LEGAL / RISK / COMPLIANCE OFFICER
“As corporate sustainability issues are moving from being voluntary to regulatory, my team needs to understand the detail of the CSRD’s reporting obligations. We are working with risk management systems to understand our ESG obligations and track the implementation and monitoring of our procedures to control those risks and potential impacts.”
CHIEF INFORMATION/ CHIEF TECHNOLOGY OFFICER
"My company is a global player with assets on all continents and operations in over 100 countries. We are challenged to find a single approach to our data collection for CSRD. Considering the size of our operations, monitoring and reporting the data will be our ongoing challenge. We need to develop a strategy, and possibly find software solutions, which will make data capture, storage, and reporting in accordance with CSRD easier."
Bureau Veritas also offers an introductory one-day training course on sustainability reporting for CSRD, for more information see below:
Training: INTRODUCTION TO SUSTAINABILITY REPORTING (CSRD)
- The aim of this training is to provide attendees with the latest information on how to report company sustainability performance.
- Understand the basics of sustainability reporting, the benefits and why you need to be ready to do it.
- Become aware of how your company will be impacted by sustainability reporting requirements.
- Prepare your company to be able to report on its sustainability.
- Get a general idea of the type of information you need to create your report and how to capture and aggregate it.