Corporate Sustainability Reporting Directive (CSRD) explained

A new financial requirement

1. Enhancing Sustainability Reporting in the EU to Prevent Environmental Catastrophes

The Corporate Sustainability Reporting Directive (CSRD) requires companies in the European Union to disclose a standardized set of crucial sustainability data based on the EU Taxonomy, aiming to improve sustainability reporting and prevent environmental catastrophes.

1.CSRD Requests Public Information on Risks and Impacts

CSRD requests public information about the sustainability risks faced by companies, as well as their current impact on people and planet.These requirements are based on the ESRS Standards, which cover topics like climate change, energy consumption, and governance with both general and sector-specific guidelines.

2.Requirements for Sustainability Reporting

To answer those criteria, companies will have to provide data on GHG emissions (based on the GHG Protocol), energy efficiency, environmental footprint results (Life Cycle Assessment), social responsibility (e.g. working conditions, human rights, equal opportunities), and all other sustainability/ESG- related issues affecting the company's operational performance. The methodology in which that information is obtained must also be reported and audited though an external insuring figure.

3.European Group Manages Financial Reporting with Fiscal Impact

The processes are managed by the European Financial Reporting Advisory Group and will be fiscally relevant through fiscal sanctions and annual inspections that can have a greater impact on the business turnover.

Value chain coordination

1. Transparency in your supply chain

In order to comply with those requirements, businesses will have to increase their emission reduction efforts all along their value chain.

This can be done by sharing information on Scope 1, 2 and 3 emissions while setting targets that are shared and coordinated within the value chain.

2. Deadlines and Criteria

The report will need to be included in the annual report, with a mandatory assurance and in the electronic format XHTML. It will include te details of the insurer, which verifies the information provided, preventing greenwashing.

  - 1 January 2024: All businesses falling under the current NFRD scope will have to submit their first reporting referring to the Fiscal Year 2023.
  - 1 January 2025: Large undertakings that currently are not subject to the NFRD;
   - 1 January 2026: Major SMEs and other smaller businesses with a turnover of min. 40 millions €, a minimum of 20 millions € in assets and more than 250 staff members