What is the CSRD and how will this new directive impact your business?
The CSRD (Corporate Sustainability Reporting Directive) is a European directive that introduces a new tool for non-financial reporting.
Its goals:
- Greater transparency from companies regarding environmental and social sustainability
- Putting an end to greenwashing
- Requiring companies to disclose their impact and the actions they have taken
- Creating standardized, clear, and measurable non-financial reporting
In France, the CSRD replaces the DPEF (Non-Financial Performance Statement), which failed to meet the European Union's requirements. DPEF data does not allow for the comparison of non-financial results between companies in the same sector. Therefore, it is necessary to create a reporting tool with common standards and to expand the scope of non-financial information to be disclosed. This is what the CSRD offers.
The CSRD is a standardized non-financial reporting tool that requires companies to disclose their environmental and social impact. This reporting makes it possible to compare the environmental and social impact of companies within the same industry.
Large companies subject to the CSRD must meet 2 out of the 3 following criteria: criteria:
- More than 250 employees
- A turnover of more than 40 million euros
- A total balance sheet of more than 20 million euros
Also affected are:
- SMEs listed on the European market (excluding micro-enterprises)
- Non-European companies if they have:
- A subsidiary or branch operating within the European Union
- A turnover of more than 150 million euros
The ESRS, or European Sustainability Reporting Standards, are 12 standardized norms that companies will use under the CSRD to report their non-financial data. The ESRS ensure that corporate sustainability data complies with the CSRD and allow for the comparison of CSR performance across different business sectors.
These standards were adopted by the European Commission in July 2023.
The 12 ESRS:
Cross-cutting standards:
ESRS 1: General requirements
ESRS 2: General disclosures
Environmental standards:
ESRS E1: Climate change
ESRS E2: Pollution
ESRS E3: Water and marine resources
ESRS E4: Biodiversity and ecosystems
ESRS E5: Resource use and circular economy
Social standards:
ESRS S1: Own workforce
ESRS S2: Workers in the value chain
ESRS S3: Affected communities
ESRS S4: Consumers and end-users
Governance standards:
ESRS G1: Business conduct
Example:
For the ESRS E2 (Pollution) standard, there are 6 sub-standards:
ESRS E2-1: Pollution-related policies (5 disclosure requirements)
ESRS E2-2: Pollution-related actions and resources (6 Requirements)
ESRS E2-3: Pollution-related targets (6 Disclosure requirements)
ESRS E2-4: Pollution of air, water, and soil (7 Disclosure requirements)
ESRS E2-5: Substances of concern and substances of very high concern (8 Disclosure requirements)
ESRS E2-6: Potential financial effects from pollution-related impacts, risks, and opportunities
Taking a closer look, for example at ESRS E2-4 (Pollution of air, water, and soil), we can see the disclosure requirements the company must meet.
Here, the company must report the pollutants generated or used during production processes (or those purchased and leaving its facilities as emissions, products, or parts of products or services). This information is intended to provide insight into the emissions the company releases into the air, water, and soil through its operations.
The information to be provided for the reporting period is as follows:
(a) air pollutant emissions generated by the company;
(b) water emissions generated by the company;
(c) inorganic pollutant emissions generated by the company;
(d) ozone-depleting substance emissions generated by the company;
(e) microplastics produced or used by the company.
The company must provide context for this information by describing:
(a) changes over time
(b) measurement methods
(c) the data collection process for accounting and reporting pollution, including the types of data required and the sources of information.
The CSRD will affect over 50,000 companies.
The CSRD influences business competitiveness:
Common standards will make it easier to compare the impact of companies within the same sector, meaning businesses will need to achieve results that hold up against their industry peers. Consequently, the CSRD can impact a company's competitiveness.
The CSRD enables greater transparency in non-financial reporting:
Implementing more comprehensive and rigorous non-financial reporting regarding a company's environmental impact fosters greater transparency. The independent audit required by the CSRD demands more rigor and honesty from companies, ensuring the information shared is more reliable.
The CSRD introduces the principle of double materiality:
Companies must provide data that accounts for both their environmental impact in relation to sustainability issues and the consequences of those issues on the company itself.
Example: Double materiality assesses how a company contributes to water pollution through the use of chemicals AND the impact of that water pollution on the company itself.
Our in-depth knowledge of the CSRD directive and our experience in improving corporate non-financial strategies have allowed us to develop an effective support program for your business. We base our method on a SaaS tool to streamline the collection and consolidation of your indicators.
Your company's sustainable performance
