CSRD (Corporate Sustainability Reporting Directive)
From imde.io
The Corporate Sustainability Reporting Directive (CSRD) is a European directive aimed at enhancing the sustainability reporting of companies, making it more consistent, comparable, and reliable. The CSRD succeeds the Non-Financial Reporting Directive (NFRD) and significantly expands the reporting requirements.
Objectives of CSRD
- Enhance Transparency: Improve the transparency of sustainability information, making it easier for investors and other stakeholders to assess companies on their sustainability performance.
- Standardize Reporting: Ensure a standardized framework for sustainability reporting, allowing companies and stakeholders to compare sustainability information more easily.
- Promote Sustainable Development: Encourage companies to take greater responsibility for their environmental and societal impact
Key Features of CSRD
- Expanded Reporting Requirements: Companies are required to provide detailed reports on how sustainability is integrated into their strategy and business model. Includes information on environmental matters, social affairs, employee concerns, respect for human rights, and anti-corruption and bribery matters.
- Scope of Application: Initially applies to large companies and public-interest entities, with plans to expand the scope to include smaller companies over time. Covers EU companies as well as non-EU companies with significant operations or market presence in the EU.
- Audit Requirement: Reports generated under CSRD will need to be audited for accuracy and compliance, ensuring the reliability of the disclosed information.
- Digital Accessibility: Requires that the reported information be available in a digital format, enhancing accessibility and usability of the data.
- Alignment with International Standards: CSRD is designed to align with and contribute to global sustainability reporting standards, facilitating international comparability and understanding.
Implications for Companies:
- Increased Reporting Burden: Companies will need to invest in systems and processes to comply with the expanded reporting requirements.
- Strategic Alignment: Companies may need to realign their strategies and operations to address the sustainability matters covered by the CSRD.
- Stakeholder Engagement: Enhanced transparency and reporting may lead to increased scrutiny by investors, customers, and other stakeholders. By providing a clear structure and standardized approach to sustainability reporting, CSRD aims to contribute to a more sustainable and transparent corporate sector in Europe and beyond.
