CSRD

What is the CSRD?

The Corporate Sustainability Reporting Directive (CSRD) is an important European Union directive that requires companies to prepare detailed reports on their sustainability practices. It expands the Non-Financial Reporting Directive (NFRD) and strengthens reporting requirements on environmental, social and governance (ESG) criteria. The CSRD aims to create more transparency regarding the impact of companies on society and the environment, thereby enabling investors and other stakeholders to make informed decisions.

Under the CSRD, companies must not only disclose their environmental, social and governance impacts, but also explain how these factors are integrated into their corporate strategy. The aim is to promote a more sustainable economy by ensuring that companies report on their sustainable practices in a consistent and comprehensive manner worldwide.

The development of the CSRD and its current status

The CSRD is part of the European Green Deal, which aims to make Europe climate neutral by 2050. The introduction of the CSRD was driven by the growing importance of sustainability and the need to make the capital market more transparent and sustainable. It replaces the Non-Financial Reporting Directive (NFRD), which only required a limited number of companies to report on sustainability.

From 2024, the CSRD will affect a much larger number of companies. It will cover large companies and listed companies in particular, but smaller companies that exceed certain thresholds will also be required to report. From 2025, companies with more than 250 employees or more than £50 million in turnover will also have to report on their sustainability performance.

Why the CSRD is important for companies

The CSRD is not just a regulatory obligation, but also offers companies the opportunity to position themselves as responsible players in the market. Sustainability reporting is no longer just a legal requirement, but also a competitive advantage. Companies that disclose their ESG data transparently and comprehensively build trust among investors, customers and other stakeholders. This strengthens their market position and contributes to long-term stability.

In addition, the CSRD enables companies to improve their sustainability strategies and manage risks in a targeted manner. In view of increasing regulatory requirements and growing demand for sustainable investments, compliance with the CSRD will also become an important factor for access to capital sources and sustainable investments.

CSRD: Requirements and key points

The CSRD imposes new requirements on companies that go beyond the previous regulations. It obliges companies to provide detailed reports on their environmental impact, social initiatives and governance structures. Essentially, companies must disclose information on the following aspects in their sustainability report:

1. Environmental aspects: Companies must provide detailed information on how their activities contribute to combating climate change and what measures are being taken to adapt to the effects of climate change.
2. Social impacts: The CSRD requires disclosure of measures in the areas of working conditions, equality and human rights.
3. Governance: Companies must report on how their corporate governance and ethical practices are aligned with sustainability goals.

In addition, companies are expected to comply with the European Sustainability Reporting Standards (ESRS). These standards ensure that sustainability reports are consistent and comparable.

Approach to meeting CSRD reporting requirements

To meet the requirements of the CSRD, companies must implement a structured process for sustainability reporting. First, they must determine the materiality of their ESG data to ensure that only relevant information is included in the report. This is followed by data collection on the material sustainability topics required by the CSRD and the EU taxonomy.

Companies must then develop a reporting strategy and set clear targets for improving their sustainability performance. Close internal communication between different departments is necessary to ensure accurate data collection and processing.

Finally, companies must prepare the CSRD report, which summarises all relevant ESG data and complies with legal requirements. The report must be reviewed regularly to ensure that it meets standards and legal requirements.

The economic impact of the CSRD

The CSRD not only has regulatory implications, but also influences the financial markets. Investors and financial institutions are increasingly relying on sustainability criteria to make investment decisions. Companies that implement the CSRD and disclose their ESG data have an advantage in the capital market. They can position themselves as attractive targets for sustainable investments and benefit from more favourable financing terms.

At the same time, the CSRD is expected to lead to better resource use and a stronger market position for companies in the long term. They will be able to not only improve their sustainability performance, but also strengthen their reputationand remain successful in the long term.

Conclusion

The CSRD represents an important step towards a more sustainable and transparent economy. Companies that implement the requirements early on will not only be able to counter regulatory risks, but also position themselves as market leaders in the field of sustainability. The CSRD offers companies the opportunity to secure long-term competitive advantages through improved transparency and sustainability strategies.