Understanding CSRD: The Corporate Sustainability Reporting Directive
What is CSRD and why does it matter?
The CSRD (Corporate Sustainability Reporting Directive) is an extension of the Non-Financial Reporting Directive (NFRD) and includes significant changes to promote transparency, comparability, and reliability.
CSRD as a whole includes a broader scope of reporting requirements that require companies to disclose more detailed and comprehensive information about their sustainability performance. It covers a wider range of ESG (Environmental, Social, and Governance) topics, including climate change, biodiversity, social aspects, and governance. This increased transparency enables stakeholders to assess a company's environmental and social impact more effectively.
The CSRD introduces digital reporting, leveraging technology to facilitate standardized and structured reporting. It aims to simplify reporting processes, enhance data quality, and enable data comparability across different companies and sectors. Additionally, the directive emphasizes the importance of external assurance, ensuring the reliability and accuracy of reported information.
The CSRD recognizes the growing demand from investors and stakeholders for ESG information to make informed decisions. By mandating comprehensive and comparable sustainability reporting, the directive helps investors assess companies' long-term sustainability and resilience, enabling better-informed investment decisions aligned with ESG goals.
Furthermore, the CSRD aligns with the EU's broader sustainability agenda, promoting sustainable finance and supporting the transition to a greener and more sustainable economy. By providing reliable sustainability information, the directive contributes to the development of sustainable financial markets and facilitates the allocation of capital to companies with strong ESG performance.
In summary, the CSRD is a significant regulatory development that enhances corporate sustainability reporting requirements within the EU. It promotes transparency, comparability, and reliability in ESG reporting, benefiting stakeholders, investors, and the overall sustainable finance landscape.
Who needs to adhere to CSRD?
CSRD (Corporate Sustainability Reporting Directive) applies to companies that meet the following criteria:
Over 250 Employees: Companies with a workforce of 250 or more employees are subject to the CSRD reporting obligations.
More than €40 Million in Annual Revenue: Companies that generate annual revenue exceeding €40 million fall under the scope of the CSRD.
More than €20 million in Total Assets: Companies with total assets amounting to €20 million or more are required to comply with the CSRD requirements.
Publicly-Listed Equities: Companies that have publicly-listed equities and meet at least one of the following conditions must adhere to the CSRD:
Have more than 10 employees.
Generate revenue exceeding €20 million.
International and Non-EU Companies: International companies that are not based in the EU but meet the following conditions are also subject to the CSRD:
Generate more than €150 million in annual revenue within the EU.
Have at least one subsidiary or branch within the EU that exceeds certain thresholds.
In the event of non-compliance with the CSRD, businesses may be subject to administrative sanctions and various penalties. These penalties include public denunciation, orders to modify conduct, and financial consequences. It's important to note that the specific penalties and the extent of sanctions will be determined by each individual EU member state within their respective jurisdictions.
Just like you, Sustaira is working hard to stay on top of new and upcoming regulations. Keep in mind that while we are reporting to the best of our ability, you will want to check in with your local policies and regulating bodies to understand if you are required to report under CSRD. The exact applicability and scope of the CSRD may vary depending on the specific regulations adopted by each EU member state and should be reviewed according to your local regulations and guidelines.
When will CSRD be Implemented?
In short, organizations need to start right now in order to be compliant with CSRD requirements. Early this year CSRD took effect for eligible companies and will require reporting for their corporate fiscal year 2024, which in laymen’s terms means that organizations have this year to figure out how to track ESG & Sustainability data and implement the necessary capabilities and infrastructure to enable proper reporting for 2024.
Beginning in 2024 starting with larger businesses, the qualifying large businesses must disclose a CSRD report based on the initial set of sustainability reporting standards for their 2024 financial year. All EU Member States must comply with CSRD by July 6, 2024.
In 2025, this trend will continue. Companies will repeat the ESG reporting cycle for the fiscal year 2025.
In 2026, EU small and medium enterprises (SMEs) will begin their CSRD reporting using a streamlined reporting system designed for small businesses.
Finally, in 2028 CSRD will expand to international companies with over €150 million in annual revenue in the EU, and with at least one subsidiary or branch in the EU exceeding specific thresholds, will be required to report under the ESRS (CSRD) at a consolidated group level, including non-EU activity.
When should you get started?
The time to start is now! With CSRD in full swing and reporting requirements beginning next year, having a clear understanding of your baselines, goals, and reporting practices is a must-have, and that starts today. For many organizations, gathering, tracking, and reporting ESG and Sustainability data comes with significant challenges that will take time to address. These challenges include but are not limited to:
Sustainability/ESG data is siloed.
No easy and efficient way to aggregate and manage the data
Too many manual processes and Excel spreadsheets: error-prone
Lack of a centralized data hub and a single source of truth
Inefficient reporting.
Difficult to demonstrate the impact
Once a year reporting versus real-time and ongoing insights
Lack of transparency in the supply chain and product lifecycle
Hard to turn Insights into actions.
No real way to track progress and results based on set goals
Unable to engage employees in sustainability
Hard to keep up with constantly changing requirements
In order to be compliant with CSRD and ensure that your organization won’t face negative
repercussions, it’s important to get your house in order now, so that reporting can be as
smooth as possible later.
Ready to get started?
Here’s how Sustaira can help!
How Sustaira can help you prepare for CSRD
An overview:
Sustaira’s Sustainability and ESG Software Platform offers a growing portfolio of customizable applications that help organizations tackle the common challenges in Sustainability and ESG. Many of these challenges you will face while preparing for CSRD. Sustaira applications go beyond the "E" of ESG and include social and governance applications as well. These applications expand to include risk and compliance, Environmental Health and Safety, and more. Because Sustainability and ESG are broad topics, users need a more broad platform and approach which Sustaira offers.
Sustaira understands that Sustainability and ESG is not just a single disclosure or yearly report, but instead, it’s a journey that we outline through the Sustaira Sustainability Circle seen above. Sustainability and ESG start with goal setting, data aggregation, and awareness, taking action, seeing the results and rewards of those actions, and then of course the ever-important reporting and disclosures.
Sustaira is the only software and solutions provider that implements a low-code, building block approach to ESG and sustainability. Using this low-code approach, Sustaira has pre-built application templates or building blocks within and between all domains of goals, actions, etc. If you look at any of the categories on the Sustaira Sustainability circle you will see a solution that pertains to that domain. All Sustaira applications or solutions are meant to be a starting point that you then expand on, customize, and add to at any time. This allows you to implement a solution sooner, with the flexibility of customization to ensure that whatever you do adopt, completely fits your needs now, and has the option to grow and change with you as those needs or requirements change. With Sustaira, you can be sure that you will be prepared for the CSRD requirements of 2024, and ensure you can stay compliant should the requirements shift moving forward.
Finally, Sustaira has an open and collaborative partnership approach in its go-to-market and implementation approach. With a strong partnership with global Fortune 500 organization, Siemens and their leading low code platform, Mendix, Sustaira offers a building block approach that translates into highly flexible customization options, seamless integration capabilities, and overall agility to allow organizations to adjust to any future stakeholders requirements or policy changes that are expected. The organization is also strategically partnering with global and regional ESG and Sustainability Consultancy firms and technology providers and implementation partners. Sustaira’s local presence across the globe directly and through partners, enables an intimate understanding of the country’s needs, resulting in tailored Sustainability and ESG enterprise solutions.
Sustaira Solutions that can help:
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Sustainabiltiy and ESG Goals & KPI Tracker
The first step in most journeys is planning. You will need to define your priorities, set goals, and outline which KPIs are going to best represent if you’ve been successful in your efforts, or if something needs to be adjusted. Managing your goals is made easier with Sustaira.
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Carbon and Emissions Accounting Scope 1, 2 and 3
The Carbon Accounting Application is used by organizations to get an overview of their Scope 1, 2 and 3 emissions. Allowing organizations to make informed decisions around their sustainability efforts, not only internally, but throughout their supply chain.
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Sustaira's ESG Disclosures and Reporting Template
The ESG Disclosures and Reporting application is able to walk users through their disclosure process using a prebuilt disclosure structure that can be applied to frameworks such as CSRD, SEC, GRI, CPD, SASB and more. This app can pull info from Carbon Accounting to auto-populate your disclosures.
Need help exploring software and solutions providers?
Download the Evaluation Criteria Framework for ESG & Sustainability Software Now!
This framework is an easy to use checklist that organizations can reference as to do comparisons. This gives you a space to walk through all of the ESG and Sustainability Criteria that Sustaira has aggregated for organizations to consider when looking for a sustainability and ESG solution. Compare between multiple vendors and find the best fit for you!
Keep me up to date!
We are committed to staying up to date on new CSRD updates or requirements. Join our waitlist to get updates regarding CSRD as well as helpful resources!
What People Are Saying about Sustaira
“Sustaira makes it easier to aggregate and report sustainability and ESG data, while also making it actionable, insightful and rewarding.”
— Suzanne Kopcha, Siemens Digital Industries Software Vice President of Strategy
“Sellen needed a Sustainability Platform that would enable us to track metrics for our current reporting commitments and provide additional features as our sustainability journey continues. The platform and custom application that we co-created with Sustaira enabled us to expand the breadth of our carbon accounting efforts and integrate them with our Contractor’s Commitment reporting”
— Angi Rivera, Sellen’s Director of Sustainability
“The flexibility of Sustaira’s platform provides a robust solution and centralizes sustainability reporting challenges for companies of any size. In partnering with Sustaira’s development team, we have created an application to accelerate a data-driven future”
— Jenny Moshea, Sellen’s Chief Information Officer
“Sustaira is great, and very user-friendly. It’s a platform any organization can utilize to improve stewardship and sustainable practices in terms of: Accounting, metric tracking, action items tracking, footprint calculators and educational resources. We see great value in our Goals and KPI Tracker Application. It offers a lot of direction and capability that helps us move the needle in sustainability.”
— - Tyler Kanczuzewski, Sustainability Manager at Logistick
More ways to adopt Sustaira
Sustaira has created building-block applications that address the key challenges in Sustainability and ESG, but unlike other applications, these have the flexibility and customization options to fit any of your unique needs. Select the applicable apps from our menu and see which applications you would want to start ith. We also develop completely custom apps. All your apps are then centralized in the Sustaira launchpad. Sustaira makes it easy for you to get started today!
Sources:
KPMG: "The Corporate Sustainability Reporting Directive (CSRD)" [Link: https://kpmg.com/nl/en/home/topics/environmental-social-governance/corporate-sustainability-reporting-directive.html#:~:text=The%20Corporate%20Sustainability%20Reporting%20Directive%20(CSRD)%20requires%20companies%20to%20report,(assurance)%20of%20reported%20information.]
Normative: "CSRD Explained" [Link: https://normative.io/insight/csrd-explained/#:~:text=The%20Corporate%20Sustainability%20Reporting%20Directive,their%20climate%20and%20environmental%20impact.]
Brightest: "CSRD: Corporate Sustainability Reporting Directive" [Link: https://www.brightest.io/csrd-corporate-sustainability-reporting-directive]
Brightest. (n.d.). Corporate Sustainability Reporting Directive (CSRD). Retrieved from https://www.brightest.io/csrd-corporate-sustainability-reporting-directive