CSRD Simplified | Why, What and How of the CSRD?

Overview

The CSRD is an integral part of the EU's Sustainable Finance Action Plan and the European Green Deal. It aims to elevate the standard of corporate sustainability reporting across the European Union.

What is the Corporate Sustainability Reporting Directive?

Adopted by the European Union, the CSRD (EU) 2022/2464 sets a clear objective for enhancing the quality, reliability, and comparability of companies’ sustainability information, targeting over 50,000 companies.

CSRD’s Reporting Requirements

From the financial year 2024 onwards, the CSRD requires the disclosure of comprehensive Environmental, Social, and Governance (ESG) information in line with the European Sustainability Reporting Standards (ESRS).

Importance of CSRD for Businesses

The CSRD underscores the importance of integrating sustainability as a strategic element in business models. Its proper implementation can help companies to better understand and communicate their sustainability impacts and progress.

Impact on Stakeholders

The directive facilitates easier comparison of climate risks and other relevant sustainability aspects among companies, aiding investors, customers, and the public in making informed decisions based on transparent and consistent data.

Combating Greenwashing

The CSRD, along with the Green Claims Directive (GCD), was developed in response to widespread greenwashing in corporate sustainability claims, aiming to enforce more authentic and verifiable sustainability reporting.

Double Materiality Assessment

The CSRD introduces the double materiality assessment, which evaluates both the impacts on people and the environment, as well as sustainability issues that financially affect the company.

Implementation Challenges and Opportunities

EU Member States have a time frame of 18 months to integrate the CSRD into national legislation. This presents both challenges and opportunities for businesses to align with new standards, potentially enhancing their brand and consumer trust.

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