Understanding the Corporate Sustainability Reporting Directive (CSRD)
The Corporate Sustainability Reporting Directive (CSRD) represents a significant advancement in sustainability reporting for businesses operating within the European Union. Building upon the foundation established by the Non-Financial Reporting Directive (NFRD), the CSRD introduces expanded reporting requirements on Environmental, Social, and Governance (ESG) matters, effective from January 5, 2023. This directive will gradually replace the NFRD, with the new regulations kicking in from 2024 onward.
Key Features of the CSRD
- Expanded Scope: CSRD applies to a broader range of companies, including large corporations and listed small and medium-sized enterprises (SMEs). Additionally, non-EU companies generating over EUR 150 million on the EU market are also required to comply.
- Double Materiality Concept: Companies must report not only on how environmental changes impact their business but also on the effects their operations have on the environment, including social and governance aspects.
- Future-Oriented Reporting: The directive mandates reporting on sustainability goals, adverse effects, and intangible resources, ensuring businesses consider long-term impacts.
- European Sustainable Reporting Standards (ESRS): While the CSRD outlines the requirements, the ESRS details the content of disclosure obligations, emphasizing pollution of air, water, soil, and substances of concern.
The CSRD emphasizes the importance of detailed hazardous substance reporting, specifically the reporting on Pollution (ESRS-E2):
- Air, Water, and Soil Pollution ([E2-4]): Companies must provide measurable data on emissions and microplastic usage.
- Substances of Concern (SoC) and Substances of Very High Concern (SVHC) ([E2-5]): Requires thorough reporting on hazardous substances in line with regulatory standards.
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