If you’re a sustainability manager or professional, you’ll know how important it is to keep on top of new legislation as it comes out. To stay compliant, you’ll need to do some research to understand which reporting requirements apply to you, and how to gather the right data to meet those requirements.
In January 2024, the European Union will bring in the EU
Corporate Sustainability Reporting Directive
(CSRD). This will apply to European companies, as well as large international companies with subsidiaries in Europe.So how will this affect your business? What do you need to do to prepare?
Read on to learn the key publicly-available facts about this directive and how it may affect your company.
What is the CSRD?
The Corporate Sustainability Reporting Directive is a new piece of European Union legislation, which is part of a broader package of legislation known as the
European Green Deal
. It is set to make the EU the front-runner in global sustainability reporting standards.All large companies in the EU will need to disclose data on the environmental impact of their undertakings and activities, as well as any sustainability risks they are exposed to. These disclosures are based on common criteria in line with the EU’s climate goals.
The aim is to end greenwashing, strengthen the EU’s social market economy, and set a precedent for global sustainability reporting standards.
How do I know if the CSRD applies to my business?
While 11,700 companies are covered by the current EU rules, around 50,000 will be covered by the new rules.
The current EU sustainability legislation is called the
Non-Financial Reporting Directive (NFRD)
. This directive was adopted by the European Union in 2014. It applies to companies with more than 500 employees operating within the EU, and requires these organizations to report on their sustainability and climate-related policies, risks, and outcomes.The CSRD is meant to address shortcomings in the NFRD, which is “
perceived as largely insufficient and unreliable
”, according to the European Parliament.Is my company covered by the NFRD, the CSRD, or both?
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How will these changes affect my business?
You’ll need to keep in mind that:
- The scope of the CSRD is broader than that of the NFRD
- Information must be included as part of your company’s Management Report, and must be delivered in a different format
- Information will be included in a digital open access database for greater transparency
- You’ll need to provide information that’s qualitative and quantitative, forward-looking and retrospective, and based in the short, medium, and long-term
- Your reporting must go through a mandatory assurance audit from a third-party service provider to make sure the information is accurate and reliable
- There may be an initial increase in costs, although the legislation should lower costs over the medium to long-term, according to the European Commission
What information needs to be provided?
The CSRD has more stringent reporting obligations than the NFRD. Your company will need to disclose information on:
- Relevant sustainability matters that have impact materiality (a positive or negative impact on people and the planet over the short, medium, and long term), financial materiality (generate risks or opportunities that could affect your organization’s financial position), or double materiality (both)
- Your business model and strategy, and its relation to sustainability risks and opportunities
- Intellectual, human, social, and relationship capital
- Policies, processes, and incentive schemes
- Progress towards meeting targets
- Adverse impacts and actions taken to remedy them
- Risks and their management
- Roles of the management and supervisory bodies and stakeholders, and their relevant expertise
What are the benefits of collecting and reporting this information?
CSRD reporting is legally required, so ensuring compliance will help your company avoid sanctions. Companies who fail to comply may incur a fine or other penalties.
But beyond just avoiding penalties, complying with the CSRD also offers opportunities. Offering transparency helps build trust with investors and customers. It can help you improve your company’s brand image, prevent greenwashing, and demonstrate your commitment to sustainability in a tangible way.
Moreover, you can improve your operational efficiencies while taking action against climate change, potentially cutting costs as you meet your company’s corporate social responsibility (CSR) goals.
Timeline and next steps
*subject to change
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You should now have a better idea of what the Corporate Sustainability Reporting Directive is and how it may affect your business. While this article can serve as an informal guide, it’s important to stay up to date on new regulations, so you can make sure you’re in compliance.Regardless of whether or not this legislation applies to you, making your company more sustainable is a smart business strategy. By investing in solutions which give you access to data on carbon emissions, you can create plans to lower these emissions over time. Ultimately, you can reduce your company’s environmental impact through measures such as carbon offsetting to reach climate neutrality.
How TravelPerk can help you reduce carbon emissions from business travel
TravelPerk’s
GreenPerk API
can help you get on track with your sustainability goals and reduce your carbon footprint. Its data transparency and carbon offsetting solutions can transform the way your business manages travel emissions.Did you know that business air travel has been reported
to contribute up to 15-20% of global travel emissions? Fortunately, there are ways to reduce the environmental impact of your company’s business travel program, so you can continue to enjoy all the key benefits of business travel while protecting the environment.You can use GreenPerk to:- Offset 100% of your business travel CO2 emissions at just 1% of the total travel cost
- Contribute to VERRA-certifiedprojects that help conserve biodiversity and protect ecosystems
- Get complete transparency over your data and progress
GreenPerk has a fixed price of €10 per metric ton of CO2, and you’ll be charged for each trip you take. You can monitor your emissions on the CO2 reporting page within the TravelPerk platform, and can offset emissions from rail travel, air travel, car travel, hotel stays, etc. Your carbon footprint is calculated using TravelPerk’s in-house tool
GreenPerk API
, and all calculations comply with the standards set by the GHG Protocol for Corporate Accounting
.
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