Navigating the CRSD Directive
The Corporate Sustainability Reporting Directive (CSRD), also formerly known as the Non-Financial Disclosure Directive, is a new EU law that requires companies to report on the impact of their activities on the environment and society. It aims to improve and establish a consistent standard for companies reporting on sustainability in the EU, including aspects such as climate change, diversity and responsible management.
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The CSRD seeks to promote significant corporate transparency and accountability in sustainability, therefore, promoting a more sustainable and fairer economy. It is essential that organizations prepare in advance for these regulations and minimize any potential negative impact by implementing comprehensive monitoring, data collection and reporting strategies.-
It's important for companies to pre-empt these challenges and begin to plan for the future. This includes analysis of the relevant CSRD areas, establishing a data collection system in line with regulations and identifying reporting processes. Staff training and education in this matter will be critical to ensure compliance with this directive.-
The application of the CSRD involves significant changes in the way the data is managed and reported.-
It is essential that teams are adequately supported so that they are not overwhelmed and can meet the new challenges posed by this directive ESG in Business.-
The development and implementation of environmental, social and responsible management (ESG) aspects in the business agenda can provide a significant competitive advantage for those companies that are not yet required to report. Businesses can comply with regulations, attract funding, and meet stakeholder preferences by implementing sustainable practices, reducing costs, and enhancing their reputation through techniques like Global Reporting Initiative (GRI) and Sustainable Development Goals (SDGs).-
The CSRD is more comprehensive than the Non-Financial Reporting Directive (NFRD), with stricter standards and a wider scope to promote transparency and a greener economy. Who must comply with the CSRD?- Public Interest Entities (PIEs) in the EU with over 500 employees and currently covered by the NFRD will have to follow the CSRD requirements beginning from the fiscal year 2025 (on FY2024 data).
- For PIEs with less than 500 employees, the directive will become applicable in the fiscal year 2026 (on FY2025 data).
- Any company operating within the EU that meets at least two of the following thresholds: more than 250 employees, a turnover of €40 million or total assets amounting to €20 million will have to comply by the fiscal year 2026 (on FY2025 data).
- EU-listed small and medium-sized enterprises (SMEs) that meet at least two of the following thresholds: having 50 to 250 employees, a turnover between €8 million and €40 million or total assets ranging from €4 million to €20 million will be included from the fiscal year 2027 (on FY2026 data).
- Furthermore, non-European companies generating a net turnover of €150 million in the EU and having at least one subsidiary that falls within the CSRD’s scope or an EU branch with a turnover of €40 million will need to adhere to the directive by the fiscal year 2029 (on FY2028 data).