Everything that encompasses the concept of sustainability has been going strong, and companies must face the growing demand to be transparent in their environmental and social practices and performance. In this context, the CSRD, or Corporate Sustainability Reporting Directive, emerges as a fundamental instrument to promote the responsibility and transparency of companies in the European Union (EU).
In this article we will talk about what the CSRD is, its objectives, requirements and how this directive relates to sustainability consulting, highlighting the vital role of companies like Ecoterrae in this area.
The CSRD, or Corporate Sustainability Reporting Directive, is an EU legislative initiative that seeks to increase transparency and consistency in the disclosure of non-financial information by companies.
This directive promotes the integration of ESG criteria in corporate reports, recognizing sustainability as essential in responsible business management.
Goals
The CSRD has several key objectives that reflect the urgency of addressing environmental and social challenges in the business context:
- Promote greater transparency in the disclosure of non-financial information.
- Improve the coherence and comparability of sustainability reports between companies.
- Integrate environmental, social and governance (ESG) risks into business decision-making.
- Facilitate the participation of stakeholders, such as investors, employees and society in general, in the evaluation of the sustainable performance of companies.
Requirements
The CSRD sets out specific requirements for companies that exceed certain thresholds, in terms of size and number of employees, and operate in the EU. Some of the key elements of the requirements include:
- Expanded Report:
- Affected companies must report on ESG aspects, covering environmental, social, labor, human rights, anti-corruption, and diversity on boards of directors.
- External audit:
- The information disclosed in the report must be subject to an external audit, increasing the reliability and credibility of the data presented.
- Breakdown by Country:
- A breakdown by country is required, providing details on business activity and non-financial information in each jurisdiction.
- Prospective Information:
- The directive urges companies to include forward-looking information, providing a long-term view of how they plan to address sustainable challenges.
CSRD and Sustainability Consulting
In this new regulatory framework, companies require a strategic approach to comply with the CSRD and take advantage of the opportunities provided by sustainability.
To do this, they must have the support of a sustainability consulting, which is presented as an essential strategic partner for companies seeking to comply with the CSRD effectively.
- They provide strategic advice for the transition to sustainable reporting, guiding companies in improvements and objectives aligned with the CSRD
- They collaborate in the development of sustainable reports, ensuring that the information presented meets CSRD requirements and aligns with ESG principles.
- External sustainability audit services, providing an objective and reliable evaluation of the data presented in the reports.
- Integration of environmental and social practices into the daily operations of companies, strengthening their position in the market and meeting regulatory requirements.
- I support companies with training programs for employees and managers, increasing awareness of sustainability and CSRD throughout the organization.
- Assists in identifying business and reputation opportunities associated with the effective implementation of sustainable practices.
The importance of CSRD
The CSRD represents a significant change in the way companies report on their sustainable performance, and our sustainability consultancy Ecoterrae is uniquely positioned to guide companies on this journey.
Through a comprehensive approach, the consultancy not only helps meet regulatory requirements, but also drives long-term value creation through sustainable and transparent practices.
Ultimately, CSRD and sustainability consulting are converging to transform the way companies operate, prioritizing sustainability and responsibility as fundamental pillars of their future success.
NFRD vs CSRD What differences do they imply for reporting?
The new CSRD Directive represents a revision of the Non-Financial Information Disclosure Directive (NFRD), addressing some identified deficiencies in the reporting of non-financial information and therefore significantly expanding the scope of the NFRD.
This update suggests the growing importance of this information from being simply referred to as “non-financial” to encompassing sustainability aspects that may have a financial impact.
What are the main differences in terms of reporting? At first glance, the complexity and rigor of the requirements established by the CSRD increase considerably compared to the NFRD.
The amount of information to report is greater, as is the level of detail in areas such as social aspects or affected communities, among others.
In addition, the CSRD uses a double materiality process to identify both the ESG (environmental, social and governance) risks and opportunities of the business and the impact of organizations on society and the environment (dual materiality).
On the other hand, a limited level of assurance on the reported information is initially introduced, an aspect that was not previously required under the NFRD.
