An introductory guide to the Corporate Sustainability Reporting Directive (CSRD)
Published: 29 Aug 2023 · Last updated: 07 Jun 2024
The Corporate Sustainability Reporting Directive (CSRD) is a new ESG reporting framework set to come into force on 1st January 2024 for organisations and business entities operating in the European Economic Area (EAA).
From 2024 onwards, the European Union (EU) will be ramping up efforts towards sustainability reporting through, and businesses falling into the remit of the new directive will need to improve their reporting processes in order to comply with more detailed reporting requirements.
This blog provides an explanation into CSRD eligibility criteria, timelines for implementation, and some of the new requirements such as double materiality assessments. For those looking to take the first step towards CSRD compliance, you can download our whitepaper for more detail: here.
Table of Contents
- What is CSRD?
- CSRD: Double Materiality
- CSRD eligibility and compliance requirements
- Factors to consider for your CSRD compliance
- What is the timeline for CSRD implementation?
- How can KEY ESG help?
What is CSRD?
The demand for corporate transparency and accountability in sustainability practices is at an all-time high. The CSRD is highly relevant today as it addresses this growing demand.
Technically, CSRD is an EU regulation that requires large and listed companies, along with those having a substantial presence in the EU, to report on a comprehensive set of Environmental, Social, and Governance (ESG) metrics.
In simpler terms, CSRD ensures that companies provide detailed reports on how their operations impact the environment and society, as well as environmental risks such as how sustainability, social and environmental issues may affect their performance. A key concept introduced by CSRD is double materiality, which means companies must disclose both the financial impact of sustainability risks and their environmental and social impact. This comprehensive approach promotes a clearer understanding of corporate sustainability efforts.
What is Double Materiality?
One of the unique features of the reporting process under the CSRD is its emphasis on double materiality, which essentially means that companies need to report on two facets of their operations:
- Impact Materiality: the impact of their activities on ESG factors.
- Financial Materiality: how ESG matters affect their operations and their finances.
For example, following a double materiality audit, an infrastructure company might need to report on the health and safety of its staff at a particular site, as well as the risk of flooding of the site to the company’s profitability.
Similarly, a clothing brand might be required to report on employee churn in its factories, as well as the risk of civil or political unrest on its ability to produce clothing items and subsequent financial profitability.
Impact Materiality: How the firm impacts ESG
Environmental: The company uses irrigation on certain cotton farms, relying on local water reserves.
Action Taken: The firm collaborates with local farmers to introduce sustainable farming techniques at the most water-intensive sites, like rainwater harvesting and drip irrigation.
Social: By sourcing materials from certain regions, there's a risk that the company is indirectly supporting unfair wages and poor working conditions.
Action Taken: The company runs third-party audits of their supply chain, ensuring that all suppliers comply with ethical labour practices.
Governance: There might be concerns about the company's oversight of its supply value chain since the company has scaled into new regions rapidly.
Action Taken: A committee is brought together to oversee ethical sourcing, ensuring supply chain practices are reviewed and reported on correctly.
Financial Materiality: How ESG impacts the firm
Environmental: If the local water reserves are depleted due to excessive water use, cotton yields might decrease, leading to increased costs.
Mitigation Strategy: Understanding the impact of climate risk and a potential water shortage to its profitability enables the company to put contingency plans in place to reduce its dependency on the local water reserves.
Social: The brand's reputation could be at risk if customers find out about its potential endorsement of unethical labour practices.
Mitigation Strategy: By adhering to ethical protocols and promoting community engagement initiatives, the firm aligns itself with customer values and removes the financial risk of corporate reputation damage.
Governance: Shareholders might be concerned about the company's potential legal liabilities or sanctions due to unethical sourcing.Mitigation Strategy: A governance committee is appointed to maintain corporate governance policies and proactively resolve issues which may negatively impact the company’s financial performance.
CSRD eligibility criteria and implementation dates
CSRD will primarily affect companies based in the EU. However, non-EU firms with a turnover of above €150 million in the EU will also have to comply. Over 50,000 companies – from SMEs to listed firms – will need to disclose ESG data. This is an increase from around 10,000 companies who were required to report on ESG metrics under the Non-Financial Reporting Directive (NFRD). CSRD is due to be phased in over the next five years, starting with those companies that already report on NFRD in 2024; “large” undertakings following in 2025; with listed companies and certain financial institutions being required to report in 2026:
- Company size and type:
- January 1, 2024: Large listed companies (those with more than 500 employees) will be required to track and collect ESG data under the CSRD directive (reporting year 2025)
- January 1, 2025: Any company meeting the two of the three following criteria be required to track and collect ESG data under the CSRD directive: 250 employees, €50 million in revenues, or €25 million in balance sheet (reporting year 2026)
- January 1, 2026: Effective date for a law that will require most SMEs (10-250 employees) to commence their reporting (reporting year 2027)
- January 1, 2028: Effective date for CSRD compliance from third-country companies (European subsidiaries of non-European companies with a turnover of more than €150 million)
- Sector and activity:
- The directive encompasses a wide range of sectors, including banking and insurance sectors,
- As of a recent review and publication by EFRAG, companies will not have to provide sector-specific reporting for another 2 years.
What is the timeline for CSRD implementation?
The CSRD was introduced in January 2023, and the European Commission released the final European Sustainability Reporting Standards (ESRS) in July 2023.
The diagram below demonstrates the phasing in of CSRD. To speak to an expert about your company’s eligibility or timeline for implementation, please contact us.
CSRD compliance requirements
1. Comprehensive reporting on sustainability matters:
- Environmental: Companies must report on pollution, circular economy (waste reduction and resource recycling), biodiversity, greenhouse gas emissions, and climate change mitigation.
- Social: Reporting on employee matters such as diversity, inclusion, human rights (both in operations and the supply chain), and impacts on local communities.
- Governance: Disclosure of corporate governance practices, including board diversity, anti-corruption, and bribery policies.
2. Adherence to European Sustainability Reporting Standards (ESRS):
- Companies must prepare their reports according to the ESRS, which provides detailed guidelines on what information should be disclosed under each ESG aspect.
3. Digital reporting and accessibility:
- Reports must be prepared in a digital format that aligns with the European Single Electronic Format (ESEF), making sustainability information easily accessible and comparable across the EU.
4. Third-party assurance:
- CSRD mandates that sustainability reports undergo independent third-party assurance to verify the accuracy and reliability of the disclosed information. This aims to enhance trust and reliability in the reported data.
5. Integration into management report:
- Sustainability disclosures must be integrated into the management report of the company, ensuring that ESG considerations are embedded in the core strategic management processes.
6. Regular updates and continuous improvement:
- Companies are required to regularly update their sustainability disclosures and continuously improve their reporting processes in line with evolving standards and stakeholder expectations.
How can KEY ESG help?
The adoption of the CSRD is a major step forward in the EU’s commitment to sustainability. It marks an important milestone in the transition to a more sustainable economy. KEY ESG's software collates all of the new CSRD requirements and breaks it down into simple and actionable steps that facilitate compliance. It sets out the processes required, and it optimises reporting systems.
The software gathers key information to provide clear audit trails, making it easy for third-party assurers to review any relevant data they may require. In ensuring that all data is reported digitally from the outset, companies can ensure that they are getting off on the right foot and upholding the new digital reporting requirements from the start.
If you're unsure where to start with your CSRD reporting, why not book a free demo of our software?
And, as always, feel free to contact our team if you have any questions at all.
What is CSRD?
The demand for corporate transparency and accountability in sustainability practices is at an all-time high. The CSRD is highly relevant today as it addresses this growing demand.
Technically, CSRD is an EU regulation that requires large and listed companies, along with those having a substantial presence in the EU, to report on a comprehensive set of Environmental, Social, and Governance (ESG) metrics.
In simpler terms, CSRD ensures that companies provide detailed reports on how their operations impact the environment and society, as well as environmental risks such as how sustainability, social and environmental issues may affect their performance. A key concept introduced by CSRD is double materiality, which means companies must disclose both the financial impact of sustainability risks and their environmental and social impact. This comprehensive approach promotes a clearer understanding of corporate sustainability efforts.
What is Double Materiality?
One of the unique features of the reporting process under the CSRD is its emphasis on double materiality, which essentially means that companies need to report on two facets of their operations:
- Impact Materiality: the impact of their activities on ESG factors.
- Financial Materiality: how ESG matters affect their operations and their finances.
For example, following a double materiality audit, an infrastructure company might need to report on the health and safety of its staff at a particular site, as well as the risk of flooding of the site to the company’s profitability.
Similarly, a clothing brand might be required to report on employee churn in its factories, as well as the risk of civil or political unrest on its ability to produce clothing items and subsequent financial profitability.
Impact Materiality: How the firm impacts ESG
Environmental: The company uses irrigation on certain cotton farms, relying on local water reserves.
Action Taken: The firm collaborates with local farmers to introduce sustainable farming techniques at the most water-intensive sites, like rainwater harvesting and drip irrigation.
Social: By sourcing materials from certain regions, there's a risk that the company is indirectly supporting unfair wages and poor working conditions.
Action Taken: The company runs third-party audits of their supply chain, ensuring that all suppliers comply with ethical labour practices.
Governance: There might be concerns about the company's oversight of its supply value chain since the company has scaled into new regions rapidly.
Action Taken: A committee is brought together to oversee ethical sourcing, ensuring supply chain practices are reviewed and reported on correctly.
Financial Materiality: How ESG impacts the firm
Environmental: If the local water reserves are depleted due to excessive water use, cotton yields might decrease, leading to increased costs.
Mitigation Strategy: Understanding the impact of climate risk and a potential water shortage to its profitability enables the company to put contingency plans in place to reduce its dependency on the local water reserves.
Social: The brand's reputation could be at risk if customers find out about its potential endorsement of unethical labour practices.
Mitigation Strategy: By adhering to ethical protocols and promoting community engagement initiatives, the firm aligns itself with customer values and removes the financial risk of corporate reputation damage.
Governance: Shareholders might be concerned about the company's potential legal liabilities or sanctions due to unethical sourcing.Mitigation Strategy: A governance committee is appointed to maintain corporate governance policies and proactively resolve issues which may negatively impact the company’s financial performance.
CSRD eligibility criteria
CSRD will primarily affect companies based in the EU. However, non-EU firms with a turnover of above €150 million in the EU will also have to comply. Over 50,000 companies – from SMEs to listed firms – will need to disclose ESG data. This is an increase from around 10,000 companies who were required to report on ESG metrics under the Non-Financial Reporting Directive (NFRD). CSRD is due to be phased in over the next five years, starting with those companies that already report on NFRD in 2024; “large” undertakings following in 2025; with listed companies and certain financial institutions being required to report in 2026:
- Company size and type:
- January 1, 2024: Large listed companies (those with more than 500 employees) will be required to track and collect ESG data under the CSRD directive (reporting year 2025)
- January 1, 2025: Any company meeting the two of the three following criteria be required to track and collect ESG data under the CSRD directive: 250 employees, €50 million in revenues, or €25 million in balance sheet (reporting year 2026)
- January 1, 2026: Effective date for a law that will require most SMEs (10-250 employees) to commence their reporting (reporting year 2027)
- January 1, 2028: Effective date for CSRD compliance from third-country companies (European subsidiaries of non-European companies with a turnover of more than €150 million)
- Sector and activity:
- The directive encompasses a wide range of sectors, including banking and insurance sectors,
- As of a recent review and publication by EFRAG, companies will not have to provide sector-specific reporting for another 2 years.
What is the timeline for CSRD implementation?
The CSRD was introduced in January 2023, and the European Commission released the final European Sustainability Reporting Standards (ESRS) in July 2023.
The diagram below demonstrates the phasing in of CSRD. To speak to an expert about your company’s eligibility or timeline for implementation, please contact us.
CSRD compliance requirements
1. Comprehensive reporting on sustainability matters:
- Environmental: Companies must report on pollution, circular economy (waste reduction and resource recycling), biodiversity, greenhouse gas emissions, and climate change mitigation.
- Social: Reporting on employee matters such as diversity, inclusion, human rights (both in operations and the supply chain), and impacts on local communities.
- Governance: Disclosure of corporate governance practices, including board diversity, anti-corruption, and bribery policies.
2. Adherence to European Sustainability Reporting Standards (ESRS):
- Companies must prepare their reports according to the ESRS, which provides detailed guidelines on what information should be disclosed under each ESG aspect.
3. Digital reporting and accessibility:
- Reports must be prepared in a digital format that aligns with the European Single Electronic Format (ESEF), making sustainability information easily accessible and comparable across the EU.
4. Third-party assurance:
- CSRD mandates that sustainability reports undergo independent third-party assurance to verify the accuracy and reliability of the disclosed information. This aims to enhance trust and reliability in the reported data.
5. Integration into management report:
- Sustainability disclosures must be integrated into the management report of the company, ensuring that ESG considerations are embedded in the core strategic management processes.
6. Regular updates and continuous improvement:
- Companies are required to regularly update their sustainability disclosures and continuously improve their reporting processes in line with evolving standards and stakeholder expectations.
How can KEY ESG help?
The adoption of the CSRD is a major step forward in the EU’s commitment to sustainability. It marks an important milestone in the transition to a more sustainable economy. KEY ESG's software collates all of the new CSRD requirements and breaks it down into simple and actionable steps that facilitate compliance. It sets out the processes required, and it optimises reporting systems.
The software gathers key information to provide clear audit trails, making it easy for third-party assurers to review any relevant data they may require. In ensuring that all data is reported digitally from the outset, companies can ensure that they are getting off on the right foot and upholding the new digital reporting requirements from the start.
If you're unsure where to start with your CSRD reporting, why not book a free demo of our software?
And, as always, feel free to contact our team if you have any questions at all.
An introductory guide to the Corporate Sustainability Reporting Directive (CSRD)
Published: 29 Aug 2023 · Last updated: 07 Jun 2024
The Corporate Sustainability Reporting Directive (CSRD) is a new ESG reporting framework set to come into force on 1st January 2024 for organisations and business entities operating in the European Economic Area (EAA).
From 2024 onwards, the European Union (EU) will be ramping up efforts towards sustainability reporting through, and businesses falling into the remit of the new directive will need to improve their reporting processes in order to comply with more detailed reporting requirements.
This blog provides an explanation into CSRD eligibility criteria, timelines for implementation, and some of the new requirements such as double materiality assessments. For those looking to take the first step towards CSRD compliance, you can download our whitepaper for more detail: here.
Table of Contents
- What is CSRD?
- CSRD: Double Materiality
- CSRD eligibility and compliance requirements
- Factors to consider for your CSRD compliance
- What is the timeline for CSRD implementation?
- How can KEY ESG help?
What is CSRD?
The demand for corporate transparency and accountability in sustainability practices is at an all-time high. The CSRD is highly relevant today as it addresses this growing demand.
Technically, CSRD is an EU regulation that requires large and listed companies, along with those having a substantial presence in the EU, to report on a comprehensive set of Environmental, Social, and Governance (ESG) metrics.
In simpler terms, CSRD ensures that companies provide detailed reports on how their operations impact the environment and society, as well as environmental risks such as how sustainability, social and environmental issues may affect their performance. A key concept introduced by CSRD is double materiality, which means companies must disclose both the financial impact of sustainability risks and their environmental and social impact. This comprehensive approach promotes a clearer understanding of corporate sustainability efforts.
What is Double Materiality?
One of the unique features of the reporting process under the CSRD is its emphasis on double materiality, which essentially means that companies need to report on two facets of their operations:
- Impact Materiality: the impact of their activities on ESG factors.
- Financial Materiality: how ESG matters affect their operations and their finances.
For example, following a double materiality audit, an infrastructure company might need to report on the health and safety of its staff at a particular site, as well as the risk of flooding of the site to the company’s profitability.
Similarly, a clothing brand might be required to report on employee churn in its factories, as well as the risk of civil or political unrest on its ability to produce clothing items and subsequent financial profitability.
Impact Materiality: How the firm impacts ESG
Environmental: The company uses irrigation on certain cotton farms, relying on local water reserves.
Action Taken: The firm collaborates with local farmers to introduce sustainable farming techniques at the most water-intensive sites, like rainwater harvesting and drip irrigation.
Social: By sourcing materials from certain regions, there's a risk that the company is indirectly supporting unfair wages and poor working conditions.
Action Taken: The company runs third-party audits of their supply chain, ensuring that all suppliers comply with ethical labour practices.
Governance: There might be concerns about the company's oversight of its supply value chain since the company has scaled into new regions rapidly.
Action Taken: A committee is brought together to oversee ethical sourcing, ensuring supply chain practices are reviewed and reported on correctly.
Financial Materiality: How ESG impacts the firm
Environmental: If the local water reserves are depleted due to excessive water use, cotton yields might decrease, leading to increased costs.
Mitigation Strategy: Understanding the impact of climate risk and a potential water shortage to its profitability enables the company to put contingency plans in place to reduce its dependency on the local water reserves.
Social: The brand's reputation could be at risk if customers find out about its potential endorsement of unethical labour practices.
Mitigation Strategy: By adhering to ethical protocols and promoting community engagement initiatives, the firm aligns itself with customer values and removes the financial risk of corporate reputation damage.
Governance: Shareholders might be concerned about the company's potential legal liabilities or sanctions due to unethical sourcing.Mitigation Strategy: A governance committee is appointed to maintain corporate governance policies and proactively resolve issues which may negatively impact the company’s financial performance.
CSRD eligibility criteria and implementation dates
CSRD will primarily affect companies based in the EU. However, non-EU firms with a turnover of above €150 million in the EU will also have to comply. Over 50,000 companies – from SMEs to listed firms – will need to disclose ESG data. This is an increase from around 10,000 companies who were required to report on ESG metrics under the Non-Financial Reporting Directive (NFRD). CSRD is due to be phased in over the next five years, starting with those companies that already report on NFRD in 2024; “large” undertakings following in 2025; with listed companies and certain financial institutions being required to report in 2026:
- Company size and type:
- January 1, 2024: Large listed companies (those with more than 500 employees) will be required to track and collect ESG data under the CSRD directive (reporting year 2025)
- January 1, 2025: Any company meeting the two of the three following criteria be required to track and collect ESG data under the CSRD directive: 250 employees, €50 million in revenues, or €25 million in balance sheet (reporting year 2026)
- January 1, 2026: Effective date for a law that will require most SMEs (10-250 employees) to commence their reporting (reporting year 2027)
- January 1, 2028: Effective date for CSRD compliance from third-country companies (European subsidiaries of non-European companies with a turnover of more than €150 million)
- Sector and activity:
- The directive encompasses a wide range of sectors, including banking and insurance sectors,
- As of a recent review and publication by EFRAG, companies will not have to provide sector-specific reporting for another 2 years.
What is the timeline for CSRD implementation?
The CSRD was introduced in January 2023, and the European Commission released the final European Sustainability Reporting Standards (ESRS) in July 2023.
The diagram below demonstrates the phasing in of CSRD. To speak to an expert about your company’s eligibility or timeline for implementation, please contact us.
CSRD compliance requirements
1. Comprehensive reporting on sustainability matters:
- Environmental: Companies must report on pollution, circular economy (waste reduction and resource recycling), biodiversity, greenhouse gas emissions, and climate change mitigation.
- Social: Reporting on employee matters such as diversity, inclusion, human rights (both in operations and the supply chain), and impacts on local communities.
- Governance: Disclosure of corporate governance practices, including board diversity, anti-corruption, and bribery policies.
2. Adherence to European Sustainability Reporting Standards (ESRS):
- Companies must prepare their reports according to the ESRS, which provides detailed guidelines on what information should be disclosed under each ESG aspect.
3. Digital reporting and accessibility:
- Reports must be prepared in a digital format that aligns with the European Single Electronic Format (ESEF), making sustainability information easily accessible and comparable across the EU.
4. Third-party assurance:
- CSRD mandates that sustainability reports undergo independent third-party assurance to verify the accuracy and reliability of the disclosed information. This aims to enhance trust and reliability in the reported data.
5. Integration into management report:
- Sustainability disclosures must be integrated into the management report of the company, ensuring that ESG considerations are embedded in the core strategic management processes.
6. Regular updates and continuous improvement:
- Companies are required to regularly update their sustainability disclosures and continuously improve their reporting processes in line with evolving standards and stakeholder expectations.
How can KEY ESG help?
The adoption of the CSRD is a major step forward in the EU’s commitment to sustainability. It marks an important milestone in the transition to a more sustainable economy. KEY ESG's software collates all of the new CSRD requirements and breaks it down into simple and actionable steps that facilitate compliance. It sets out the processes required, and it optimises reporting systems.
The software gathers key information to provide clear audit trails, making it easy for third-party assurers to review any relevant data they may require. In ensuring that all data is reported digitally from the outset, companies can ensure that they are getting off on the right foot and upholding the new digital reporting requirements from the start.
If you're unsure where to start with your CSRD reporting, why not book a free demo of our software?
And, as always, feel free to contact our team if you have any questions at all.
What is CSRD?
The demand for corporate transparency and accountability in sustainability practices is at an all-time high. The CSRD is highly relevant today as it addresses this growing demand.
Technically, CSRD is an EU regulation that requires large and listed companies, along with those having a substantial presence in the EU, to report on a comprehensive set of Environmental, Social, and Governance (ESG) metrics.
In simpler terms, CSRD ensures that companies provide detailed reports on how their operations impact the environment and society, as well as environmental risks such as how sustainability, social and environmental issues may affect their performance. A key concept introduced by CSRD is double materiality, which means companies must disclose both the financial impact of sustainability risks and their environmental and social impact. This comprehensive approach promotes a clearer understanding of corporate sustainability efforts.
What is Double Materiality?
One of the unique features of the reporting process under the CSRD is its emphasis on double materiality, which essentially means that companies need to report on two facets of their operations:
- Impact Materiality: the impact of their activities on ESG factors.
- Financial Materiality: how ESG matters affect their operations and their finances.
For example, following a double materiality audit, an infrastructure company might need to report on the health and safety of its staff at a particular site, as well as the risk of flooding of the site to the company’s profitability.
Similarly, a clothing brand might be required to report on employee churn in its factories, as well as the risk of civil or political unrest on its ability to produce clothing items and subsequent financial profitability.
Impact Materiality: How the firm impacts ESG
Environmental: The company uses irrigation on certain cotton farms, relying on local water reserves.
Action Taken: The firm collaborates with local farmers to introduce sustainable farming techniques at the most water-intensive sites, like rainwater harvesting and drip irrigation.
Social: By sourcing materials from certain regions, there's a risk that the company is indirectly supporting unfair wages and poor working conditions.
Action Taken: The company runs third-party audits of their supply chain, ensuring that all suppliers comply with ethical labour practices.
Governance: There might be concerns about the company's oversight of its supply value chain since the company has scaled into new regions rapidly.
Action Taken: A committee is brought together to oversee ethical sourcing, ensuring supply chain practices are reviewed and reported on correctly.
Financial Materiality: How ESG impacts the firm
Environmental: If the local water reserves are depleted due to excessive water use, cotton yields might decrease, leading to increased costs.
Mitigation Strategy: Understanding the impact of climate risk and a potential water shortage to its profitability enables the company to put contingency plans in place to reduce its dependency on the local water reserves.
Social: The brand's reputation could be at risk if customers find out about its potential endorsement of unethical labour practices.
Mitigation Strategy: By adhering to ethical protocols and promoting community engagement initiatives, the firm aligns itself with customer values and removes the financial risk of corporate reputation damage.
Governance: Shareholders might be concerned about the company's potential legal liabilities or sanctions due to unethical sourcing.Mitigation Strategy: A governance committee is appointed to maintain corporate governance policies and proactively resolve issues which may negatively impact the company’s financial performance.
CSRD eligibility criteria
CSRD will primarily affect companies based in the EU. However, non-EU firms with a turnover of above €150 million in the EU will also have to comply. Over 50,000 companies – from SMEs to listed firms – will need to disclose ESG data. This is an increase from around 10,000 companies who were required to report on ESG metrics under the Non-Financial Reporting Directive (NFRD). CSRD is due to be phased in over the next five years, starting with those companies that already report on NFRD in 2024; “large” undertakings following in 2025; with listed companies and certain financial institutions being required to report in 2026:
- Company size and type:
- January 1, 2024: Large listed companies (those with more than 500 employees) will be required to track and collect ESG data under the CSRD directive (reporting year 2025)
- January 1, 2025: Any company meeting the two of the three following criteria be required to track and collect ESG data under the CSRD directive: 250 employees, €50 million in revenues, or €25 million in balance sheet (reporting year 2026)
- January 1, 2026: Effective date for a law that will require most SMEs (10-250 employees) to commence their reporting (reporting year 2027)
- January 1, 2028: Effective date for CSRD compliance from third-country companies (European subsidiaries of non-European companies with a turnover of more than €150 million)
- Sector and activity:
- The directive encompasses a wide range of sectors, including banking and insurance sectors,
- As of a recent review and publication by EFRAG, companies will not have to provide sector-specific reporting for another 2 years.
What is the timeline for CSRD implementation?
The CSRD was introduced in January 2023, and the European Commission released the final European Sustainability Reporting Standards (ESRS) in July 2023.
The diagram below demonstrates the phasing in of CSRD. To speak to an expert about your company’s eligibility or timeline for implementation, please contact us.
CSRD compliance requirements
1. Comprehensive reporting on sustainability matters:
- Environmental: Companies must report on pollution, circular economy (waste reduction and resource recycling), biodiversity, greenhouse gas emissions, and climate change mitigation.
- Social: Reporting on employee matters such as diversity, inclusion, human rights (both in operations and the supply chain), and impacts on local communities.
- Governance: Disclosure of corporate governance practices, including board diversity, anti-corruption, and bribery policies.
2. Adherence to European Sustainability Reporting Standards (ESRS):
- Companies must prepare their reports according to the ESRS, which provides detailed guidelines on what information should be disclosed under each ESG aspect.
3. Digital reporting and accessibility:
- Reports must be prepared in a digital format that aligns with the European Single Electronic Format (ESEF), making sustainability information easily accessible and comparable across the EU.
4. Third-party assurance:
- CSRD mandates that sustainability reports undergo independent third-party assurance to verify the accuracy and reliability of the disclosed information. This aims to enhance trust and reliability in the reported data.
5. Integration into management report:
- Sustainability disclosures must be integrated into the management report of the company, ensuring that ESG considerations are embedded in the core strategic management processes.
6. Regular updates and continuous improvement:
- Companies are required to regularly update their sustainability disclosures and continuously improve their reporting processes in line with evolving standards and stakeholder expectations.
How can KEY ESG help?
The adoption of the CSRD is a major step forward in the EU’s commitment to sustainability. It marks an important milestone in the transition to a more sustainable economy. KEY ESG's software collates all of the new CSRD requirements and breaks it down into simple and actionable steps that facilitate compliance. It sets out the processes required, and it optimises reporting systems.
The software gathers key information to provide clear audit trails, making it easy for third-party assurers to review any relevant data they may require. In ensuring that all data is reported digitally from the outset, companies can ensure that they are getting off on the right foot and upholding the new digital reporting requirements from the start.
If you're unsure where to start with your CSRD reporting, why not book a free demo of our software?
And, as always, feel free to contact our team if you have any questions at all.
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