CSRD: When will you have to comply?

In 2021, the European Commission (EC) adopted the Corporate Sustainability Reporting Directive (CSRD), succeeding the Non-Financial Reporting Directive (NFRD) which entered into force in the Netherlands in 2018.

The CSRD ensures that an increasing amount of companies will have to start reporting on sustainability and brings sustainability reporting up to speed. What does this mean for you, and your company and how do you ensure you comply with the (upcoming) requirements? Find out now in this blog.

The goal of the CSRD

The CSRD is the replacement for the NFRD regulations and requires companies to report on their environmental and social impact from 2024 onwards. The aim of these regulations is to make companies' sustainable activities visible, so that stakeholders, among others, know what is going on and improvement can take place. In this way, companies will contribute even more to achieving the Paris Climate Agreement.

CSRD more demanding than NFRDThe CSRD emphasises the importance and interrelationship between sustainability and the future-fit. Companies must not only report on their ESG (Environmental, Social and Governance)performance, but also publish performance in more detail and according to stricter guidelines. Consider topics such as environmental pollution, social responsibility, human rights and diversity. So there is work to be done; the Climate Standard of the CSRD document contains 23 'disclosure requirements'.

Also, companies should not solely look at their own activities, but also include their value chain. So, you as an SME, too. Perhaps the biggest and most far-reaching change is that - three years after the CSRD takes effect - content quality control by an external party will become mandatory.

When should you comply?

Relative to its predecessor, the CSRD applies to many more companies; the EC expects around 50,000 companies to have to provide sustainability disclosures, up from over 12,000 currently. These companies represent about 75% of total European revenue.

In addition, the scope of the CSRD increases over the years. For instance, from 1 January 2024, it will apply to companies currently covered by the NFRD. Then, a year later (1 January 2025), the scope is extended to large companies not presently covered by the NRFD. The following year (1 January 2026), the CSRD will also apply to listed SMEs and a lighter CSRD variant will be used for unlisted companies. So it is not a question of if, but when you will have to start complying with the CSRD.

CSRD and your business

Implementing the CSRD is complicated and affects many parts of your business. This is because the aim of the new regulations is to make corporate finance and sustainability more intertwined, resulting in a sustainability report. So it will affect your strategy, human resources, systems and data management, among other things.It may seem like a far-off show, but you as a business owner are going to be affected by the new legislation no matter what. This may be on the one hand because your company falls within the CSRD scope, or on the other hand because you are doing business with a company that has to comply with the standards.

Also, the scope of the CSRD increases every year and timely implementation can prevent many last-minute problems, just like we saw with the GDPR. Furthermore, knowing how sustainable your business is is important and provides many benefits.The idea behind Eevery has always been pro-activity. We started building our platform to inform SMEs about global sustainability standards (e.g. GRI, UN SDGs) and motivate them to prepare for them. The CSRD regulations are a new addition to which our platform has been calibrated and something we can help you with.

Interested and want to know more? Subscribe now and read the latest news for SMEs on ESG, sustainability and CSRD.

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