It’s time to dive into the world of sustainability reporting and unravel the latest European Union (EU) legislation – the Corporate Sustainability Reporting Directive (CSRD). If you haven’t heard about it yet, buckle up because compliance is going to be a game-changer.
So, what’s the fuss all about? The CSRD is a fresh EU regulation that demands large companies to disclose their environmental and social impact activities regularly. This move isn’t just about ticking boxes; it’s a game-changer that aims to drive responsible business practices and provide stakeholders with a clearer view of companies’ non-financial performance.
CSRD: New and Improved
The CSRD, which came into force on January 5, 2023, expands the scope and reporting requirements of its predecessor, the Non-Financial Reporting Directive (NFRD). This means more companies are now required to report on their sustainability performance. In fact, around 50,000 companies across the EU will need to adhere to these new reporting standards, accounting for a whopping 75% of all EU companies’ turnover. That’s quite the reach, isn’t it?
Who Needs to Jump on the Bandwagon?
As one of the largest pieces of environmental legislation, the Corporate Sustainability Reporting Directive will require more companies than ever before to report on their environmental impact, albeit at different stages depending on the size and scope of each company. Most companies with listed securities on EU-regulated markets will be required to comply, as well as any EU companies–listed or unlisted– that meet at least two of the following criteria:
- Has 250 or more employees on average during the financial year
- €50 million or more in net turnover
- €25 million or more in total assets
But wait, there’s more! Non-European companies with branches or subsidiaries in the EU and a net turnover of €150M or more within the EU will also need to comply by 2028.
Timing Is Everything: Navigating the CSRD Timeline
With the directive officially in force, it’s time for businesses to gear up for the phased implementation. By January 1, 2025, companies who already report to under the NFRD must submit their compliant report for the 2024 financial year. That’s just around the corner, folks! Smaller companies and specific subsidiaries may not be required to report until as late as 2028, but it is important to keep in mind that the data required to comply with the new regulation takes time to collect, which means that there’s no time to waste in getting your sustainability reporting game on point.
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Sign Up NowWhat’s in It for You? Detailed Disclosures Galore!
This isn’t just another run-of-the-mill regulation. The CSRD raises the bar by requiring companies to report on a range of detailed sustainability information, including environmental protection measures, social responsibility and treatment of employees, respect for human rights, anti-corruption and bribery measures, diversity on company boards, and how sustainability risks might affect their performance. Phew! It’s a lot, but it’s all in the name of transparency and accountability.
Sanctions: What Happens If You Don’t Comply?
The million-dollar question: Can companies get sanctioned for non-compliance? While the specifics are still being ironed out, it’s safe to say that significant sanctions are on the horizon for those who don’t play by the CSRD rules. The exact nature and cost of sanctions will vary across different EU Member States, but it’s clear that non-compliance won’t be a walk in the park
Preparing for the CSRD: Your Action Plan
With the CSRD set to shake up the business landscape, it’s crucial for companies to kickstart their preparation process as soon as possible. From data collection to compliance strategy, there’s no time like the present to get ahead of the game. Seeking guidance from policy experts can provide invaluable insights into what the new directive means for your business and help you develop an effective compliance strategy.
Ready to Embrace the CSRD?
The CSRD isn’t just a new regulation; it’s a call to action for businesses to step up their sustainability reporting game and embrace responsible business practices. With the clock ticking and the stakes high, now’s the time to dive into the CSRD and ensure your business is ready to meet the new reporting standards head-on.
Remember, the future of sustainable business starts now. Let’s dive in and make a positive impact together! Contact our team to learn how Zeigo Activate can help you get started.
