The European Union (EU) has recently introduced a new Corporate Sustainability Reporting Directive (CSRD), which will require large companies to report on their sustainability and social responsibility efforts. This new directive is part of the EU’s efforts to create a more sustainable and responsible business environment.
The current state of sustainability reporting in the EU
Currently, companies in the EU are required to report on their sustainability efforts under the Non-Financial Reporting Directive (NFRD), which was introduced in 2014. However, the NFRD has been criticized for being too broad and lacking in detail. As a result, many companies have been providing vague and superficial reports that do not give stakeholders a clear picture of their sustainability efforts.
The new Corporate Sustainability Reporting Directive
To address these issues, the EU has introduced the CSRD, which will replace the NFRD. The CSRD will require large companies with more than 500 employees to report on their sustainability efforts in a more detailed and standardised way. The directive will cover a wide range of sustainability topics, including environmental impact, social responsibility, and governance.
The CSRD will require companies to report on their sustainability efforts using a set of standardized metrics and disclosures. This will make it easier for stakeholders to compare the sustainability efforts of different companies and track progress over time. The directive will also require companies to provide more detailed information on their supply chain, including their environmental and social impact.
The CSRD will apply to companies that are listed on EU stock exchanges, as well as companies that have a significant presence in the EU. Companies will be required to comply with the directive starting from January 2023, with the first reports due in 2024.
It is imperative to note that this new reporting requirement will not be limited to large, listed companies but will in fact be rolled out to all types of companies in the next four years. This effectively means to over the next few years the number of companies who will be obliged to provide detailed reporting on sustainability will multiply by a factor of five – jumping from the current 10K to an estimated 50K.
Benefits of the new Corporate Sustainability Reporting Directive
The CSRD is expected to have a number of benefits. Firstly, it will provide stakeholders with more accurate and reliable information on the sustainability efforts of companies. This will enable investors to make more informed decisions about where to invest their money. It will also enable consumers to make more sustainable purchasing decisions.
Secondly, the CSRD will encourage companies to improve their sustainability efforts. By requiring companies to report on their sustainability efforts in a more detailed and standardized way, the directive will create a more competitive business environment. Companies that are seen to be lagging behind their peers in terms of sustainability will be under pressure to improve.
Thirdly, the CSRD will help to create a more sustainable and responsible business environment. By requiring companies to report on their sustainability efforts, the directive will encourage companies to take their social and environmental responsibilities seriously. This will help to create a more sustainable and responsible business environment, which will benefit society as a whole.
Conclusion
The new Corporate Sustainability Reporting Directive is an important step towards creating a more sustainable and responsible business environment in the EU. By requiring companies to report on their sustainability efforts in a more detailed and standardized way, the directive will provide stakeholders with more accurate and reliable information on the sustainability efforts of companies. This will encourage companies to improve their sustainability efforts and help to create a more sustainable and responsible business environment.
If you are interested in finding out more about how your company can best prepare for the new EU Corporate Sustainability Reporting Directive, and at the same time harness your company data for business optimisation contact Datalitiks on [ana.rubio@datalitiks.com]
About Datalitiks
Datalitiks is an award-winning data-driven start-up company that leverages technology and harnesses data to aid companies in their sustainability journey. Datalitiks offers SaaS solutions to B2B to support organisations in getting a better and clearer understanding of their ESG priorities whilst providing the necessary support to help them measure and track their ESG efforts to not only be complaint with regulations but to take them to the next level by deriving valuable insights and triggering actionable efforts aimed at building a better tomorrow.
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