CSRD

Explained
EU’s Corporate Sustainability Reporting
Directive

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What Is
CSRD?
The CSRD is a European Union
regulation that establishes standardized
sustainability reporting requirements for
certain companies. It aims to increase
transparency and comparability of
companies' environmental and social
impact, allowing stakeholders to make
informed decisions.

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CSRD Key Aspects

1. Standardized Reporting:

The CSRD defines a common format and

set of metrics for companies to report on
sustainability. This ensures consistency
and allows for easier comparison
between companies within the same
industry or across sectors.

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CSRD Key Aspects

2. Double Materiality:

Companies need to report on "double

materiality." This means considering two
perspectives:
Inside-out view: How sustainability
issues (like climate change or resource
scarcity) affect the company's business
operations and financial performance.
Outside-in view: How the company's
activities impact the environment and
society (e.g., pollution from
manufacturing, labor practices).

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CSRD Key Aspects

3. Planning & Implementation:

Gap Analysis: Evaluate your current

reporting practices against the CSRD
requirements. Identify areas where you
need to improve data collection, reporting
methodologies, or internal processes.
Data Collection and Management:
Establish systems to collect and manage
data on sustainability metrics relevant to
your identified material issues.
Develop Reporting Strategy: Define how
you will present the CSRD report.

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CSRD Key Aspects

4. Reporting and Assurance:

Report Creation: Compile the CSRD

report following the ESRS guidelines and
incorporating your materiality
assessment findings.
Assurance: Engage an independent
auditor to verify the accuracy and
credibility of the reported information.

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Who does it apply

to?
Large EU Companies: All large companies
headquartered in the European Union.
Large Non-EU Companies: Companies
with a turnover exceeding €150 million
within the EU, even if not headquartered
there.
Listed SMEs: Small and Medium
Enterprises (SMEs) listed on regulated
markets within the EU.
High-Risk SMEs: SMEs involved in high-
risk sustainability activities may also be
required to report, depending on the
specific activity.
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Why was it
introduced?
The CSRD replaces the Non-Financial
Reporting Directive (NFRD), which had
some shortcomings.
Previously reported data lacked
consistency and comparability, making it
difficult for investors and consumers to
assess a company's ESG (environmental,
social, and governance) performance.
The CSRD aims to create a more
standardized reporting format, allowing for
easier comparison between companies.

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Overall Impact
Increased transparency for stakeholders
(investors, consumers, policymakers).
Reduced greenwashing (misleading
sustainability claims).
Encouragement of more sustainable
business practices.
A more sustainable European economy.

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