In just over a year, on January 1, 2024, the CSRD will come into force. Companies already in scope of the Non-Financial Reporting Directive (NFRD) will need to report in 2025 based on FY 2024 information – so get ready now.
The CSRD proposal applies double materiality. Double materiality means that businesses must not only disclose how sustainability issues can affect the company (“impacts inward”), but also how the company impacts society and the environment (“impacts outward”). For businesses that have historically assessed only risks to their business rather than their impacts on the world, the CSRD implies a fundamental shift in measurement and reporting.
CSRD includes more companies than the already existing European Non-Financial Reporting Directive (NFRD). All large companies governed by the law of or established in an EU member state and all European stock exchange-listed companies (except micro-companies), as well as small and medium-sized enterprises (SMEs), are under the scope of the new directive. SMEs and non-EU companies will have separate standards.
Therefore, engaging your supply chain in this process is critical. Have you talked to your ESG/Corporate Social Responsibility/CSRD teams about what procurement needs to deliver and how your suppliers can help meet the targets? If not, then now would be the time.
One of my recent blog posts is talking about ”Diversifying your supply chain is not just an option for ESG Management, it’s part of it”. Find out how a diverse supply base can help you meet your ESG targets – click below to read the blog:
More on the CSRD , the International Sustainability Standards Board (ISSB), and the US SEC, can be found in this comparison on the 3 disclosure proposals by Harvard Law School.
More information & sources; https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en https://www.bsr.org/en/our-insights/blog-view/what-business-needs-to-know-eu-corporate-sustainability-reporting-directive