Most companies that will report according to the CSRD guidelines already keep track of sustainability data, such as CO₂ emissions or energy consumption. Sometimes this is due to existing obligations, or on a voluntary basis. There are plenty of companies that therefore lean back and wait to take further steps towards their CSRD report. However, there is every reason to get off to a quick start!
The new reporting obligation requires reporting on sustainability in a very broad and detailed manner. We can say that the CSRD guidelines are the most comprehensive and far-reaching disclosure requirements in the non-financial field to date.
And what many companies are not aware of is that the concept of sustainability for CSRD goes beyond the environment alone. The new guidelines are based on the three main themes: Environment, Social, and Governance.
ESG: From Corruption to Child Labor
The theme of the environment clearly revolves around matters related to the environment. The CSRD defines five main topics within this theme, including biodiversity and circularity. Like all CSRD guidelines, not all topics are mandatory for every company to report on. It depends on the relevance of each topic, which should be determined based on double materiality.
An exception to this is the topic of Climate Change. The EU considers it of such importance that every organization must report on it. From Scope 1, 2, and 3 emissions to a transition plan towards a climate-neutral operation, everything is aimed at aligning with the Paris Agreement.
Within the Social domain, there are also several mandatory topics. These relate to data points concerning the organization’s own employees. The Social theme extends to employees in the supply chain, consumers, and communities influenced by the organization.
There is a broad spectrum of topics that can be reported on within this domain. This includes paying a living wage, embracing diversity, and combating child labor. The CSRD also covers consumer privacy and overall safety as part of the described topics.
Lastly, the Governance theme encompasses general matters related to the effective governance of the organization. This includes combating corruption and ensuring timely payment to suppliers.
All in all, it is evident that the CSRD defines the concept of sustainability in a broad and detailed manner. As a result, organizations’ sustainability reporting will encompass a significant number of chapters and topics.
The advice, therefore, is not to wait, even if you are not starting from scratch when preparing your report. Assess what needs to be reported, evaluate what you already have available, and create a plan to complete your reporting!
The first step in this process is to conduct the double materiality analysis. Use our software for this purpose to save time and establish an audit trail. Request a demo below!
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