Introduction
The Corporate Sustainability Reporting Directive (CSRD) is revolutionizing sustainability reporting in Europe. This directive, which replaces the NFRD, imposes new transparency obligations on more than 50,000 European companies. Decryption of the issues and the procedure to follow.
What is CSRD?
The CSRD is a European directive that came into force in January 2023 which:
- Extend the scope of the companies concerned
- Standardize reporting with ESRS standards
- Requires an external audit of information
- Requires publication in digital format
Who is affected and when?
Application calendar
- 2025: Large companies already subject to the NFRD (financial year 2024)
- 2026: All major companies (fiscal year 2025)
- 2027: Listed SMEs, insurers and banks (financial year 2026)
- 2029: Non-EU companies with European subsidiaries (financial year 2028)
Eligibility criteria
Businesses that meet 2 of the 3 criteria are concerned:
- More than 250 employees
- Turnover > 40M€
- Balance sheet total > 20M€
ESRS standards: a new framework
The European Sustainability Reporting Standards define:
ESRS Transversal (mandatory)
- SERS 1: General requirements
- SERS 2: General information
ESRS Thematic
- Environment (E1-E5): Climate, biodiversity, water, pollution, circular economy
- Social (S1-S4): Workforce, workers, value chain, communities, consumers
- Governance (G1): Business conduct
Methodology: the double materiality approach
The CSRD introduces the concept of double materiality:
1. Impact materiality
How the company impacts the environment and society
2. Financial materiality
How ESG issues affect financial performance
Assessment process
- Stakeholder mapping
- Identifying impacts, risks and opportunities
- Materiality assessment
- Validation by management
Structure of the CSRD report
The report should include:
General information
- Business model and strategy
- Governance and organization
- Materiality analysis
For each material challenge
- Policies and due diligence
- Actions and resources
- Objectives and results
- Metrics and KPIs
Preparing for CSRD compliance
Phase 1: Diagnosis and gap analysis
- Assess the gap with CSRD requirements
- Audit existing collection systems
- Identify the resources needed
Phase 2: Implementation
- Perform the double materiality analysis
- Deploy data collection systems
- Train the teams concerned
- Setting up project governance
Phase 3: Production and Audit
- Write the ESRS compliant report
- Organize the external audit
- Publish in XBRL format
Challenges and opportunities
Main challenges
- Technical complexity of ESRS standards
- Large volume of data to be collected
- Need new skills
- Cost of compliance
Business opportunities
- Improving ESG risk management
- Strengthening transparency and trust
- Facilitated access to sustainable finance
- Competitive advantage in the markets
Conclusion
CSRD marks a new era in sustainability reporting. Although complex, this directive offers the opportunity to structure your ESG approach and create sustainable value. At SustainSoft, our platform and our CSRD expertise support you in this major regulatory transformation.
