The CSRD requires the 50,000 largest companies in Europe to report on the impact of their activities on people and the environment. It is an important part of the European Green Deal and aims to improve transparency and the quality of sustainability information. But what about non-European companies? And what exactly do you have to report on?
Is your company subject to the CSRD?
The CSRD applies to all listed companies, public interest companies and companies that meet pre-established criteria. If you are not sure whether you belong to one of these target groups, you can use a handy decision tree.
It may not always be obvious for non-European companies to know whether they also have to report according to the CSRD. For instance, as a non-European company, are you listed on European markets? Depending on where you operate or have branches, you may have to report according to the CSRD.
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What should you report?
Once you have determined that you are subject to the CSRD, you naturally need to know what you need to report. The CSRD requires you to report on your impact on the environment, people and governance. There are two important things to keep in mind:
- You have to use the European Sustainability Reporting Standards (ESRS), which are developed by the European Financial Reporting Advisory Group (EFRAG). The ESRS are mandatory for all companies subject to the CSRD and will provide a common framework for sustainability reporting.
- You have to base your reporting on the principle of double materiality. This means you should only report on the topics that are most relevant to your company and your stakeholders, and that have the greatest impact on the environment and society. You can find more information on this in part 2 of "Getting started with the CSRD".
The materiality assessment is a necessary step to identify which sustainability topics are relevant for your company. The analysis should be made according to objective scientific data and sources.
What data and information are we talking about?
To give you an idea of what to report and what data and information is involved, let's take the topic of water as an example. Water is a vital resource for many companies, but also a source of risks and opportunities. Consider, for example, the effects of water scarcity, floods, pollution, etc. According to the CSRD, you should report on the theme of water in four sections:
- Governance: How is water managed within your company? Who is responsible for water policy and objectives? How is water integrated into your strategic decision-making?
- Strategy: What is your vision and ambition for water? How does water contribute to your business model and value creation? How does water affect your financial performance and risk profile?
- Impact, risk and opportunity management: What is your impact on water in your value chain? What risks and opportunities are associated with water for your business and your stakeholders? How do you identify, assess and manage these risks and opportunities?
- Metrics and targets: What indicators and targets do you use to measure and improve your water performance? How much water do you use or consume? Do you know the quality of your water? How do you discharge it?
To answer these questions, you need data and information from both inside and outside your company. For example, you also want to consider the local context in which you operate as a company, which determines, among other things, the availability of water, the risk of flooding or water scarcity, and so on. For this, you can use different sources and methods, such as internal systems (e.g. QHSE systems, water meters, invoices, audits, etc.) and/or external sources (e.g. open data, scientific reports, benchmarks, best practices, etc.).
Antea Group can guide you through this process so that your sustainability reporting is fully aligned with the CSRD. Want to know more about our climate services? Then be sure to take a look at our services page or contact our experts.
Prefer real-time guidance?
Then register now for our training series "CSRD obligation: learn to report on sustainability", in collaboration with Voka.
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