Feb 27 • Eelco Bolk
Top six things you need to know about CSRD
Starting in 2025, a lot of companies will need to comply with ESG reporting requirements. This obligation arises with the implementation of the European Corporate Sustainability Reporting Directive (CSRD), a component of the European Green Deal and the successor to the Non-Financial Reporting Directive (NFRD).
Knowledge about Corporate Social Responsibility (CSR) reporting is crucial as it enables organizations to transparently communicate their social, environmental, and economic impacts.
By accurately reporting CSR activities and initiatives, companies demonstrate accountability to stakeholders, including investors, customers, employees, and the community.
Effective CSR reporting enhances corporate reputation, fosters trust, attracts investment, and facilitates sustainable business practices. It also helps identify areas for improvement and aligns business strategies with societal expectations and sustainable development goals.
By accurately reporting CSR activities and initiatives, companies demonstrate accountability to stakeholders, including investors, customers, employees, and the community.
Effective CSR reporting enhances corporate reputation, fosters trust, attracts investment, and facilitates sustainable business practices. It also helps identify areas for improvement and aligns business strategies with societal expectations and sustainable development goals.
1. What is the function of the CSRD?
In essence, the EU holds the belief that both consumers and investors are entitled to transparent insights into the sustainability practices of businesses.
The creation of the Corporate Sustainability Reporting Directive (CSRD) stemmed from the inadequacy of existing legislation in fulfilling this objective.
Prior to CSRD, the Non-Financial Reporting Directive (NFRD) laid out reporting standards for large corporations. However, it was found by the European Commission that the information provided by companies was lacking:
"Reports frequently lacked key information deemed essential by investors and other stakeholders. Comparing reported data across companies was challenging, leading to uncertainty regarding its reliability." — European Commission.
The European Commission highlighted the detrimental impact of subpar sustainability reporting, especially concerning the promotion of sustainable investments. A robust understanding of the sustainability implications of investment portfolios is crucial for fostering a credible market for green investments. Even investors not primarily focused on green ventures must comply with the disclosure obligations outlined in the Sustainable Finance Disclosure Regulation (SFDR). Furthermore, the European Commission identified an "accountability gap" as a rationale for proposing CSRD: "Enhanced public accountability through high-quality and dependable company reporting is paramount." — European Commission.
Consequently, CSRD was established with the aim of enhancing transparency in reporting and furnishing investors with the necessary data to evaluate a company's sustainability practices.
The creation of the Corporate Sustainability Reporting Directive (CSRD) stemmed from the inadequacy of existing legislation in fulfilling this objective.
Prior to CSRD, the Non-Financial Reporting Directive (NFRD) laid out reporting standards for large corporations. However, it was found by the European Commission that the information provided by companies was lacking:
"Reports frequently lacked key information deemed essential by investors and other stakeholders. Comparing reported data across companies was challenging, leading to uncertainty regarding its reliability." — European Commission.
The European Commission highlighted the detrimental impact of subpar sustainability reporting, especially concerning the promotion of sustainable investments. A robust understanding of the sustainability implications of investment portfolios is crucial for fostering a credible market for green investments. Even investors not primarily focused on green ventures must comply with the disclosure obligations outlined in the Sustainable Finance Disclosure Regulation (SFDR). Furthermore, the European Commission identified an "accountability gap" as a rationale for proposing CSRD: "Enhanced public accountability through high-quality and dependable company reporting is paramount." — European Commission.
Consequently, CSRD was established with the aim of enhancing transparency in reporting and furnishing investors with the necessary data to evaluate a company's sustainability practices.
2. Which companies will be impacted by CSRD?
CSRD will affect all companies established within the European Union, Iceland, Liechtenstein, Switzerland, and Norway that surpass at least two of the following criteria:
A net turnover of €40 million
A balance sheet total of €20 million
An average of 250 employees over the financial year.
Furthermore, non-EU companies that generate a net turnover of over €150 million from EU-generated profits and companies with a subsidiary or branch in the EU generating over €40 million net turnover are also encompassed within the scope.
The new sustainability reporting regulations will additionally extend to all large companies and those listed on regulated markets, excluding those listed with micro trades. These entities are also accountable for evaluating relevant information concerning their subsidiaries.
A net turnover of €40 million
A balance sheet total of €20 million
An average of 250 employees over the financial year.
Furthermore, non-EU companies that generate a net turnover of over €150 million from EU-generated profits and companies with a subsidiary or branch in the EU generating over €40 million net turnover are also encompassed within the scope.
The new sustainability reporting regulations will additionally extend to all large companies and those listed on regulated markets, excluding those listed with micro trades. These entities are also accountable for evaluating relevant information concerning their subsidiaries.
3. What information must be reported under CSRD?
CSRD requires reporting of forward-looking, retrospective, qualitative and quantitative information necessary to understand the companies impacts on sustainability matters.
The information is essential to interpreting how these matters influence a company’s development, performance, and position. But it also sheds light on the adverse impacts that the company may have on the climate – or any other dimension of sustainability. This is called “double materiality”.
The information must contain a description of the company’s:
-
Business model & strategy, as well as opportunities and resilience to sustainability risks and transition plans.
-
Sustainability targets and their progress.
-
Sustainability governance (administrative, management and supervisory bodies and their expertise and skills to fulfil their role).
-
Incentives schemes linked to sustainability matters.
-
Due diligence of sustainability matters and the process to conduct it.
-
Principal adverse impacts, and those of its value chain, including its products and services, its business relationships and its supply chain; principal sustainability risks and their management.
4. Global Impact
The implementation of the CSRD has the potential to drive positive change in corporate sustainability practices not only within the European Union but also globally, by setting a precedent for comprehensive and standardized sustainability reporting.
5. When will CSRD start applying?
The application of CSRD will take place in four stages:
-
Stage 1: Reporting in 2025 for the financial year 2024 for companies already subject to the NFRD.
-
Stage 2: Reporting in 2026 on the financial year 2025 for other large companies.
-
Stage 3: Reporting in 2027 on the financial year 2026 for listed SMEs (except micro undertakings), small and non-complex credit institutions and captive insurance undertakings.
-
Stage 4: Reporting in 2029 on the financial year 2028 for non-EU undertakings with net turnover above €150 million in the EU if they have at least one subsidiary or branch in the EU exceeding certain thresholds.
6. The proactive implementation of CSRD offers advantages.
Getting ahead of the curve with CSRD compliance offers numerous benefits: uncovering fresh insights as companies delve into non-financial indicators tied to corporate operations. For instance, it reveals opportunities for cost savings such as energy efficiency improvements and process optimizations.
With the proposed ramp-up of climate ambitions, the EU is set to roll out stricter regulations on ESG in the coming years, impacting both major corporations and SMEs. Proactively preparing for these changes and devising strategic plans to mitigate adverse effects ensures your company remains agile and resilient in the face of challenges.
Prioritizing ESG not only ensures compliance but also grants a competitive edge over peers not yet subject to reporting obligations.
With the proposed ramp-up of climate ambitions, the EU is set to roll out stricter regulations on ESG in the coming years, impacting both major corporations and SMEs. Proactively preparing for these changes and devising strategic plans to mitigate adverse effects ensures your company remains agile and resilient in the face of challenges.
Prioritizing ESG not only ensures compliance but also grants a competitive edge over peers not yet subject to reporting obligations.
Conclusion
In conclusion, understanding the Corporate Sustainable Reporting Directive (CSRD) is paramount in navigating the increasingly complex landscape of corporate sustainability. With businesses facing mounting pressure to adopt transparent and accountable practices, knowledge of the CSRD empowers stakeholders to effectively assess companies' environmental, social, and governance (ESG) performance.
By fostering greater transparency and accountability, the CSRD not only bolsters investor confidence but also drives positive societal and environmental impact. Embracing the principles of sustainable reporting not only benefits individual companies but also contributes to the collective effort towards a more sustainable and equitable future for generations to come.
Thus, the importance of grasping the nuances of the CSRD cannot be overstated in fostering responsible corporate behavior and advancing global sustainability goals.
By fostering greater transparency and accountability, the CSRD not only bolsters investor confidence but also drives positive societal and environmental impact. Embracing the principles of sustainable reporting not only benefits individual companies but also contributes to the collective effort towards a more sustainable and equitable future for generations to come.
Thus, the importance of grasping the nuances of the CSRD cannot be overstated in fostering responsible corporate behavior and advancing global sustainability goals.
E-mail: info@360horizons.org
Niels Leenders
Facilitator, coach, outdoor guide, program development, infrastructure explorer
Niels is an enthusiastic entrepreneur and a sought-after coach and facilitator for senior management and executive teams. He loves creating memorable experiences, both in consulting and in mountain and wilderness environments. Passionate about people, the beauty of nature and the link between them. Whether it's coaching and facilitating a leadership team, leading an expedition or sharing an inspiring thought; he will guide you every step of the way with a sense of purpose, dedicated care and attention.
“Leadership is not about titles, positions, or flowcharts. It’s about one life influencing another.”
Eelco Bolk
Coach, trainer, facilitator, program development, online learning
With 25 years of experience in education, training and coaching, Eelco has built up expertise in designing and executing personal transformation & leadership programs. Bringing his inner peace, honesty and sincere approach everywhere he goes, his personal story of resilience and adaptability is intertwined with his variety of professional skills in coaching, leadership development, team building, facilitation and life skills.
“You don’t have to know anything. It's more important to have the attitude of Beginners Mind, a mind that is open and fresh, than to be an expert.”
Aart van der Horst
Trainer, facilitator, coach, certified team trainer, program development
As a certified and experienced team coach, senior trainer, educator and coach, Aart is highly skilled in observing, analysing, creating and facilitating learning processes and positive change from within. The combination of more than 20 years of experience in facilitating both international leadership teams and complex youth groups contributes to his balanced, ethical, approach to human behaviour, learning and development.
“You don’t have to know anything. It's more important to have the attitude of Beginners Mind, a mind that is open and fresh, than to be an expert.”
Eddie van der Wereld
Training, executive coaching, leadership development and change management
Eddie embodies the fusion of MBA sustainable leadership with the mindset of a sportsman. An empathetic and honest leader, he stands as a reflective expert in sustainable leadership, executive coaching, creative strategic processes, and international culture development within organizations. As a keynote speaker and author of acclaimed works such as "Goal Achieving for Dummies" and "The Power of Fear," Eddie is committed to fostering sustainable leadership cultures. His focus lies in bridging the gap between leaders' intellect and emotions, aligning them with the pressing sustainable health, safety, and environmental challenges of today.
"Be a little kind to people. After all, they are often unconsciously waging an inner battle every day"
Toine Doreleijers
Facilitator, coach, outdoor guide, program development, infrastructure explorer
Toine is not just your ordinary coach; he's an adventurer at heart, deeply passionate about venturing into the wild. He thrives on creating unforgettable experiences, be it in the boardroom or amidst snow-capped peaks. His love for both the challenges of the wilderness and the intricacies of business balance perfectly in his life. As a nutrition specialist for the body and a facilitator for the mind, Toine understands the importance of maintaining harmony in all aspects of life. He believes in the profound connection between people and nature, and he's dedicated to nurturing this bond.
Dagmar Heemskerk-Verbeek
Facilitator, trainer, program development, advocacy
Dagmar is a passionate and energetic eco-systemic and dialogue facilitator, who loves guiding people in navigating societal and personal transitions in this 'time in between'. She has an unlimited curiosity for the world and all living beings, including humans. She is fascinated by inter-being and interconnectedness, being inspired by indigenous wisdom up to quantum science. Working with people and group dynamics, she taps into her knowledge and experience in leadership, system dynamics, constellations, active hope, deep democracy and deep ecology. She will hold space so you can face reality, shift perspectives and see new possibilities for our common future.
Schedule a call
Grant yourself 30 minutes to spark your sustainable businesscase
Download your free guide:
10 Accelerators for Corporate Sustainability Change
Thank you for downloading! By prioritizing these accelerators and integrating them into your organisations corporate practices, you can effectively drive a sustainable culture change and contribute to positive environmental, social, and economic outcomes ✨
Plan a free Coaching Conversation
We provide you with 1:1 coaching experiences that empower you to become a catalysts for positive change
Diane Bos
Systemic coach, trainer, facilitator, constellations practitioner, program development
As a certified systemic coach, trainer and facilitator of social change, personal growth and conflict transformation, Diane brings about deep processes of change. With a strong background in systemic coaching, constellations and body work, she brings a deeper sense of awareness into every conversation and group she works with. Being able to tap into the underlying patterns of both societies, teams and individuals, she is able to work with the unseen dynamics that influence our lives.
Is your company esg ready?
Find out here and start planning your 30 min free conversation.
Write your awesome label here.
Created with
