Why are the CSRD guidelines important?

The CSRD brings significant changes to environmental, social, and governance (ESG) reporting. Its goal is to ensure consistency, comparability, and reliability of sustainability reporting, enabling investors and stakeholders to make better-informed decisions that contribute to a healthy planet. The CSRD goes beyond financial results and emphasizes the importance of organizations' sustainability performance and impact.

In practice, the CSRD ensures that…
Companies must report in a standardized manner on, for example, working conditions in their supply chain, the CO2 impact of the use of their products, the impact of an end-of-life article, and the ways in which management decisions are made. 

Which companies fall under the CSRD?

The CSRD is the successor to the NFRD (Non-Financial Reporting Directive). 

• From January 1, 2024, all companies currently operating under the NFRD will be required to comply with the CSRD guidelines.
• From January 1, 2025, the CSRD will apply to all large companies that meet at least two of the following criteria: 250 FTEs, more than €40 million in turnover, and/or €20 million in balance sheet total.
• Medium-sized and small enterprises will also have to comply with the CSRD from 2026.

It applies to organizations within the European Union (EU) and also affects non-EU companies with subsidiaries or establishments within the EU. If an organization meets the criteria, reporting under the CSRD is mandatory.

CSRD-compliant companies also need to report their activities upstream and downstream in the supply chain. This means they must collect data from suppliers and customers, even if these are not yet CSRD-compliant, such as SMEs. For these companies, complying with the CSRD guidelines can provide a competitive advantage and strengthen their market position. Therefore, it is also relevant for SMEs to prepare for the CSRD.

What do I need to do for the CSRD?

To meet the CSRD requirements, you need to review relevant laws and regulations, identify sustainability aspects, prepare a structured report, involve stakeholders, and publish the report. Check if you have completed these CSRD checklist;

Step 1: Identify stakeholders and their expectations 
Step 2: Perform a materiality analysis 
Step 3: Set measurable goals 
Step 4: Implement policies and procedures 
Step 5: Monitor and measure performance 
Step 6: Communicate transparently about CSRD initiatives

The path to a clear CSRD report can vary by sector. New Economy helps map this path to sustainability reporting and the relevant substantive analyses.

Benefits of the CSRD guidelines for organizations

The CSRD offers several benefits for organizations that take sustainability seriously. 

• It promotes more transparent reporting, enabling companies to better communicate about their sustainability performance and impact. 
• Transparency can enhance the organization's credibility and reputation, which can lead to improved brand value and customer loyalty. 
• The CSRD enables companies to gain better insight into their own sustainability practices, enabling them to make targeted improvements and operate more efficiently.
• Access to capital and investors can be facilitated, as sustainability is becoming increasingly important to investors and stakeholders. By making these aspects transparent, companies can demonstrate their commitment to sustainable and responsible business practices.

How can I prepare for the CSRD?

An important first step is to assess existing non-financial information (NFI) reporting and identify areas where improvements are needed to comply with the new guidelines. This may include establishing or revising processes, systems, and data collection related to the double materiality. It is advisable to involve internal stakeholders in the preparation and raise their awareness of the CSRD requirements. Consulting sustainability reporting and compliance experts, such as New Economy, can also be valuable in ensuring a streamlined and effective transition to the CSRD. By starting preparations early, organizations can proactively adapt to the new regulations and avoid potential challenges.

Summary of the CSRD and its impact

The CSRD (Corporate Sustainability Reporting Directive) is a significant development in reporting standards, aimed at improving the transparency and comparability of sustainability reporting. It requires companies to report not only their financial results but also their environmental, social, and economic impact. Although the CSRD is primarily aimed at listed companies and large organizations, it is also relevant for SMEs. It is important to study the requirements, identify sustainability aspects, prepare a structured report, and involve stakeholders. By starting preparations early, organizations can proactively comply with the new guidelines and reap the benefits of transparent sustainability reporting.

Want to learn more about how your company can comply with the CSRD and benefit from this dual materiality reporting at the impact and financial levels? Contact us to discover how our sustainability and compliance expertise can help you implement the CSRD.

Schedule a now free intake interview Connect with one of our consultants and find out what you can do to prepare for the CSRD. 

New Economy collaborates with 2Impact and helps companies to use the opportunities of the CSRD for a clear and impactful strategy.