Are you ready for the Corporate Sustainability Reporting Directive (CSRD)?
Copyright: European Union
You might be used to ESG reporting (Environmental, Social, and Corporate Governance), but the new EU reporting requirements are a bit more complex. So what is it you need to know?
The significant changes are that:
Your sustainability reporting will sit alongside your financial reporting in your Annual Report.
More data needs to be included: organizations will need to include Scope 3 emissions and a greater scope of the company’s impact.
Your information will be audited.
A digital format of the data will be required.
So why do we need it?
The previous Non-Financial Reporting Initiative (NFRD) indicated that ESG had no financial relevance and needed to be trustworthy with reliable and extended data.
This new EU legislation) will gradually be coming into play over the next few years.
FY’24: For all organisations that are already within the existing scope of the NFRD
FY’25: All “large” organisations—firms with a net turnover of €40 million or more, at least €20 million in assets and 250+ employees
Later: All listed companies, including listed small and medium-sized enterprises (SMEs) but with the exception of micro enterprises
What? Companies will need to disclose information concerning:
Treatment of staff and approach to social matters
Anti-bribery and Corruption
What is expected from me?
No need to panic. I assume you do not start from scratch. You have most likely done some reporting in previous years, and now is the time to step it up and take your sustainability commitment one step further. By doing this work now, you will ensure a smoother ride in the future.
So how do I start?
Depending on how much you have in place – it is always a good idea to start with your strategy.
1.) Strategy Your initial goals and objectives might need to be sharpened. Is your sustainability vision inspirational and integrated enough? Is your focus areas the right ones considering you should also include your whole value chain? Is it communicated?
Take a moment to assess this and ensure you focus on the correct issues. Then, when you start your reporting, you will most likely go through a risk assessment and better identify your weaknesses and strengths – revisit your strategy and align it with your climate work’s long-term KPIs.
With more complex reporting demands, you better set up a system that makes it easy. Maybe your existing financial reporting systems include ESG reporting; otherwise, there are many new services available up to date with current regulations. These software tools:
Make collecting data across markets easy.
Allow you to monitor the status of your KPIs in real time.
Provide graphs for communication.
Suggest activities to reach your goals.
Help you engage key people and follow up on tasks within the organization.
Create action plans and reports and lets you display data on the intranet and website.
Check out some software reporting tools: Cleerit, Worldfavor, Workiva, Stratsys, Envoria, Brightest
3.) Activation / Communication
Communication is about publicly setting your goals and intentions. These intentions will help you reach your goals – as a communication professional, I could list a million reasons why communication is essential. Make sure it is inspirational; show what works and what does not and highlight what can be learned from other affiliates and their Best Practices. Make it aspirational; what are you trying to achieve, and are all your colleagues aware; it is impossible to work towards something when it is not clearly communicated. You also need to help your value chain to understand what is expected from them – what is your Code of Conduct? How can they improve? Why not engage your suppliers in Scope 3 with the Climate Education Tool?
Take this opportunity to make sure your organization is fit for the future.