The world is changing rapidly and with challenges such as climate change, poverty and inequality, eyes are on the role of companies. Beginning in 2025, CSRD will apply not only to large publicly traded companies, but to many more businesses, including SMEs. In this article, discover everything you want to know about CSRD and ESG and why it’s important to act now.
Refresher: what is CSRD?
CSRD, or Corporate Sustainability Reporting Directive, is a European sustainability reporting directive that requires companies to be more transparent about their impact on the environment and society. This directive supports the European Commission’s Green Deal to be climate neutral by 2050. CSRD goes beyond environmental measures. It helps companies not only improve their commitment to sustainability, but also to inform financiers, consumers, employees and other stakeholders.
What are ESG and ESG reporting?
ESG stands for Environmental, Social and Governance. These are the three core themes within CSRD that a company reports on. ESG reporting is a way of evaluating a company’s sustainability and social impact. This can include, for example, CO2 emissions and waste management (Environmental), equal opportunities and data protection (Social) and board composition (Governance). The European Sustainability Reporting Standards (ESRS) provide a standard for ESG reporting so that all companies report in the same way.
For whom is the CSRD mandatory?
Large companies are already familiar with the Non-Financial Reporting Directive (NFRD); the CSRD expands those reporting requirements. Beginning in 2025, other large companies and listed companies in the EU will also be covered by the legal obligations. This applies to organizations that meet two of the three criteria:
● A balance sheet total of more than 25 million euros
● Net sales of more than 50 million euros
● More than 250 employees
Even if your company is not directly subject to CSRD obligations, you may still be affected. For example, if you supply to a company that does have ESG reporting, chances are your company will be asked for sustainability information. If you fail to meet certain sustainability guidelines, then you run the risk that customers or partners will choose an alternative supplier or partner.
Why is ESG important to your company?
How your organization deals with sustainability issues such as climate, equity and data privacy is more important than ever. Many organizations are adapting their strategy and operations to incorporate sustainability. This is not only good for the planet, but also attracts investors and financiers. Because more and more stakeholders value sustainable and ethical business practices, companies that perform well on ESG criteria are seen as more future-proof, which increases the likelihood of obtaining financing and investment. So, ESG reporting is not only a legal requirement, but also essential for the survival and growth of your business.
How do you prepare an ESG report?
Most organizations want to make a commitment to a better world, but are unsure where to start with sustainability reporting. Reporting is new, seems complex, and can feel like an extra task on top of the annual report. Here are some steps to get you started:
- Gain insight into your organization: what is your mission and vision? What does your value chain look like? Who are your partners and end users?
- Gather knowledge of your environment: what are the relevant laws and regulations? What do stakeholders expect from you?
- Identify opportunities and risks: Create a SWOT analysis and link it to ESRS to determine your organization’s ambitions.
- Engage with stakeholders: they are indispensable to developing a sustainable strategy.
- Collect data and start structuring: take a structured approach to collecting relevant data.
- Conduct a dual materiality analysis: what is your organization’s impact on the environment and vice versa?
Why you shouldn’t hesitate with ESG reporting
At Qconcepts, we understand that you have a lot on your plate and CSRD and ESG reporting raise additional questions. However, procrastinating only makes things more challenging and good preparation takes time. By starting now, will you reduce the pressure and increase the quality of reporting. Further, starting early also helps identify and correct problems more timely, and failure or inability to report carries risks.
How Qconcepts helps you move forward
Our team of ESG experts is ready to show you that ESG reporting is not just mandatory, but an opportunity to create value and strengthen your business. That’s why we don’t call it sustainability strategy, but rather, sustainable strategy.
What you get from us:
- Dedicated ESG experts: Our senior audit professionals are all ESG experts
- Knowledge and tools: Through webinars and meetings, we will guide you through all the steps of the CSRD.
- Independence and quality: In addition to future monitoring, we offer CSRD maturity scans and consulting calls to determine your current position.
- Efficiency: One point of contact for both financial sustainability reporting. This avoids duplication and unnecessary questions.
Want to know more about how we support you with ESG reporting? Feel free to contact us at joke.rigter@qconcepts.nl.
