EU Corporate Sustainability Reporting Directive (CSRD) - Strategic and operational implications

The EU Corporate Sustainability Reporting Directive (CSRD) creates a new requirement for companies to report on the sustainability of their activities. Around 50,000 companies in the European Union are expected to be required to publish data under CSRD – more than four times the number that reported sustainability information under the Non-Financial Reporting Directive (NFRD) – the legislation that CSRD replaces.

The first deadline under CSRD is rapidly approaching. Large companies in scope will need to begin publishing their sustainability information in 2025 for financial year 2024.

Companies will have to report sustainability information in line with the European Sustainability Reporting Standards (ESRS). Companies need to provide qualitative, quantitative, forward-looking and retrospective information, including on their value chain; and covering short-, medium- and long-term time horizons.

To fully respond to CSRD, companies need to consider how implementing the reporting requirements extends beyond the immediate compliance exercise and will drive broader changes to strategy, governance, operations and data. In particular, companies need to consider how the requirements affect their approaches to:

• Develop decarbonisation pathways and transition plans, conduct scenario analysis and calculate carbon footprints.
• Align their reporting with strategy and ensure their targets are credible and the progress made is effectively reported to the external audience.
• Design and implement improved risk management processes and governance structure.
• Set up due due-diligence processes and identify and mitigate risks in their supply chains.

Our CSRD briefing pack highlights priority action areas for a company’s business strategy transformation. It also provides an overview of the CSRD and ESRS requirements together with reporting timelines. Please find the briefing pack below.