Get Ahead of Regulations: A Comprehensive Guide on CSRD

Updated on
July 12, 2024

In a world where sustainability is not an option but a necessity, is your business ready to lead the change? The Corporate Sustainability Reporting Directive (CSRD) emerges as a crucial component in business strategy, marking the beginning of a new era of regulatory obligations and opportunities for innovation.

The Impact of CSRD:

From 1 January 2023, businesses will face a new set of challenges and opportunities. The CSRD will affect more than 49,000 European businesses, including large corporations, insurance companies, credit institutions, and publicly traded companies.

What is the CSRD, and Why is it Crucial for Your Business?

The CSRD is an initiative of the European Union aimed at increasing transparency in business activities related to sustainability. It covers aspects such as environmental impact, social impact, and governance. Compliance is not only a duty but an opportunity to stand out in an increasingly environmentally conscious market.The new disclosure requirements of the CSRD seek to:

• Enhance transparency for investors, consumers, and other stakeholders.

• Assist businesses in managing sustainability-related risks.

• Foster innovation in sustainability matters.

Who Needs to Comply with the CSRD

It's crucial to understand which entities are subject to these new regulations:

  • Large Enterprises (both EU and non-EU subsidiaries): Companies considered large, with more than 250 employees and/or with an annual turnover exceeding €50 million and/or with total assets exceeding €25 million, are required to report according to the CSRD. This criterion significantly broadens the spectrum of companies required to report compared to previous regulations.
  • Publicly Listed Companies, including SMEs (excluding micro-enterprises): Small and medium-sized enterprises (SMEs) listed on regulated markets are also subject to the CSRD. However, they are granted a grace period of 3 years before they are required to comply with these reporting obligations. This provides time for these businesses to gradually adapt to the new requirements.
  • Insurance Institutions and Credit Entities: Entities within the insurance and credit sectors are not exempt from these obligations. The CSRD requires them to present sustainability reports, reflecting the growing importance of transparency in environmental and social impacts in these financial sectors.
  • Non-European Companies with Subsidiaries in the EU: Non-European companies operating within the European Union also fall within the scope of the CSRD. Those with a net turnover of €150 million or more within the EU are required to report according to the CSRD. This underscores the global reach of the directive, affecting companies beyond EU borders.

The Challenge: How to Comply with the CSRD Requirements

Starting compliance with the CSRD requires first a solid understanding of its requirements and a detailed internal assessment to identify areas for improvement. Integrating data management systems is crucial, ensuring accurate and transparent data for effective sustainability strategies. Team training and transparent disclosure of practices are essential, strengthening the company's trust and reputation among stakeholders.Digital solutions play a key role in the effective compliance with the CSRD, automating the collection and analysis of data, and ensuring flexibility in the face of changing regulations. Adopting these technologies allows companies not only to comply with the regulations but also to lead in innovation and sustainability, transforming the challenges of the CSRD into opportunities for growth.

What Does This Mean for Investors, Consumers, and Other Stakeholders?

The CSRD will facilitate these groups in making informed decisions, improving the trust and reputation of companies. It will also promote innovation in sustainability, motivating companies to develop new ways of operating sustainably.

Dcycle: Your Ally in the Transition to Sustainability and Benefits

Dcycle emerges as a key facilitator in this scenario. Our comprehensive solution automates and simplifies the collection of data, analysis, and reporting, making compliance with the CSRD less daunting. Certified by TÜV and in compliance with the ISO 14064 standard, Dcycle offers a reliable and efficient platform to manage carbon footprint and other key aspects of sustainability reporting.Complying with the CSRD may seem like a challenge, but with the right tools and guidance, it can be transformed into a strategic opportunity. We invite you to discover how our tool, Dcycle, can simplify compliance with the CSRD for your company.

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Boris Landívar
Environmental Engineer

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