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Corporate Sustainability Reporting Directive (CSRD)

The CSRD is a new, important piece of European regulation requiring companies to report on non-financial topics, such as environmental challenges, social impact, and corporate governance (ESG). Learn more about what your CSRD journey could look like.

The Corporate Sustainability Reporting Directive (CSRD) is designed to make sustainability information more transparent, reliable and comparable.

The CSRD requires companies in the European Union to report on non-financial topics, such as environmental challenges, social impact, and corporate governance (ESG).

It presents numerous advantages, as it can uncover opportunities for cost reduction and foster innovation in product development. However, knowing which information you need to disclose to comply with this new legislation and how to approach reporting can be challenging.

South Pole's latest tools and methodologies will assist you in determining your level of compliance with the CSRD regulation, help you identify material topics to disclose and provide insight into where improvements are required - saving you time and resources. Once you know your material topics and current reporting gaps, you can move towards closing them, prepare for reporting and disclose your ESG performance.

Our solution

Each CSRD journey is unique and requires a tailored approach to ensure it aligns with your business objectives. We can support you in the following areas:

CSRD Gap Analysis

Get clarity on your current sustainability reporting, understand where you stand regarding complying with the CSRD regulations and receive recommendations on which improvements to prioritise.

Double Materiality Assessment

Determine which reporting standards, disclosures, and data points should be included in your reporting and which ones can be reasonably omitted.

Strategy Definition and Vision

Design a clear ESG strategy to ensure that your key stakeholders and organisation are set up for success.

Capacity Building

Explore trainings that will empower C-suite, management teams, and employees to get up to speed on CSRD regulation and provide insight into how it will impact business activities.

Support and Backup

Benefit from South Pole’s global team of experts who can provide support and answer your CSRD-related questions to ensure you confidently kick off your journey.

Ready to get started?

Get started with your CSRD journey today
Get started with your CSRD journey today

Customized Solutions Highly tailored to your company's needs and sustainability goals

Efficiency and Clarity Straightforward tools and methodologies that simplify the CSRD process

Actionable Insights Recommendations that guide you toward meaningful activities

Collaboration and Alignment Presentations and joint discussions will ensure that all stakeholders involved are on the same page and committed to the next steps

Long-Term Success A foundation that addresses immediate needs and set you up for success in the long run

Why choose South Pole as a trusted partner?

Impartial, independent advice

We are an impartial, independent advisor that has supported clients on their climate action strategy for over 17 years.

Experienced and committed team

Our experienced and committed team of passionate experts have global experience and specialised regional market knowledge.

Solid track record

We have a solid track record, having been trusted by 1000+ corporations.

Frequently asked questions

What are the main objectives of the CSRD?

Following the objectives outlined in the Paris Agreement the EU approved the European Green Deal in 2020, which is a set of policy initiatives that aims to set the EU on track towards climate neutrality in 2050. The CSRD is one important element in this legislative package, and complements the EU Taxonomy and the Sustainable Finance Disclosure Regulation (SFDR).

The main objective of the CSRD is to make the ambitions of the European Green Deal achievable by channeling capital flows towards sustainable businesses through ensuring more transparent and harmonized sustainability information, as well as through an increased emphasis on the importance of ESG factors.

Which companies are affected by the CRSD?

CSRD will apply to:

  1. All companies listed on regulated markets in the EU (except micro-companies).
  2. All large companies that meet two of the three following criteria:
    1. More than 250 employees during the financial year
    2. Net turnover exceeding EUR 50 million
    3. Balance sheet total exceeding EUR 25 million
  3. Non-EU companies that meet certain criteria

Note that only listed SMEs will have to comply with CSRD. However, there are big benefits for non-listed SMEs to follow the CSRD requirements anyway since it will make it easier to provide information on their sustainability performance to clients, banks and investors. The EU has proposed specifically designed sustainability reporting standards for non-listed SMEs with simplified reporting requirements, that non-listed SMEs can adopt on a voluntary basis.

When will the new CSRD rules start to apply?

The new CSRD rules will apply in stages as follows:

1st of January 2024:

All companies subject to the Non-Financial Report Directive (NFRD), i.e. large public interest entities/groups with more than 500 employees (reporting in 2025 on 2024 data)

1st of January 2025:

All remaining large companies (reporting in 2026 on 2025 data)

1st of January 2026:

all listed SMEs (reporting 2027 on 2026 data). For these companies there is a possibility to opt-out until 2028

1st of January 2028:

Non-EU companies with branches/subsidiaries of a certain size (reporting 2029 on 2028 data)

What is Double Materiality?

The Double Materiality Assessment (DMA) is foundational in the CSRD. DMA has two dimensions:

  1. Impact materiality: the impact that the company's business activities have on the sustainability matters such as environment and society (Inside-Out perspective)
  2. Financial materiality: the impact of sustainability matters that have a financial impact on the company (Outside-In perspective)

In the process of the Double Materiality Assessment (DMA) companies will engage with stakeholder and assess and rate impacts, risk and opportunities from the two perspective above. This will give an overview which are the greatest impacts, risk and opportunities aswell as giving the company clarity of which sustainability matter should be reported on in the CSRD report. Material topics should be reported on and non-material may be omitted.

Double materiality can also help companies improve their risk management strategies, enhance their business resilience and position themselves more favorably in a market increasingly focused on sustainable and socially responsible practices.

Read our blog post on Double Materiality Assessment to learn more.

Where and in what format should companies report on CSRD?

The CSRD information should be included as a specific section in the company's management report.

The information should be submitted in an electronic format (XHTML format) in accordance with European Single Electronic Format (ESEF) regulation, and uploaded to the coming European Single Access Point (ESAP) database, in order to make the reported information easily accessible to investors and other stakeholders.

What happens if a company fails to disclose according to the CSRD?

Regarding non-compliance with the CSRD, it will be up to each Member State to define penalties for infringements to the CSRD.

Expectation are that they will be substantial. Additionally, there are significant reputational and commercial risks when not complying.

What are the differences between the NFRD and the CSRD?

The Non-Financial Reporting Directive (NFRD) is an EU directive that was adopted in 2014 which requires certain large EU companies (companies defined as public-interest entities, such as listed companies, banks or insurance companies with over 500 employees) to report on non-financial issues and their ESG performance. The CSRD builds on the NFRD, and increases the scope of reporting and the content of what needs to be disclosed.

For example:

  • The new CSRD rules will affect many more organisations - from around 11,700 companies having to report according to the NFRD to around 50,000 companies having to comply with the new CSRD regulations.
  • The intention of the CSRD is to make sustainability information more accessible, comparable and reliable. Therefore, the CSRD forces companies to disclose in accordance with specific standards (called the ESRS, European Sustainability Reporting Standards). Under the NFRD companies are able to choose which standard to use for publishing their sustainability information.
  • The CSRD has stricter regulations on third-party validation and requires mandatory assurance, while assurance is voluntarily under the NFRD.
  • The CSRD is also stricter on where and in what format companies should report. The NFRD encourages digital reporting but has no specific requirements on accessibility. The CSRD on the other hand, requires companies to report in the XHTML format and upload this information to a common database (called ESAP, the European Single Access Point).

What are the key benefits of reporting according to the CSRD?

Although the CSRD might seem like an increased regulatory burden for companies, reporting according to this new directive will bring about various key benefits. The CSRD presents an opportunity to companies to integrate ESG into its core business strategy.

Since complying with the CSRD will increase the degree of transparency in sustainability reporting, it will be easier for investors, clients and other stakeholders to get a clear picture of your company's sustainability performance. This could result in increased business resilience, more access to capital and financing, increased positive reputation, reduced risks of being accused of greenwashing, among others.

Furthermore, since the disclosure requirements of the CSRD are standardised and highly detailed, the degree of comparability between companies will be higher which in turn makes it easier for external investors to find the best performing companies.

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Magnus Kagg, Senior Consultant
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