A major pillar of the European Union’s sustainable finance strategy, la directive CSRD is already impacting the CSR reporting practices of many organizations. If it brings its share of difficulties, the opportunities it generates are not to be neglected. Today, let’s take a look at the CSRD directive and the challenges and opportunities of this evolution for companies.
The CSRD directive in a nutshell
This new EU directive replaces and extends the NFRD – the Non Financial Reporting Directive – which you are already familiar with. However, some major changes should be known and anticipated:
- If NFRD didn’t concern your organization until now, CSRD may involve it today. Indeed, nearly 40,000 additional companies in Europe will have to establish extra-financial reporting concerning their CSR implications. We thus go from 11,000 companies or establishments with the NFRD, to 50,000 for the CSRD.
- The information to be provided is much more precise and complete. The new reporting format is now common to all EU companies.
- The CSRD introduces the notion of dual materiality. Companies will have to communicate both on the impact of the company’s activities on society and the environment AND on the impact of ESG issues on the company;
- The companies concerned will now have to carry out a audit of their CSR reporting by an OTI (Independent Third Party Organization)
CSRD Directive: the major challenges to anticipate
It is essential for any company to comply with the legal framework that governs its activities and its CSR approach. However, this can present some challenges for organizations.
We can distinguish several challenges to anticipate:
- Know the legal evolution of CSR reporting in France.
And that’s no small feat. It’s about knowing to what extent your company is affected, from what dates, in what way… Companies will have to devote time and resources to ensure that they respect and master the new reporting requirements. Adapting to the CSRD directive may in particular require training by experts who master the specificities of your sector.
- Gather the information to be included in the reporting. If this has not already been done, companies will have to define a clear CSR policy. They will also have to develop their own dedicated management dashboard, and set up a system of relevant indicators for monitoring objectives (KPIs).
- Compliance and CSR risk analysis in conjunction with stakeholders. Beyond the significant financial penalties, non-compliance with the CSRD directive can lead to a loss of confidence on the part of customers and stakeholders. Ultimately, this can mean a reduction in activity and a drop in turnover. Thus, some companies may have to implement new procedures and possibly change partners and subcontractors.
CSRD: opportunities for companies
The philosophy of this new directive is to help companies move forward in their transition. It is therefore above all an opportunity for European companies to adopt a more sustainable and desirable approach.
A common language is thus imposed on all companies by the application of this new legal framework. This allows organizations to concretely measure their goals and results. They can thus compare themselves with each other according to common indicators, and be inspired together.
In addition, the reliable and precise data produced by these reports can be consulted by stakeholders or suppliers who so wish. They therefore constitute proof of your commitment and your efforts according to European standards.
In fact, the CSRD directive is a real opportunity for companies to demonstrate transparency and contribute to a greener and more respectful future.