Major pillars of the European Union Green Deal, the green taxonomy and the new CSRD directive will have a strong impact on CSR reporting. These two initiatives are part of a package of measures to achieve carbon neutrality by 2050. Let’s take a closer look…
CSRD: new CSR reporting directive
The new CSRD directive represents a major pillar of the European Union’s sustainable finance strategy. It will gradually come into force from January 1, 2024 and aims to harmonize and make CSR reporting practices more reliable.
The CSRD replaces and extends the NFRD already well known to companies: the Non Financial Reporting Directive.
Here are the main changes made by the CSRD:
- Many more companies involved. 50,000 companies in Europe will have to establish extra-financial reporting concerning their CSR implications. The NFRD only targeted 11,000 companies or establishments;
- It makes it possible to collect much more precise and complete information thanks to a new common reporting format in the EU;
- The notion of dual materiality. This involves communicating both on the impact of the company’s activities on society and the environment AND on the impact of ESG issues on the company;
- Obligation to carry out a audit de son reporting RSE by an OTI (Independent Third Party Organization)
If you want to see more clearly, you can follow a training course on the actions to be implemented to comply with the new European directive on CSR (CSRD).
Green taxonomy, environmental compass of Europe
Second pillar of Green deal, the green taxonomy is a flagship measure of the european commission. It is also one of the bases for building a green finance ecosystem.
Indeed, it aims to identify and classify economic activities having a positive impact on the environment. The objective of the green taxonomy is to direct investments towards sustainable activities and to promote the commitment of organizations to ecological transition.
Concretely, an activity can be considered sustainable if it substantially meets at least 1 of these objectives. Of course, it must not compromise the other 5:
- Climate Change Mitigation
- Adaptation to climate change
- Sustainable use and protection of aquatic and marine resources
- The transition to a circular economy
- Pollution control
- The protection and restoration of biodiversity and ecosystems.
This regulation applies in particular to:
- Financial institutions and large companies with more than 500 employees who already have the obligation to communicate on their environmental impact. This year, they must already publish the alignment of their activities with this new regulation, that is to say the share of their turnover, their investments and their expenses allocated to sustainable activities.
- Financial market participants and other organizations that use this information. These are, for example, financial supervision institutions such as central banks or insurance companies.
- Member States when they put in place public measures, standards or labels for green financial products or green bonds.
Thus, from 2024, many companies among the 50,000 players concerned will have to learn to adapt their reporting to the challenges of the green taxonomy and to the new European CSRD standard.