Understanding Corporate Sustainability Reporting Directive

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The Corporate Sustainability Reporting Directive (CSRD) is a new EU regulation that replaces the Non-Financial Reporting Directive (NFRD).

It significantly broadens the scope of companies required to report on their sustainability performance and introduces more stringent reporting standards. The CSRD aims to improve the quality and consistency of sustainability information provided by companies, making it easier for investors, stakeholders, and regulators to assess corporate ESG performance.

The CSRD expands reporting obligations beyond large listed companies to include more organisations, such as large private companies and non-EU companies with significant EU operations.

Although the UK is no longer part of the EU, UK-based companies with EU operations or subsidiaries are still affected by the CSRD. Additionally, the UK government is aligning its own sustainability reporting requirements with international standards, including the Task Force on Climate-related Financial Disclosures (TCFD) and the International Sustainability Standards Board (ISSB).

UK companies impacted by the CSRD need to:

1. Determine Applicability: Assess whether their business operations or subsidiaries fall under the scope of the CSRD.
2. Implement Reporting Processes: Establish internal processes for collecting, managing, and reporting ESG data.
3. Align with Reporting Standards: Ensure compliance with ESRS or other relevant reporting standards.
4. Obtain Third-Party Assurance: Engage with auditors to provide assurance on sustainability reports.
5. Prepare for Future Regulations: Stay informed on future regulatory developments in both the EU and UK to ensure ongoing compliance.

Starting in 2024, the CSRD will apply to large EU companies and non-EU companies with substantial EU operations. 

The key requirements for companies falling under the scope of the CSRD include:

1. Detailed ESG Reporting: Companies must provide comprehensive reports on their environmental, social, and governance impacts, risks, and opportunities.
2. Double Materiality: Companies need to assess both the impact of ESG factors on their business and the impact of their business on the environment and society.
3. Standardised Reporting Format: Reports must align with the European Sustainability Reporting Standards (ESRS), ensuring consistency and comparability across industries.
4. Assurance Requirements: Companies will need to obtain third-party assurance on their sustainability reports, similar to financial auditing.

The scope of the CSRD will continue to expand in the coming years. 

By 2026, the directive will apply to a wider range of companies, including:

• Listed SMEs: Small and medium-sized enterprises listed on EU-regulated markets will be required to comply, with simplified reporting standards.
• Non-EU Companies: Companies outside the EU with net turnover exceeding €150 million in the EU will also need to report on their ESG performance.
• Supply Chain Transparency: There will be an increased focus on supply chain transparency, requiring companies to report on the ESG practices of their suppliers and partners.

At iModus, we understand that navigating the complexities of sustainability reporting can be challenging. 

Our expertise in energy and carbon consultancy positions us as a trusted partner in helping businesses meet their CSRD obligations and other sustainability reporting requirements. 

Here's how we can support your company:

1. ESG Data Collection and Management: We help businesses establish efficient systems to collect and manage ESG data, ensuring accuracy and consistency in reporting.
2. Compliance with Reporting Standards: Our team will guide you through the European Sustainability Reporting Standards (ESRS) and other relevant frameworks, ensuring your reports meet regulatory expectations.
3. Third-Party Assurance Preparation: We assist in preparing your sustainability reports for third-party assurance, ensuring a smooth auditing process.
4. Energy Efficiency Projects: Our core services, including LED lighting installations, voltage optimisation, and EV charging solutions, contribute to improved sustainability performance, directly supporting your ESG goals.
5. Ongoing Regulatory Updates: We provide regular updates on sustainability regulations, keeping your business informed of new developments and ensuring you remain ahead of compliance deadlines.

The CSRD represents a significant shift in corporate sustainability reporting, with wide-ranging implications for UK companies operating in the EU. 

By understanding the requirements and preparing for future developments, businesses can position themselves as leaders in sustainability and build trust with investors and stakeholders.

Imodus is here to help your company navigate these changes, providing the expertise and solutions needed to meet your sustainability goals and regulatory obligations. 

Contact iModus to learn more about how we can support your journey toward sustainability compliance.