EU Corporate Sustainability Reporting Directive

The Corporate Sustainability Reporting Directive (CSRD) was published in the the Official Journal of the European Union on December 16, 2022. It requires certain companies to provide reports on sustainability-related matters, in line with a set of standards developed by an independent body called the European Financial Reporting Advisory Group (EFRAG). This directive replaces and expands the scope of the existing sustainability reporting requirements under the EU’s Non-Financial Reporting Directive (NFRD). The CSRD effectively quadruples the number of companies required to report and extends the requirements to non-European companies with significant operations in the EU.

EFRAG’s approved version of the set of standards required by the CSRD was released in November 2022 and includes two sets of cross-cutting standards, which are general requirements irrespective of topic, and 10 other standards divided into the ESG themes: Environmental, Social and Governance.  The image below demonstrates this:

When it comes to complying with the Environment section of the CSRD, OPTEL’s Optchain is the perfect solution to provide extensive reporting mechanisms that monitor and disclose GHG emissions, both at an organisation and product level. Because the CSRD requires disclosure of GHG emissions in scopes 1, 2 and 3 for most companies and also requires as much primary data as possible, it is important to have the proper tools and systems in place, particularly for primary data outside company walls. Optchain is the traceability platform that enables granular and accurate tracking of GHG emissions for scopes 1, 2 and 3 throughout the supply chain. It also offers complete visibility on supply chain performance.

Reporting requirements will be phased in over time for different types of companies. The implementation of the directive is to start with larger companies, with rollout to smaller companies over the following years. The first companies will have to apply the standards in fiscal year 2024, for reports published in 2025. Listed SMEs are obliged to report as of 2026, with a further possibility of voluntary opt-out until 2028, and will be able to report according to separate, proportionate standards that EFRAG will develop next year. The table below shows the CSRD deadlines: