The Ultimate Cheat Sheet to Master CSRD

1. Understand CSRD

The Corporate Sustainability Reporting Directive (CSRD) is the European Union's new framework for sustainability reporting. It requires companies to report on their sustainability performance as part of their management report. The directive aims to enhance the consistency and comparability of sustainability information across EU companies.

2. Know the Entities Affected

CSRD applies to all listed companies on EU-regulated markets, including small and medium-sized enterprises (excluding micro-enterprises). Also, all large companies, listed or not, that meet at least two of the following criteria:

• Balance sheet total of more than EUR 20m
• Net turnover of more than EUR 40m
• Average number of employees during the financial year exceeding 250

It also applies to non-EU companies with a turnover above EUR 150 million in the EU, and at least one subsidiary or branch in the EU that exceeds the above thresholds.

3. Get Familiar with ESRS

The European Sustainability Reporting Standards (ESRS) is a central component of the CSRD. These standards guide what and how companies should report. ESRS have a broader view of materiality than some other standards and are based on double materiality - impact and financial perspective.

4. Double Materiality Assessment

Double materiality assesses will help your organization identify its environmental, social, and governance (ESG) impacts, risks, and opportunities. It's a requirement under the ESRS and helps determine what your company should report on.

Moreover, you can use this as a strategic tool for making informed decisions and future-proofing your business.

5. Report Preparation

Ensure data integrity, transparency, and appropriate structures are in place to prepare and comply with the ESRS and CSRD requirements. The use of software for the collection, analysis, and reporting of sustainability data can simplify this process.

6. Training and Expert Guidance

Consider seeking expert guidance for tasks like gap analysis and double materiality assessment. Training your team on CSRD and ESRS is essential for compliance and effective reporting.

7. External Assurance

CSRD requires statutory limited assurance for the ESRS report. External assurance providers help validate the report's accuracy, boosting confidence among stakeholders.

8. Timeline for CSRD Implementation

Depending on the size and type of the company, implementation will occur as follows:

June 2023: EU Commission to adopt ESRS as delegated acts.

• 1 January 2024: Companies already subject to the Non-Financial Reporting Directive.
• 1 January 2025: Large companies not currently subject to the Non-Financial Reporting Directive.
• 1 January 2026: Listed small and medium-sized enterprises.
• 1 January 2028: Non-EU companies covered by CSRD.

9. Embrace Digital Solutions

Leverage advanced software solutions that are tailored to ESRS requirements. These can help in efficient data collection, analysis, reporting, and monitoring of sustainability data, and streamline the process for external assurance providers.

10. Stay Informed

Regulations and standards like CSRD and ESRS may undergo revisions and updates. Stay informed about these changes and their potential impact on your business. Regulatory bodies, industry associations, and sustainability consultancies can be great sources of up-to-date information.

11. Foster a Culture of Sustainability

Beyond compliance, use these regulations as an opportunity to foster a culture of sustainability within your organization. This can drive better business performance, improve brand reputation, and contribute to global sustainability goals.

Bottom Line

Transitioning to the new CSRD and ESRS requirements is not just about meeting regulatory demands. It is also an opportunity to demonstrate your organization's commitment to sustainability, transparency, and accountability to stakeholders and society at large.