A 3-Minute Guide to CSRD
What is the CSRD?
The Corporate Sustainability Reporting Regulations of 2024 mark a key step in the European Union’s push for greater transparency in corporate environmental and climate data. These regulations implement the Corporate Sustainability Reporting Directive (CSRD), part of the EU’s larger effort under the European Green Deal to address climate change. It builds on the Non-Financial Reporting Directive (NFRD), expanding the scope and depth of reporting required from businesses—making transparency a central focus in environmental, social, and governance (ESG) practices.
What’s Required?
Companies under the new regulations must report on a double materiality basis. This means they not only need to disclose how climate and other ESG factors affect their business (financial materiality), but also how their operations impact the environment and society (impact materiality). Additionally, companies must provide details on their value chain.
These regulations are a significant step towards integrating sustainability into corporate governance and making it a core part of business reporting. They encourage businesses to be more transparent and proactive about their environmental and social impacts while adjusting to evolving regulatory requirements.
Key Dates and Scope
The regulations came into effect on July 6, 2024, and apply to financial years starting on or after the following dates:
January 1, 2024: Public interest entities already under the EU’s non-financial reporting rules (companies with over 500 employees).
January 1, 2025: All other large companies with more than 250 employees.
January 1, 2026: Listed small and medium-sized enterprises (SMEs), though they can opt out until 2028 if needed.
Why CSRD Matters
Currently, approximately 11,700 companies across the EU must adhere to NFRD guidelines. However, with the introduction of the CSRD, that number is expected to rise to around 49,000. The CSRD mandates companies to report on a broad range of ESG factors, including climate change, biodiversity, human rights, and social inclusion.
One of the major advantages of the CSRD is the enhanced transparency it offers. As stakeholders are increasingly prioritising sustainability, businesses that comply with CSRD can strengthen trust and credibility. According to PwC, 51% of companies believe the CSRD will significantly enhance their environmental performance, while 49% anticipate improved stakeholder engagement.
This directive also comes with a strong framework for risk management. By thoroughly assessing ESG factors, companies can identify potential risks early, helping them mitigate future challenges and seize opportunities that align with sustainable practices.
Challenges to Be Aware Of
Despite the benefits, the CSRD also presents challenges, particularly around data management. Many companies—over 90%—still rely on spreadsheets for sustainability reporting, but the complexity of CSRD reporting will require more advanced systems.
Smaller businesses may find this transition particularly challenging, as they may need to invest in new technologies and upskill or hire staff with expertise in ESG reporting and data analysis. While these changes present a new challenge for businesses, they are critical for long-term compliance and increased value.
How do I Prepare?
If you’re not sure where to start—Techies Go Green is here to help. Don’t miss Techies Go Green Live on October 17th at the Guinness Enterprise Centre for step-by-step guidance on building a climate action plan: Techies Go Green Live Tickets.
For even more information on the CSRD in Ireland, be sure to register for the Irish-German Chamber of Commerce webinar on September 19th from 11 am to 12 pm.
