In 2021, the European Union (EU) introduced the Corporate Sustainability Reporting Directive (CSRD), a significant legal development. This directive mandates that companies publicly disclose their environmental and social impact. Its overarching objective is to establish a framework that ensures the disclosed sustainability data is comparable, relevant, and reliable.

The CSRD brings about a transformative change by compelling companies to disclose their sustainability data. This disclosure enables stakeholders such as investors, consumers, and policy makers to make better-informed decisions. By influencing companies to adopt more sustainable practices, the CSRD aims to drive the transition towards a more sustainable business landscape.

Who is impacted by CSRD?

If you are an Irish based business with European subsidiaries which generate a turnover of more than €150 million, and you meet at least two of the following criteria, you will fall under the purview of the CSRD:

  • Net turnover exceeding 40 million EUR
  • Assets exceeding 20 million EUR
  • Workforce comprising more than 250 employees

What implications does CSRD have for Irish companies?

If your company was previously required to report under the Non-Financial Reporting Directive (NFRD), it will also be obligated to report under the CSRD. For companies that were not subject to NFRD reporting requirements, there are two potential scenarios in which the disclosure responsibilities outlined in the CSRD could impact your business:

Scenario 1:

If your Irish company has securities listed on an EU-regulated market.

Scenario 2:

If your Irish company has a net turnover in the EU exceeding €150 million for each of the last two consecutive financial years and meets either of the following criteria:

  1. Has an EU subsidiary with securities listed on an EU-regulated market or is classified as a large undertaking and fulfills two of the following conditions:
    • Total assets of €20 million
    • Net turnover of €40 million
    • An average of 250 employees over the financial year
  2. Has an EU branch that generated a net turnover of over €40 million in the previous financial year.

What is the timeline for compliance?

For those organisations who are required to comply with CSRD, our timeline shows the steps the European Commission has already taken and is planning to take. Included against each step is a recommended action plan for companies who are preparing for mandatory reporting in 2026.

What concrete changes does CSRD bring to companies' reporting of non-financial information?

Required disclosures:

  • Double materiality: impacts, key risks and opportunities affecting the business (financial implications) or business affecting the surrounding environment and societies (impacts)
  • Not only historic performance disclosures, but forward-looking perspective up to 10 years
  • Time-bound sustainability-related targets, metrics and action plans
  • Enhancing the value chain perspective
  • Roles of administrative, management and supervisory bodies with regard to sustainability management

Reporting practices:

  • Reporting in the Management Report (vs. previously in Sustainability Report)
  • Compulsory assurance (limited first, reasonable after the transition period)
  • Highest management engagement
  • Electronic reporting format (XHTML) and reporting to European Single Access Point (comparability)

 

Being able to comply with CSRD and leverage positive business opportunities require systematic development and transformation

 

How should you prepare for CSRD?

We support our clients in making CSRD-reporting work for their organisations. Part of the CSRD reporting drives companies to report completely new KPIs that have not been measured before. That is why they have to design new and transform existing internal processes aimed at collecting, monitoring and clarifying sustainability data.

Our approach to CSRD reporting is built on our extensive sustainability and reporting experience and strengthened by our people, digital, data and technology capabilities. We support you in defining the right KPIs to report on and preparing your organization to be able to do so.

 

If you would like to gain a deeper understanding of CSRD and its implications for your organisation, or if you require assistance in identifying potential gaps and developing the necessary capabilities, please don't hesitate to contact us. We are here to help. 

Would you like more information?

If you want to get more information about this subject please get in touch with our experts who would be pleased to hear from you.

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