The Corporate Sustainability Reporting Directive (CSRD) plays a crucial role in promoting transparency with regard to environmental concerns. The CSRD requires companies to incorporate sustainability information into their financial reports, thereby reinforcing greater environmental and sustainable responsibility among organizations.

Published on December 14, 2022, and effective January 5, 2023, the CSRD provides for gradual implementation, starting with publicly traded companies (except micro-enterprises), large companies within the EU, and non-EU companies with subsidiaries in the EU (see summary table below). The CSRD report should include information on the business model and corporate strategy for the transition to a more sustainable economy, targets to be achieved and their timetable, measures to identify and monitor the environmental impacts of the company’s actions, etc.

The recent implementation of reporting standards in the European Union (EU) is characterized by its more rigorous and transparent nature, allowing customers, suppliers, and other stakeholders in the value chain to assess the environmental impact of business activities and understand the mitigation measures adopted. To ensure the reliability of the information contained in these reports, they will be subject to independent audits and certifications. In this way, the CSRD is a tool for assessing corporate responsibility in relation to environmental issues, which can be used by customers or business partners to select partners and suppliers more carefully, in comparison with other similar tools.

For investors, the CSRD will enable a more comprehensive analysis of the company’s activities, allowing for an assessment of risks and opportunities taking into account environmental and sustainability factors.

On the other hand, and no less importantly, this report will allow end consumers to have information about the environmental performance and awareness of companies, enabling them to make more conscious and informed decisions.

With the implementation of these reports, the EU aims to raise awareness of environmental issues among businesses, giving them the same level of importance as financial reporting currently has, and preventing unfounded claims – greenwashing.

It is expected that, over time, this awareness will impact the business community and pressure it to adapt and implement mitigation measures, which will inevitably lead to a need for adaptation, modernization, and innovation among all players in the value chain.

Sustainability will become as important as financial issues and will have to be treated and reported with the same degree of rigor, rigour, and transparency, having a direct impact on the company’s reputation and credibility.

In the future, only those who accept this paradigm shift and embrace sustainability and environmental protection as an integral part of their activity will have a place in the business world that wants to be green.

Phases of gradual implementation of the CSRD From January 1, 2024: – Listed companies (except micro-enterprises), large companies (>500 employees) of public utility already required to report non-financial information – must report information for 2024 in 2025 From January 1, 2025: – Large companies (>250 employees) and/or €40 million and/or total assets of €20 million From January 1, 2026: – Listed SMEs and other companies NOTE: Small and medium-sized enterprises may not report until 2028.

Types of companies required to submit reports (starting next year) Publicly traded companies Large companies and parent companies that meet at least two of the following requirements: – Total balance sheet exceeding €20 million – Net turnover exceeding €40 million – More than 250 employees Non-EU companies with a subsidiary in the EU: Net turnover equal to or exceeding €150 million Insurance companies Financial institutions
Exceptional cases (not required to submit a report) Subsidiaries of EU companies whose data is already reported in the parent company’s report. Subsidiaries of non-EU companies whose data is already reported in the parent company’s report, provided that it complies with European Sustainability Reporting Standards.