What does the Corporate Sustainability Reporting Directive (CSRD) mean for your business?

CSRD stands for Corporate Sustainability Reporting Directive. This European regulation requires companies to report on their sustainability performance and business operations.

The CSRD Directive, or Corporate Sustainability Reporting Directive, is a European regulation that requires companies to report on their sustainability performance and business operations. Even if your company is not yet required to comply with the CSRD, it is a good idea to start preparing now. Companies that are required to report must include data on their partners within the value chain. So, you may already encounter these requirements in your collaborations with suppliers and customers.

Starting in 2025, the CSRD reporting obligation applies to publicly listed and large companies, which will need to report on 2024. Following that, large enterprises (reporting on 2025), publicly listed small and medium-sized enterprises (reporting on 2026), and non-EU companies with a certain EU revenue (reporting on 2028) will also be required to report. Since reporting companies must also include data about their partners in the value chain, you may already need to consider these requirements in your partnerships. It is wise to start gathering your sustainability data so you can meet information requests from your value chain partners.

If your sustainability reporting is incomplete, submitted late, or not submitted at all, you could face a fine. Additionally, failing to report on sustainability could negatively affect your reputation. Customers, partners, and investors may lose trust in your business.

ESG stands for Environmental, Social, and Governance. These three aspects reflect your company’s sustainability and ethical standards. By continually evaluating your ecological footprint (environmental), relationships with employees, customers, and suppliers (social), and your business ethics, transparency, and governance structure (governance), you can improve your practices.
The CSRD, or Corporate Sustainability Reporting Directive, is a regulation that mandates companies to report on their sustainability performance and business operations.

While ESG provides the themes on which you can assess your sustainability progress, the CSRD focuses on the obligation to report on your sustainability efforts.

A sustainability report focuses on your company’s impact on society. In the report, you describe your company’s sustainability goals and the efforts you are making to achieve them. A sustainability report must be submitted annually. The goal of the report is to give you insight into your impact, allowing you to become more sustainable across all ESG areas.

For publicly listed small and medium-sized enterprises (SMEs), the CSRD will apply starting January 1, 2026. It is still uncertain whether and when the CSRD will apply to non-publicly listed SMEs. The European Union is currently considering whether a 'lighter' version of the CSRD could be developed for these companies, one that would be easier to implement.

Even if your company is not yet required to report, you might still be impacted by the CSRD through your collaborations. Reporting companies must also include data about their partners in the value chain.

The CSRD requires that you provide insight into your sustainability strategy, risks, and impacts. To start preparing for the CSRD, you can follow these steps:

- Identify your stakeholders. Determine which stakeholders are most relevant to your business and have the most impact on your activities.

- Inventory the sustainability issues relevant to your business. Identify which issues are most important, and assess their potential impacts, risks, and opportunities.

- Develop a sustainability strategy. Set clear, measurable goals for areas such as carbon dioxide emissions, energy consumption, employee well-being, and good governance.

- Collect data on key business activities. Start with data on your direct emissions (Scope 1) and indirect emissions from the generation of purchased energy (Scope 2). Afterward, you can gather data on Scope 3 emissions.

- Test your reporting systems. Gradually integrate your sustainability efforts into your operations and experiment with which CSRD reporting system works best for your reporting processes.