From reporting to sustainable performance

The CSRD (Corporate Sustainability Reporting Directive) is the European directive on the publication of sustainability information by companies. It harmonises ESG reporting by specifying the key indicators to be published in the management report on climate, pollution, water, biodiversity, the circular economy, social issues, and governance. 40,000 European companies and 10,000 non-European companies are concerned. 

The publication of robust sustainability reporting brings several advantages to companies: strategic reflection on impacts, risks and opportunities at the highest level of the company, financing opportunities, strengthening of the employer brand, etc. 

ESRS stands for “European Sustainability Reporting Standards”. These are the set of standards that specify the categories of indicators, the indicators and the methodologies required to produce high-quality sustainable information. There are two generic standards (ESRS 1 and 2) and ten thematic standards on the Environment (E1, E2, E3, E4 and E5), Social (S1, S2, S3, S4) and Governance (G1). 

Until now, the Non-financial Reporting Directive did not specify the specific indicators expected in the publication of extra-financial information on the ESG perimeter. Between 2017 and 2020, the companies subject to it were gradually required to publish a full carbon footprint and a reduction plan. The CSRD goes further in its ambition to harmonise sustainability reporting by specifying the indicators expected for each ESG theme of significant importance and by requiring them to be auditable. 

The first CSRD reports will be published in 2025 on 2024 sustainability data for large listed companies subject to the NFRD (Non-Financial Reporting Directive). All large companies, including SAS, will start reporting in 2026 on 2025 data. Listed SMEs will begin reporting in 2027 on the year 2026 (with a possible two-year delay). Finally, large foreign groups with significant activity within the EU will publish their first report in 2029 on 2028. 

The European taxonomy is integrated into the CSRD. This means that companies subject to this new directive will also have to measure their eligibility and alignment with the European taxonomy. 

The CSRD aims to be a reporting framework that integrates other robust standards. To this end, the European Union is working mainly with the CDP, the GRI, the TCFD and the ISSB. If a company is aligned with the CSRD, then it will be highly compatible with the best sustainability reporting frameworks. 

The CSRD advocates double materiality (impacts and risks), whereas the ISSB opts above all for financial materiality. In addition, the CSRD has defined 10 thematic standards on ESG, whereas the ISSB focuses solely on climate change to date. Finally, the CSRD is mandatory within the EU and beyond, whereas the ISSB is a framework defined by a private law body that can be made mandatory by certain countries. 

EcoAct has a positive and transformative vision of CSRD. It can be approached as something other than a reporting exercise. Based on your data and science, we use reporting as a guide to corporate sustainable and resilient transformation. At the same time, we believe that awareness-raising and commitment are essential if you are to take action using this most robust framework for action at international level, in a pragmatic and educational way. 

The following penalties apply in the event of non-compliance with the CSRD in France:  

• Non-publication: liable to a €3,750 fine + public communication + exclusion from public procurement procedures and concession contracts (law on green industry) 
• Non-audit: liable to a €30,000 fine + 2 years’ imprisonment  
• Obstructing an audit: liable to a €75,000 fine + 5 years’ imprisonment 

In addition to the financial penalties, CSRD information will be published on a European Union platform and made available to the public, which could represent a reputational risk. 

• Are stakeholders aware of ESG issues? 
• Is double materiality sufficient to identify impacts, risks and opportunities?  
• Are there plans for the CSR and Finance departments to work together?  
• To what extent is foresight integrated into the CSRD project? 
• How do you plan to communicate with your value chain? 
• To what extent is data collection and management anticipated? 
• How can the CSRD be used to maximise its ESG impact
• How can the CSRD be used to catalyse the transformation of its business model?