Around 15,000 companies in Germany and a total of around 50,000 companies across the EU are now obliged to report comprehensively on their sustainability impacts, risks and opportunities.
What is CSRD?
The Corporate Sustainability Reporting Directive (CSRD) is a further development of the Non-Financial Reporting Directive (NFRD) and sets new standards for sustainability reporting within the EU.
It aims to increase the transparency and accountability of European companies with regard to their sustainability performance by introducing binding reporting standards. This includes extended reporting on environmental, social and governance (ESG) aspects, which must be available in a digital format.
Potential challenges for companies
The implementation of the CSRD requirements poses challenges for companies. These include
- Adapting to new reporting standards,
- the collection and evaluation of extensive data on sustainability aspects
- identifying material topics, taking into account the principle of dual materiality (more on materiality analysis),
- preparing the extensive carbon footprint and
- the procurement and presentation of the required data in a standardized format.
In addition, companies need to realign their internal processes and systems and may need to implement new technologies and software solutions to meet these new requirements.
As an SME, will you have to comply with the CSRD requirements?
Although SMEs may initially be exempt from CSRD, many will be directly or indirectly affected, particularly through requirements from their business partners or as part of supply chain obligations.
The CSRD poses challenges for SMEs such as
- Resource constraints,
- complex data management,
- high costs,
- technological requirements and
- training needs.
SMEs face additional burdens as they often have limited resources to meet the requirements of CSRD, especially in determining and collecting relevant sustainability KPIs. Standardized sustainability reporting frameworks could help SMEs to reduce the effort and cost of reporting. External consulting firms can assist in implementing an effective sustainability management system, selecting the right metrics and preparing a comprehensive report.
Careful planning and support are critical to managing these and realizing benefits. Our services can help you meet the requirements efficiently and cost-effectively.
Contact us today for a free consultation.