The introduction of the Corporate Sustainability Reporting Directive (CSRD) is a significant step towards a more sustainable future for companies. It presents a whole 15,000 companies in Germany with the new challenge of preparing a sustainability report. In this blog post, we explain what the CSRD term means, whether your company is affected by the sustainability reporting obligation and what you can expect now.
What is the Corporate Sustainability Reporting Directive (CSRD) and when does it come into force?
The Corporate Sustainability Reporting Directive (CSRD) is an important approach to measuring and communicating corporate sustainability and responsibility. Mandatory reporting should lead to the following benefits:
1. improving a company’s access to financial capital. Sustainability reporting can help companies to identify and manage their own risks and opportunities in connection with sustainability issues. 💶
2. create a basis for better dialog and communication between companies and their stakeholders 🤝
3. help to improve the reputation of the companies 👏
4. reduction in ad hoc requests for information. 📄
In December 2022, the EU Parliament adopted the CSR Directive. It should come into force on January 1, 2024 and extends the requirements of the existing Non-Financial Reporting Directive (NFRD).
The number of companies required to disclose under the CSRD will increase steadily on this basis in the period from 2024 to 2028.
What is included in the CSRD or sustainability report?
The report is structured in accordance with the ESRS (European Sustainability Reporting Standards). They are a component or disclosure tool within the CSRD (Corporate Sustainability Reporting Directive) and outline all the information that must be included in these reports.
The final version of ESRS Set 1 was published by the EU Commission on July 31, 2023 and is now also available as a German translation.
ESRS Set 1 defines cross-divisional standards and standards for the disclosure of information on environmental, social and governance aspects, which facilitates the reporting and disclosure of ESG-related data in a standardized format.
The following diagram provides an overview of the subject areas that fall within the scope of the ESRS.
Which companies are affected by the new CSRD reporting obligation?
The Corporate Sustainability Reporting Directive (CSRD) builds on the Non-Financial Reporting Directive (NFRD) and the Accounting Directive and introduces amendments to define the criteria that determine whether an undertaking is obliged to report.
The first category of companies that are obliged to report on their sustainability information are “large undertakings”. Large companies are those companies (Accounting Directive Article 3(4)) that fulfill at least two of the following three criteria:
Balance sheet total of more than 25 million euros
💶 Net sales of more than 50 million euros
👥 At least 250 employees
The second category of companies that are obliged to submit sustainability reports comprises small and medium-sized enterprises in accordance with the Accounting Directive. These companies fall into this category if they are either credit institutions or insurance companies, listed on an EU stock exchange or otherwise classified as “public interest entities” by their national governments. In Germany, for example, this category of companies is often referred to as “market-oriented”.
Wir empfehlen Ihnen, Ihren Favoriten zu kaufen toothbrush zu supergünstigen Preisen mit kostenlosem Versand und Sie können Ihre Bestellung auch noch am selben Tag im Geschäft abholen.The good news is that you are not alone with your business. An estimated 50,000 companies in the EU will be affected by the new regulation, including 15,000 in Germany. This means that around 50 times more companies than before will be obliged to submit sustainability reports.
But where and how do you actually start? How do you collect data effectively and how do you create a CSD-compliant sustainability report?
Laut der Studie “ESG-Strategie und Berichterstattung – Status und Umsetzung im deutschen Mittelstand” von IMI und PwC Deutschland fühlen sich 76 Prozent der Unternehmen in Deutschland nicht darauf vorbereitet, ihre ESG-Ziele zu erreichen und die gesetzlichen Anforderungen zu erfüllen.
One major hurdle is, unsurprisingly, the slow pace of digitalization in SMEs. 75% of companies still use spreadsheets to record and process ESG-relevant data. Given the scope of the new CSRD, this can quickly lead to excessive demands and a lack of transparency. Read our blog post to find out why you should not rely on unwieldy spreadsheets to record sustainability information.
Tip: Collect, analyze and report your sustainability information with CSRD software
The chaos of data collection can be overcome with ESG reporting software. With Code Gaia, you first define your sustainability goals, the scope of the report/analysis (environment/ESG) and the reporting period together with our sustainability specialists. Then upload your data such as invoices, questionnaires etc. to the Code Gaia portal. In the second step, your data is processed and optimized together with our sustainability experts. This allows you to download reports on your sustainability information in seconds and make your transformation visible to stakeholders or your customers.
The advantages of sustainability reports
The new regulation poses immense challenges for SMEs that have not yet been subject to any reporting obligations. However, this also presents a great opportunity.
1. leading the way in responsibility and competition through sustainability reports 🚀
According to the IWI & PwC study, family businesses in particular stand for sustainable commitment and the careful use of resources. With sustainability reports, they can not only document their own contributions to society and the environment, but also differentiate themselves from other competitors.
2. gain the trust of investors and customers through sustainability reports 💚
Sustainability reports offer many advantages for companies. They not only help them to improve their sustainability performance, but also have a positive effect on potential investors. The sustainability reports provide them with important information about a company’s commitment to greater sustainability. This enables them to weigh up their investment decisions more carefully and make more informed decisions.
3. making transformation visible with software-supported sustainability reports 🌱
In times of rapidly advancing climate change, companies can also use their sustainability report to demonstrate their commitment to the environment and thus score points with customers. Code Gaia’s 1-click reports make it easy for you to communicate your transformation credibly and transparently.
Conclusion: CSRD-compliant sustainability reports as an opportunity
Sustainability reports are an important approach to measuring and communicating the sustainability and responsibility of companies. The new CSR reporting obligation in accordance with the Corporate Sustainability Reporting Directive (CSRD) will affect around 15,000 companies in Germany in future, which will have to prepare such a sustainability report. The reporting covers environmental matters, social issues and governance factors.
The road to sustainability may be rocky, but it is worth it. By complying with the CSR Directive and creating a meaningful sustainability report, companies can strengthen their credibility and have a positive impact on society. It is time for us to take responsibility together and steer our companies towards a sustainable future. Our modern ESG reporting software can do a lot of the work for you.
Let’s tackle your transformation together!
Our intelligent software can help you, like more than 100 other SMEs, to create sustainability reports and reduce your carbon footprint. Save yourself the Excel chaos, tedious onboarding and, above all, a lot of time!
Simply arrange a short appointment with us and see Code Gaia for yourself.
