The Corporate Sustainability Reporting Directive (CSRD) is the new standard for sustainability reporting for companies domiciled or operating in the European Union (EU), which has significant implications for North American companies with subsidiaries in the bloc. It covers over 800 disclosure requirements across 2 general and 10 topical standards focusing on impact, risk and opportunity management. It also requires companies to obtain limited assurance and to pursue machine-readability of information to enable the EU’s upcoming publicly accessible European Single Access Point database.
The CSRD represents one element in the broader journey from voluntary sustainability disclosures to mandatory sustainability reporting on par with financial reporting. With improved control and disclosure of sustainability data, investors may consider sustainability factors alongside traditional financial metrics when making investment decisions. With more eyes/scrutiny on sustainability disclosures, a company’s reputation and valuation is at stake, raising the importance of having processes to develop good quality information and providing the opportunity for performance-based differentiation. Businesses will need to involve a range of stakeholders from across finance, legal, IT (Information Technology), procurement, sustainability, investor relations and human resources to operationalize the CSRD requirements. The CSRD requirements go beyond compliance. It’s an opportunity to enhance value and proactively manage sustainability risks. By integrating sustainability into core processes, you gain a competitive edge in today’s market. This document outlines the applicability of the CSRD to North American companies and their key action points over the next few years.
