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Everything You Need to Know About the EU CSRD

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In January 2023, the European Union launched an ambitious and transformative regulation: the Corporate Sustainability Reporting Directive (EU CSRD). This groundbreaking directive is not just another policy change; it represents a significant evolution from the 2014 Directive (NFRD), bringing a fresh perspective to the corporate world.

What makes the EU CSRD so compelling? It's all about making sustainability reporting ultimately  as robust and reliable as financial reporting. Companies are now required to provide high-quality data on sustainability, shining a light on the environmental and social impacts of their operations. This isn't just about ticking boxes; it's a bold step towards supporting investments that are not only sustainable but also resilient to the changing climate.

Who Needs to Report?

Under the EU Corporate Sustainability Reporting Directive (CSRD), reporting is mandatory for large public-interest entities, including listed companies, banks, and insurers with over 500 employees. Furthermore, large EU companies that meet specific financial and employment criteria, listed SMEs, and third-country corporations with significant operations in the EU must also adhere to compliance through a phased-in approach. This directive significantly broadens the scope of entities accountable for detailed sustainability reporting.

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What impact is it going to have on corporates?

It will compel corporations to elevate transparency in their sustainability practices, focusing on environmental, social, and governance (ESG) factors. This shift will require operational changes and may incur initial costs for adapting data management and reporting processes. However, it also opens opportunities for attracting ESG-focused investors and gaining competitive advantages in a market increasingly aware of sustainability. Overall, the CSRD sets a new benchmark for corporate responsibility, with potential global implications.

What are the CSRD's climate reporting requirements for companies?

Under the EU Corporate Sustainability Reporting Directive (CSRD), companies are mandated to provide detailed reporting on greenhouse gas (GHG) emissions, including both direct and indirect emissions across their value chain. Through the ERSR E1 standard for climate disclosure, companies must disclose climate-related risks and opportunities, integrating these insights into their business strategies and financial planning. Additionally, this includes a clear account of their carbon credits usage, ensuring transparency in how they offset their carbon footprint. . This approach aims not only to enhance transparency but also to encourage companies to embed climate considerations into their core decision-making processes, aligning with global initiatives like the Paris Agreement.

How is it being phased in, and which types of companies will it affect?

The EU Corporate Sustainability Reporting Directive (CSRD) will implement its phases starting from 2024, initially focusing on large public-interest companies. These entities should prepare their first CSRD-compliant reports for the fiscal year 2024, with submissions due in 2025. Following this, the directive will gradually include large non-public-interest entities, smaller listed companies, and certain non-EU companies with significant EU operations in successive years. This staggered approach allows companies to adapt to the new reporting standards in a manageable way, ensuring a smooth transition to enhanced sustainability reporting across the EU.

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How can STRIVE by STX help you?

STRIVE by STX provides a comprehensive suite of solutions tailored to support companies in effectively managing the complexities brought forth by the EU Corporate Sustainability Reporting Directive (CSRD). Our emissions reduction offerings empower businesses to accurately calculate and report their Scope 1, 2, and 3 emissions, ensuring seamless compliance with CSRD regulations. Additionally, our specialized consulting services enable corporates to design robust climate strategies and transition plans, and effortlessly gather essential data required for CSRD reporting.

With Strive by STX as your trusted partner, you can confidently navigate the CSRD landscape, ensuring your organization's sustainability efforts align with regulatory expectations. Get in touch with us.

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