The Ultimate Guide To CSRD (And Why ESG Reporting Matters In 2024)

The Corporate Sustainability Reporting Directive (CSRD) is a new piece of EU regulation that requires companies to audit and report on their Environmental, Social and Governmental (ESG) activities and initiatives.

CSRD applies to all businesses within the European Union, including subsidiaries of foreign companies located and doing business in Europe.

Having a thorough understanding of CSRD requirements and ESG topics generally will guarantee you a clear competitive advantage over your competitors.

The purpose of this article is to make CSRD accessible and explain, in plain language, what it means for your company in the months and years ahead.

We'll also attempt to answer some of the most common questions on this topic, including:

• What is CSRD and why does it matter?

• What are the direct business benefits of CSRD?

• Who will be affected by CSRD and what timeline is involved?

• What are the requirements of CSRD?

• What are the implications of CSRD for UK companies?

• What other new rules should I be aware of?

• How can we get prepared for CSRD?

CSRD is constantly evolving, which is why we will continue to update this and other articles to provide an all-encompassing resource on ESG topics.

At Fifty Shades Greener we aim to demystify ESG, helping businesses to reduce their emissions and operational costs, in line with sustainability best practices.

We provide a range of ESG training courses for both individuals and companies, alongside consultation and ESG certification for businesses.

So if you're baffled by topics like CSRD and sustainability, or would like to learn more about them, get in touch with our team today.

So What Is The CSRD Exactly?

CSRD (Corporate Sustainability Reporting Directive) is a new piece of EU legislation requiring companies to report on their business activities' environmental and social impact, alongside their corporate governance.

Collectively these three reporting elements are referred to as Environmental, Social, Governance, or ESG.

As of January 2024, CSRD will begin applying to companies throughout the EU, starting with larger companies. The compliance of smaller companies will also be enforced in subsequent years.

We will go more into detail on this in a moment, however, if you have any specific questions on CSRD not covered in this article feel free to contact our team.

Why CSRD Matters

While much press will no doubt continue to be devoted to topics like AI, smart technologies and the metaverse, we believe that Environmental, Social & Governmental (ESG) will shortly become the defining issue for doing business in 2024 and beyond.

Much of this will be down to the transformative effect that ESG regulations like CSRD will soon have on the business landscape.

CSRD is, in part, a response to the growing climate crisis and the EU's goal of reaching net zero carbon emissions by 2050. It also seeks to address growing concerns by both consumers and investors alike for greater corporate transparency on a range of ESG issues ranging from climate risk to greater fairness and diversity within the workplace.

Unfortunately, however, there remains a persistent lack of clarity surrounding the topic of ESG reporting in general and CSRD requirements in particular.

Few business stakeholders have the time to research these topics in depth and fewer still have the patience to comb through reams of regulatory briefs from Brussels or the verbose ruminations of compliance experts.

Any wonder, then, that CSRD has been dubbed "the Green GDPR", an unfortunate term which evokes memories of hard deadlines, thorny technical issues and last-minute operational overhauls.

Framing CSRD in purely regulatory terms is counterproductive, however, since it ignores the multitude of benefits that come from being proactive on ESG matters.

CSRD - Benefits For Business

Business must always be ready to adapt to changing conditions.

And while climate change represents perhaps the greatest challenge humanity has ever faced, it also represents a huge commercial opportunity.

By tackling the CSRD challenge head-on your company gains the edge today and ensures it remains more resilient to market shocks well into the future.

Meanwhile, your competitors flounder, rushing to complete their reporting last minute, forever caught on the back foot.

Reducing Operational Costs

The most immediate benefit of adopting a green-first business model is the reduction of utility costs.

As recent geopolitical upheavals and global disruptions such as the pandemic have shown, we're living in uncertain times. Energy markets, in particular, remain ever-precarious.

The future, therefore, belongs to those companies who become more proactive in managing their overheads, insulating them from future market shocks.

And achieving this is far easier than you might think.

Our hospitality clients, for example, enjoy average reductions of 30% on both their energy and water costs and up to 40% reductions in waste management.

Imagine what a 30% reduction in energy costs could do for your company's bottom line.

Now imagine you're the person who's made that accomplishment possible.

Our ESG training courses will help you gain the skills to achieve such goals. You'll also learn how to create CSRD-compliant reports as you take the lead on all ESG matters.

It's a huge opportunity to build and future-proof your career while effecting real, positive change within your organisation.

Contact our team to learn more about the various training programs we offer to find one best suited to your needs.

Higher Investment

Sustainable investment is one of the key growth areas right now.

PwC recently called it "the growth opportunity of the century" projecting a tripling in returns for ESG investors by 2025.

Europe currently leads on sustainable investments with 31% of investors saying that ESG is "central to their investment approach" according to research from Morningstar.

Being proactive on CSRD, therefore, can help secure capital for business growth well into the future.

It can also help you to strengthen your other business relationships while building more resilience and transparency in your company's supply chains.

Happier Customers

Consumers are increasingly concerned about the environment in general and climate change in particular.

They're also more discerning about which companies they purchase from and increasingly savvy when it comes to differentiating between cynical greenwashing and genuine climate action.

According to one study by PwC, a full 76% of respondents said they would stop buying from companies that treat the environment, society and their employees poorly.

Younger consumers, in particular, tend to be the most environmentally and socially conscious. They're also the most mistrustful of companies' intentions when it comes to ESG matters.

"Give the people what they want" has always been the core axiom in business, hence the above-average growth of sustainable products.

Consumers are also prepared to pay extra for those products. A 2023 survey of British consumers by Deloitte found that, even during a cost of living crisis, one in four consumers are happy to pay extra for more ethical and sustainable products.

Happier Workers

These trends also carry over to the workforce so having good ESG in place will your company attract the best young talent.

Launching new ESG initiatives is a surefire way to earn your employees' respect, resulting in greater staff retention and overall engagement. This means higher productivity and better levels of customer care.

A greener workplace is also a safer and more efficient workplace so all departments benefit.

Your sales and marketing team will waste no time telling the world about your new ESG goals and achievements, resulting in higher turnover.

Meanwhile, your competitors are still dragging their heels trying to figure out what happened and how they can catch up.

Having sustainability skills is what gives you that edge.

Despite the growing demand for ESG skills, the number of people with those skills remains comparatively low.

According to data from LinkedIn, that gap was over 10% during the period 2022-2023.

Companies are actively hiring talent who know how to reduce costs, drive change and fulfill all ESG reporting requirements.

This is an opportunity in the waiting.

By joining our ESG Leader programme you can master those skills and become the leader on sustainability issues within your organisation to ensure they are fully aligned with CSRD.

CSRD Aims

The primary aim of CSRD is to meet the challenges of the climate crisis while fostering innovation and economic growth.

It ties in with the goals of the European Green Deal, a set of legally binding targets which the European Commission adopted as part of its aim of reducing emissions by a minimum of 55% by 2030.

The ultimate goal, however, is to achieve net zero emissions by 2050, becoming what the European Commission has called the first climate-neutral continent.

Both CSRD and the Green Deal are concerned with creating a more sustainable economy, and improving corporate sustainability is a core requirement of this goal.

Main CSRD Requirements

Oftentimes times business leaders tend to focus disproportionately on the environmental aspect of ESG and forget the social and governance aspects.

While it's true that tackling the climate crisis and reducing greenhouse gas emissions is paramount to our survival, corporate sustainability also encompasses other important areas, such as guaranteeing human rights, anti-corruption initiatives and good corporate governance overall.

In other words, businesses must take a more holistic approach when assessing their impact on the world around them.

One of the main requirements of CSRD is to complete a "double materiality assessment".

This assessment can be split into two areas, impact materiality and financial materiality, often simplified as "inside-out" and "outside-in". 

The first is essentially an audit of the impact that your company's business operations have on the people around them and the planet as a whole – how internal operations affect the world outside (inside-out).

The second part is to look for opportunities and gains which your company can enjoy through enhanced sustainability action – how the climate crisis and other external factors are affecting your company (outside-in).

This becomes the basis for creating your company's ESG report while also outlining areas of improvement to address as part of your company's ongoing sustainability initiatives.

Knowing which areas to audit and the precise disclosure requirements can be tricky, however, but we're here to help. We can assist your company in its sustainability reporting and advise on sustainability matters on a consultancy basis, or help you gain the skills to master CSRD with one of our ESG training programmes.

Who Is Affected By CSRD?

As of January 2025, companies will need to begin submitting sustainability reports as per CSRD.

Initially, it will be large companies who will need to do this, this includes both large EU companies and multinationals with a European presence. (If you're unsure about when or how to do so get in touch with us and we can assess your needs.)

First in line are companies already subject to NFRD, CSRD's predecessor legislation, which will need to submit their 2024 ESG report in 2025.

These are what are referred to as "large public interest companies", companies with 500+ employees operating within regulated markets such as financial institutions and insurance firms.

Next in line to report are other large companies, who will be subject to mandatory reporting in 2025.

Under CSRD, this category of "large companies" comprises companies that meet one or all of the below criteria within the financial year:

• Employing in excess of 250 EU-based staff

• Assets valued at over €20 million

• Revenue of more than €40 million

It's fair to say that the majority of these large companies already have their CSRD strategy in place.

Many will already have a whole team working on this. Or else they will have hired one of the larger consulting firms to do the heavy lifting.

Small and medium enterprises don't have this luxury, however, and will need to learn to manage their ESG with fewer internal resources.

The good news is that, if you're an SME, you can defer your ESG reporting until 2028.

But, while your competitors may be content to kick the can down the road for another four years, that's four years of opportunities lost.

Meanwhile, your company stands to enjoy four years of net gains, not to mention a four-year reduction in net emissions, by dramatically reducing utility costs and making the business more attractive to consumers and investors alike.

We run through all of this with you in our ESG Leader course, which provides you with the skills you need to take the lead on sustainability within your organisation.

That way, when the time does come to start submitting reports, it won't present any difficulty because, thanks to your training, it will already be second nature.

Is Your Business CSRD-Ready?

With CSRD coming into effect in January, 2024 will be the year of Environmental, Social Governance.

While the emphasis will initially be placed on larger companies, the SMEs who are quick to adapt to this changing landscape will be the ones who prosper well into the future.

As we have seen, by developing sustainability skills within your organisation, you can reduce operating costs while simultaneously attracting more investment, more talent and more happy customers.

At Fifty Shades Greener our goal is to empower you to build a more sustainable future.

We provide sustainability and ESG training to individuals and companies, based on real climate science, with step-by-step lessons and real-world practical applications.

From simple but smart ways to reduce your utility costs to completing your company's ESG reports, you'll learn the skills you need to bring true, positive change to your company.

We also provide green business consultancy for companies and institutions who need a helping hand with their sustainability targets, alongside ESG certification for companies which have already demonstrated a clear commitment to sustainability best practices and want to showcase their achievements.

So if you're struggling with CSRD, interested in developing valuable green skills or just looking for ways to create a more sustainable workplace, contact Fifty Shades Greener today.