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 (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.

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.

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.

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.