The European Commission introduced the CSRD as part of its ambitious Sustainable Finance Package, aimed at redirecting investments towards sustainable activities across the EU (European Union). By setting up a standardised reporting framework for non-financial data, the CSRD aims to align sustainability reporting with financial reporting standards, thus advancing the goals outlined in the European Green Deal.
At its core, the CSRD looks to set up a common language for sustainability reporting through European Sustainability Reporting Standards (ESRS). This approach aims to enhance the reliability and comparability of sustainability information, enabling investors to make informed decisions that support sustainable economic activities.
Companies falling under the scope of the CSRD will need to send their first sustainability reports for the financial year 2024 by January 1, 2025. Small and medium enterprises (SMEs) will start reporting from the budget year 2027, with an optional extension for voluntary reporting until 2028. The reporting standards for SMEs will be tailored to reduce administrative burdens while ensuring compliance with sustainability reporting requirements.
The CSRD stands for a pivotal development in corporate sustainability reporting, aligning business practices with EU sustainability goals and enhancing market transparency. As the regulatory landscape evolves, businesses must adapt by integrating robust sustainability practices that not only ensure compliance but also drive long-term value creation and resilience.
If you are confused about the difference between the CSRD and CSRDDD, please, read our blog clicking here or get in touch.
Are you prepared to rethink your operations due to enhanced due diligence requirements for human rights and sustainability?
Effects on Human Rights and Modern Slavery
Anti-slavery efforts in the supply chain are a fundamental aspect of CSRD compliance. This directive builds on the anti-slavery and labour exploitation agenda by requiring businesses to provide quality and reliable reports, ensuring that environmental and social sustainability efforts are integrated.
CSRD reports will require more detail than current standards in outlining a company’s impact on human rights, the environment, social standards, and sustainability risk projections. This will include disclosures on a company’s measures to prevent labour exploitation in their supply chains. To ensure companies provide reliable information, they will also have to undergo independent auditing and certification.
By enforcing stringent reporting standards, the CSRD promotes corporate accountability about human rights and modern slavery issues within supply chains. Companies will be compelled to conduct thorough due diligence to find and address human rights risks, thereby fostering transparency and ethical business practices.
The CSRD offers an opportunity for companies to thrive and gain a competitive edge in a rapidly evolving market environment. Embracing these changes can position your business as a leader in sustainable business practices while contributing to a more resilient and fair global economy.
If you need a team of experts to help you address the risk modern slavery and human trafficking, get in touch, and discover our solutions!
