CSRD is the most comprehensive regulatory framework to date in the field of Sustainability reporting. In scope and complexity, it is at least equal to the regulatory requirements of Financial Reporting. CSRD will require Companies to carry out a fundamental review of their business including an assessment of the business strategy, business model, governance and value chain. Many businesses caught in the CSRD net may not be used to these frameworks, so help will be needed to guide them through the process.
New concepts such as double materiality will need to be considered in order to establish the most important topics for each company, and that’s only the starting point. Once you have identified the most important topics you will have to establish a base-line, set targets, and detail how you will meet those targets over time. In relation to green-house gas (GHG) for example, companies will have to report on emissions which arise directly in their processes (Scope 1), indirectly as a result of their activities (Scope 2), and those arising in their value chain (Scope 3).
In time Sustainability reports will have to be audited as is the case currently with Financial reports, and this will require companies to focus significant resources on data collection and quality. Sustainability reporting data will have to be submitted in a standardised digital format, to allow for easier checking and comparison in the European single access point database. The scale of CSRD reporting is hard to comprehend, it requires the disclosure of detailed and diverse information over approximately 85 disclosure requirements and more than 1,100 data points, depending on which sustainability topics are material to a particular business.