With growing legislative obligations, such as the EU’s Corporate Sustainability Reporting Directive (‘CSRD’), Irish Businesses must prioritise ESG initiatives to meet their regulatory obligations.
Businesses in Ireland, Europe and Globally now need to fully understand the range of ESG regulations coming down the track which will impact their way of doing business as well as their business strategy, brand impact and reporting requirements.
The EU is determined to be a leader in this space and any large business intending to operate here will need to be aware of, and understand, these requirements.
Deciphering the myriad of regulations, distilling the key requirements and then implementing them in your business is, however, a daunting task.
BDO has carried out a number of CEO surveys to determine the most pressing concerns and challenges. The common issues arising amongst businesses are:
As a result, we started a CEO forum to discuss these issues in conjunction with our Joint Venture Partner, Centigo. This has been a useful forum for CEOs to learn from each other and discuss priorities.
One of these priorities is the CSRD.
What do Businesses need to know about CSRD?
2024 is the first year in which companies are required to report in accordance with the CSRD, the Directive of which has now been implemented into Irish Law as of the 6th July 2024.
Under the CSRD, companies will be required to report information which is necessary to understand their impacts on sustainability matters, and information necessary to understand how sustainability matters affect their development, performance and position. As well as the sustainability reporting that is required by the CSRD, there are linked, additional reporting requirements; if an EU entity falls within the scope of the CSRD, then it is also required to report in accordance with Article 8 of the Taxonomy regulation. This requires disclosures about the extent to which an entity’s operations are associated with environmentally sustainable economic activities (with reference to the related percentages of total turnover, operating expenditure and capital expenditure that meet specified criteria).
Importance of the CSDDD Directive
Along with the CSRD, companies also need to be aware of the CSDDD. Per the EU Commission the aim of this Directive is to “foster sustainable and responsible corporate behaviour in companies’ operations and across their global value chains”. The Directive will require companies to carry out due diligence on implementation of human rights in their Supply Chain along with the environmental impacts of their actions inside and outside Europe.
The Directive applies to large companies from 2027, but SMEs will be affected if they are part of the Value Chain of a large company.
On top of these requirements, companies involved in importing into Europe also have a significant number of new requirements which started with the Carbon Border Adjustment Mechanism, and moving into the Deforestation Regulation and more for 2025.
What can your business do to prepare your Sustainability Plan?
The myriad of Sustainability regulations are proving difficult for businesses and we are often asked how companies should approach them.
We recommend putting in place a project plan and working through a number of defined steps such as:
