CSRD sustainability reporting

Sustainability reporting (CSRD) relates to the sustainable development of companies. This new directive, effective January 2024, aims to highlight information on their environmental, social, and governance (ESG) performance. Enerfip gives you details of this new regulation!

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“It means more transparency for citizens, consumers, and investors so that businesses can play their full role in society.”

Bruno Le Maire, Minister of the Economy, Finance, and Recovery

What is the CSRD?

The CSRD or Corporate Sustainability Reporting Directive, what is it? This is the new European directive 022/2464/EU of December 14, 2022 – resulting from a revision of the NFRD (Non-Financial Reporting Directive), at the origin of the DPEF report (Déclaration de Performance Extra-Financière), which came into force in 2017 – proposed by the European Commission to establish the framework for sustainability reporting and better regulate the non-financial reports of large listed companies and SMEs in the sustainable development sector.

What is it for? Its purpose is to help consumers, politicians, and investors analyze the non-financial performance of companies, but also to guide them toward more sustainable and transparent investments. Through CSRD reporting, a response to social and environmental challenges is provided. How? By determining the information to be provided that will meet ESG (Environment, Social, Governance) criteria, such as the business model, risks incurred, opportunities, etc.

In short, this text guarantees reporting in accordance with EU (European Union) standards, but also imposes new rules related to sustainable development so that the information is easily accessible to the interested public.

What priorities are highlighted in this reporting?

Among the changes made by the CSRD, the Accounting Directive, the Transparency Directive, the Audit Directive, and the Audit Regulation have been amended. For what purpose? To inject new information relating to the following points:

• environmental protection;
• social responsibility;
• respect for human rights;
• anti-corruption measures;
• diversity within corporate executive boards.

By harmonizing corporate sustainability reporting and improving the availability and quality of ESG data, the CSRD offers a solution to combat global warming. This is a key element of the Green Deal!

Who is affected by the CSRD?

Coming into force on January 1, 2024, the Corporate Sustainability Reporting Directive (CSRD) concerns:

• large European and non-European companies meeting the NFRD thresholds;
• large companies employing more than 250 people and having a turnover of more than €40 million or a balance sheet total of more than €25 million;
• listed SMEs whose shares are admitted to trading on a regulated market;
• micro-enterprises with no more than ten employees, a balance sheet total of €350,000, or a turnover of €700,000;
• large European companies and non-European companies with a European turnover of more than €150 million and a subsidiary or branch based in the European Union.

Before this reform, this concerned 11,700 large companies and groups in the EU. Nearly 50,000 European companies are now required to publish information on their commitment to environmental sustainability.

When?

The CSRD now applies to large companies that are already covered by the NFRD. However, for the rest, this will be done gradually between 2024 and 2026. Indeed, for companies with more than 250 employees, more than 50 million euros in turnover or more than 25 million euros in total balance sheet, the CSRD comes into force from January 1, 2025. For SMEs listed on the stock exchange, it takes effect from January 1, 2026.

It should also be noted that the first reports take place one year after the implementation of the CSRD directive.

How to prepare for the CSRD?

The CSRD aims to:

• standardize corporate sustainability reports;
• improve the transparency and comparability of information;
• promote a more sustainable economy sustainable.

To best prepare for the new reporting, you must first carefully analyze the texts. What does this mean? Given the complexity and density of the new obligations, it is essential to take the necessary time to fully understand each of the CSRD issues. By building solid expertise on topics related to sustainable development, you will be better able to identify potential risks or opportunities, but also to define a strategy and actions for corporate sustainability.

Secondly, it is important to adapt the data collection and construction tools.In other words? The CSRD includes a vast number of information obligations and data points, so it is logical that certain stages of data creation, collection, and reliability will be modified within companies.

Finally, we recommend that you establish robust internal controls. Why? Because the CSRD requires a robust audit by a statutory auditor (CAC), but not only that! Depending on the country, an independent third-party body (OTI) is also required. They must ensure that sustainability information is accurate and complies with ESRS standards and the provisions of Article 8 of the Taxonomy regulation.

What is the benefit of the CSRD for investors and consumers?

“The financial system plays a crucial role in implementing the EU Green Deal, and significant investments are needed to make our economy greener.”

Mairead McGuinness, Commissioner for Financial Services, Financial Stability and Capital Markets Union

The CSRD directive is an additional confidence-building criterion for investors and consumers. What does it mean? This solution allows for the comparison of one company's performance with another. Through the CSRD, the company is transparent to investors, allowing them to better understand the company's impacts on the environment. It also strengthens the employer brand. Why? Because the CSRD meets the challenges of CSR policy.

By advocating sustainable finance, the CSRD aligns itself with the values ​​of sustainability and the democratization of financial reporting. This is a guarantee for consumers who see that standards related to the ecological transition are being respected.

Enerfip, for its part, aims to make the impact of your investments positive and virtuous. By investing on our site, you are participating in the decarbonization of savings products. So, if you want to invest in the energy transition, directly in renewable energy production, energy efficiency or sustainable mobility projects, make an appointment with the Investor Relations department without further delay!