Navigating EU Sustainability Reporting with CSRD Compliance
Recently, there have been significant updates to EU legislation regarding sustainability reporting. These updates have expanded the application scope of the reporting requirement and specified the content of the reporting. The intention behind these new rules is to provide investors and other stakeholders with access to relevant, comparable, and reliable sustainability information. The importance of sustainability reporting is expected to be on part with traditional financial reporting. The Corporate Sustainability Reporting Directive (CSRD) plays a vital role in driving this transformation.
Expanded application scope under CSRD
The new Corporate Sustainability Reporting Directive (CSRD) entered into force in January 2023, with EU Member States required to implement its provisions into national law and regulation by 6 July 2024. CSRD requires all large and all listed companies (except listed micro-enterprises) to disclose their sustainability-related information. Third-country undertakings which have significant activity on the territory of the European Union will also be required to disclose their sustainability information. The reporting obligation enters into force gradually for different types of companies from 2024 to 2029.
CSRD applies to Sweco as well. Sweco is yearly reporting its own sustainability information, and the most recent sustainability report for the year 2023 was published in April 2024 and can now be accessed via this link Sweco sustainability report 2023.
Standardisation of reporting content with ESRS
The content of sustainability reporting has been structured and specified to ensure consistency and comparability. Companies are now required to report in accordance with the European sustainability reporting standards (ESRS), which were adopted in July 2023 as part of the Corporate Sustainability Reporting Directive (CSRD). These reporting standards are mandatory for all companies that fall under the jurisdiction of the CSRD.
Mandatory audit requirements for CSRD compliance
CSRD also requires auditing of the sustainability information. A gradual approach to the audit requirement from limited assurance to reasonable assurance is envisaged.
Double materiality assessment in CSRD
CSRD provides for a ‘double materiality perspective’ which requires companies to report not only on the impacts of the company’s activities on people and the environment (inside-out view), but also on how climate change and other sustainability matters affect the company (outside-in view). Companies should consider both of these perspectives in their materiality assessments. Double materiality assessment is a necessary basis for a company’s sustainability reporting and sustainability strategy. Learn more about double materiality assessment in our blog post.
EU Taxonomy reporting requirements
EU taxonomy reporting requires companies to assess the sustainability of their economic activities in accordance with the EU Taxonomy criteria. EU taxonomy reporting is included in a company’s sustainability reporting. The scope of the EU taxonomy reporting will therefore expand in accordance with the CSRD, requiring more companies to disclose their EU Taxonomy information.
Sweco experts can provide the following services in relation to the EU taxonomy:
- EU-taxonomy eligibility assessment, which is a first step of taxonomy assessment aimed at identifying whether a company’s activities are taxonomy-eligible, i.e., fall within the scope of the EU-taxonomy.
- EU-taxonomy alignment assessment, which is an assessment of whether a company’s activities are taxonomy-aligned, i.e., meet the substantial contribution and DNSH-criteria.
- Guidance on how to prepare for the EU-taxonomy reporting start, which includes a comprehensive overview of the EU-taxonomy reporting requirements as well as guidance for reporting and data collection.
Climate reporting as part of sustainability reporting
Climate reporting is also a part of sustainability reporting. Climate reporting specifically focuses on the carbon footprint calculations. Read more about it in a separate Sweco blog.
More about CSRD compliance, ESRS standards, double materiality, and EU taxonomy reporting for sustainability. Contact Us!
Olga Gerasina, Environmental Law Specialist, olga.gerasina@sweco.fi