The Council of the European Union has adopted the EU Sustainability Reporting Directive (CSRD). It will require significantly more companies to report on the sustainability of their business activities and introduce new mandatory standards.
Some non-EU-businesses will also be affected as Companies will have to look at the entire value chain in their reports and provide precisely defined key figures. This should make the information provided more uniform and easier to compare. In addition, the sustainability reports are to be subject to an external audit by an accredited independent auditor in the future. This will for the first time put sustainability reporting on an equal footing with financial reporting.
Whilst here in the UK we are sat outside these requirements it is highly probable that we will see similar requirements for UK business. As outlined above those wishing to deal with EU business may well be required to follow the same path as their EU counterparts to meet the customers requirements..
There is no panic here, the reporting is some years hence, but firms would do well to consider how they can meet their obligations.
Public interest entities with more than 500 employees and are thus already covered by the NFRD will have to submit their first report for the previous financial year based on the CSRD requirements in 2025. Large companies that are not currently subject to the NFRD but will be subject to the CSRD in the future will have to report for the first time in 2026 for the previous financial year. Listed small and medium-sized businesses would have to submit their reports for the first time in 2027, but can be exempted from this obligation until 2028. For non-EU companies, the CSRD will only apply from 2028, and they will have to submit their first report in 2029.
We at Polestar are seeing an acceleration in the commercial, reporting and social requirements for firms to treat ESG seriously, greenwashing will not do. With this in mind we are working with a number of businesses in the segment as ESG becomes a sector in its own right
Companies will have to look at the entire value chain in their reports and provide precisely defined key figures.