The CSRD is considered a game-changer in sustainability reporting within the EU and beyond. This is a comprehensive regulation that concerns over 50,000 companies, some of which have never done sustainability reporting. To start reporting and preparing a double materiality assessment, you have to know your value chain and how your supplier impacts the environment and human rights. Besides that, you have to establish processes and procedures for efficient data gathering within the organization and from your supply chain network. This requires time, effort, and a plan.
We’ve already covered the Corporate Sustainability Reporting Directive (CSRD) and its overall effects on business. In this article, you will learn more about the timeline during which you will have to report, and what you will have to prepare and know during the CSRD preparation.
CSRD Reporting Timeline
On 5 January 2023, the EU Corporate Sustainability Reporting Directive (CSRD) entered into force. This new directive strengthens the rules concerning the social and environmental information that companies have to report.
Your company will need to comply if it meets at least two of the criteria:
- More than 250 employees
- €40M turnover
- €20M in total assets.
Does my company qualify for the CSRD reporting?
The next important step is to understand if the timeline will affect your company.
Here are three questions that can assist you in analyzing and positioning the company in the corresponding timeline:
- Has my company previously been subject to the Non-Financial Reporting Directive (NFRD)?
- Is my company a large public-interest entity or a listed SME?
- Does my company have a clear sustainability strategy and goals in place?
The reporting timeline currently contains four primary groups based on the company’s status:
1. Companies already subject to NFRD: If your company is already subject to NFRD, then you will have to report the FY24 date in 2025.
2. “Large companies” currently not subject to the NFRD: The companies that meet at least two criteria listed above are defined as large companies. If your company is large but is currently not subject to NFRD, then you will have to report FY25 data in 2026.
3. Listed small and medium-sized enterprises (SMEs): The companies that have financial assets traded on EU markets will have to report FY26 data in 2027.
You’re a medium-sized enterprise if you meet at least two of these criteria:
- 50 - 249 employees on average during the financial year
- Net turnover: € 8M - € 40M
- Total assets: € 4M - € 20M
You’re a small-sized enterprise if you meet at least two of these criteria:
- 10 - 49 employees on average during the financial year
- Net turnover: € 700K - € 8M
- Total assets: € 350K - € 4M
4. Global consolidated level reporting for non-EU headquartered companies: If the companies listed in the EU regulated markets, companies with subsidiaries in the EU, and companies outside of the EU (or non-EU) with more than €150 M turnover at the group level, the companies have to report FY28 data in 2029.
Even if you’re not subject to CSRD, your customers could be. Be prepared for the potential data your customers will need for reporting and start thinking about what information could be needed, how you can gather the data and make sure your customers are confident in your organization.
How to prepare the CSRD report?
We suggest companies start the preparation 2 - 3 years in advance, as the scope of CSRD will involve cross-department communication and discovering the value chain. This is especially important for companies that are not subject to NFRD and have no experience in sustainability reporting. To help you start reporting, we suggest moving forward following the plan and steps below:
Phase 1 - Baseline Assessment
The initial step is to assess your company’s place in the market, and review and understand policies, standards, and sustainability-related topics. You have to be informed about sustainability guidelines and standards related to your field.
Besides that, the initial phase involves setting up a project team that will be responsible for the CSRD reporting within the company and going through the topics of ESRS (European Sustainability Reporting Standards, you can read more here), preparing the relevant risks and opportunities, and conducting the double materiality assessment.
- 1.1 - Project kick-off and understanding of the company
- Review and understand the policies, standards, and sustainability-related topics that concern the organization.
- Set up the project team and identify the responsible team members and potential stakeholders.
- Establish communication links with each department through a representative who can participate in the process.
- 1.2 - Material issues and materiality topics
- Identify the stakeholders.
- Go through the topical ESRS and prepare the relevant risks and opportunities
- Make initial contact with the value chain participants and assure participation.
- Conduct double materiality assessment and address the material topics.
- Select the materiality topics.
Phase 2. Getting assurance ready
During this phase, you have to understand if you have enough data and establish the processes for information collection. Start identifying areas of incomplete or insufficient data gathering and related challenges - why can’t data be efficiently gathered? Do you know your entire value chain and all supply chain participants? Think about the ways to solve identified challenges and ensure you have all required information technologies and equipment in place before the initial start of the reporting process. It is crucial to start working with all your suppliers and learn how the value chain impacts on the environment and human rights.
- 2.1 - Gather data for sustainability-related disclosure
- Identify areas of incomplete or insufficient data gathering, and challenges to data acquisition, including information technology equipment gaps.
- Identify and communicate with the value chain participants.
- 2.2 - Confirm Risk Management Progress
- Review the goals established through the Materiality Map.
- Confirm the correspondence between the goals and the newly published standards.
- Confirm the validity of the transition plans and commerce documentation.
- 2.3 - Production process and value chain assessment
- Identify the value chain’s impacts on the environment and human rights and the methods to prevent, end, or mitigate those identified adverse effects.
Phase 3 - Production process and value chain assessment
The next phase will be the preparation of the documentation and the first CSRD report. Ensure all the data is in place and fill the gaps to structure your final CSRD report.
- 3.1 - Document Preparation
- Plan for CSRD report format and for audit documentation.
- Outline data availability and sufficiency, and suggest options to remedy reporting gaps, obtain missing data, or explain its current absence.
- 3.2 - First CSRD Reporting
- Assist the CSRD Lead in completing the documentation needed for the First Annual CARD-compliant Sustainability Report.
If you are not sure where to start, Minespider experts can help you - just contact us here.