CSRD report: everything you need to know to be compliant by 2024

In the face of the climate emergency, it's important to call on the responsibility of every citizen to adopt behavior that is less harmful to the environment. However, it is clear that this paradigm shift also and above all concerns companies, given their major impact on ecosystems. By way of illustration, a report by the Carbon Disclosure Project organization, published in 2017, explains that 100 companies have been responsible for 71% of global GHG emissions since 1988.

It's easy to see why the business world, in concert with the political sphere, must position itself as the figurehead of this ecological orientation, as evidenced by legislative developments in this direction...

... starting with the new CSRD directive, which came into force in January 2024. The latter aims to broaden the scope of companies concerned by the obligation to draw up and present extra-financial reports, relating to their sustainability performance. Valuable information, therefore, to know where an organization stands, and how it can improve.

But who is really concerned by CSRD in 2024? What is the legal scope of this directive? And how do you produce a proper CSRD report?

Focus on the Corporate Sustainability Reporting Directive 🔎.

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Definition of CSRD

What is CSRD and CSRD reporting?

CSRD, which stands for Corporate Sustainability Reporting Directive, is a European directive requiring organizations to publish detailed reports on their ESG impacts:

• environmental;
• social;
• governance.

The aim? To increase their transparency and accountability.

More specifically, the CSRD directive is part of the Green Pact for Europe and replaces the former NFRD (Non-Financial Reporting Directive), notably by broadening the number of companies concerned. It also reviews the standards to be adopted in order to produce compliant and harmonized reporting. These are the ESRS, or European Sustainability Reporting Standards, promoted by EFRAG.

Finally, CSRD reporting simply defines the document detailing the sustainability performance of the organizations concerned.

💡 For further details, please refer to the official text of the CSRD directive: Directive (EU) 2022/2464 of the European Parliament and of the Council of December 14, 2022.

What's new in the CSRD?

As we've just seen, the CSRD replaces the NFRD, which was ultimately deemed too limited to meet the growing challenges of corporate sustainability.

While one of the major differences is the increase in the number of entities concerned, there are also plans to :

• gathering more accurate and reliable information ;
• standardizing this information through the introduction of European sustainability reporting standards;
• reinforcing the principle of double materiality, to which we will return in greater detail;
• require the CSRD report to be audited by a statutory auditor or an authorized body;
• to publish this report in a tagged digital format to facilitate comparability and automated data analysis.

What are the main objectives of the CSRD sustainability report?

Improving the transparency and comparability of ESG information

The primary aim of CSRD is to improve the transparency and comparability of data relating to sustainability (environmental, social and governance).

In other words, it's not just a question of obliging companies to publish information, but also of ensuring that it is more accurate and harmonized, to facilitate interpretation.

In a way, the CSRD is working towards the adoption of a common language, by specifying the indicators to be included in reporting, in line with European standards.

Encouraging the transition to a sustainable economy

By promoting this transparency, the directive enables investors, consumers and other stakeholders (institutions, business partners, etc.) to make fully informed decisions.

At the same time, the CSRD encourages organizations to adopt more sustainable and responsible practices, notably by integrating ESG criteria into their strategy and operations.

Meeting stakeholders' expectations... and building their trust!

The process of producing a CSRD report may seem cumbersome, but there are real benefits for companies!

Indeed, this document helps build the confidence of various stakeholders, starting with consumers and employees, at a time when :

• are increasingly concerned about social and environmental issues ;
• deplore actions resembling greenwashing.

People are demanding something concrete. They want to know what a company is really worth from an environmental point of view, and where it's heading. And that's an excellent argument for selling more or recruiting the best talent.

Who is affected by CSRD?

While the CSRD has increased the number of companies concerned by extra-financial reporting, the preparation of the report does not apply to all of them.

👉 Here is a table summarizing the organizations concerned and the timetable for implementation:

☝️ The CSRD report therefore concerns many organizations, increasing the number of companies impacted (compared to the NFRD) from 11,600 to around 50,000.

How often should I publish my CSRD report?

CSRD reports must be submitted at the same time as the annual management report.

Although the date varies from company to company, it is customary for annual reports to be published within six months of the end of the fiscal year.

Note that the CSRD report must also be circulated to associates 15 days before the Annual General Meeting.

💡 Sa mple timetable:

• Fiscal year-end: December 31, 2024.
• Publication of the CSRD report: between March and June 2025.

What are the CSRD indicators? Focus on ESRS

When we talk about CSRD, we also need to talk about ESRS, or European Sustainability Reporting Standards.

Defined by EFRAG (European Financial Reporting Advisory Group), these are a set of standards and indicators designed to frame the way in which companies are required to report their sustainability information as part of extra-financial reporting.

😀 Thanks to this standardization, it becomes easier to compare the performance of different companies with each other.

Briefly, there are several types of standards:

• transversal standards (ESRS 1 and ESRS 2) ;
• thematic standards, based on the three classic pillars of CSR:
  • the environmental pillar (ESRS E1 to ESRS E5) ;
  • the social pillar (ESRS S1 to ESRS S4) ;
  • the governance pillar (ESRS G1).

👉 Here's a summary table:

Apart from ESRS 2 (General disclosures), the other ESRS are not mandatory for all companies. In fact, it is up to you :

• for ESRS E1, to demonstrate why your organization is not concerned by climate change, and why reporting on this issue is unnecessary;
• for the other ESRSs, use the double materiality analysis to identify which issues should or should not be covered in the document.

For more details on these different indicators, we invite you to consult our article dedicated to ESRS.

☝️ Note that EFRAG is currently working on sector-specific standards.

How to report on CSRD?

#1 Understand the scope and regulations

To begin with, it seems crucial to understand how your company is affected by the CSRD, as well as the implementation dates where applicable.

Then, when you get a little more to the heart of the matter, it's important to understand the ESRS standards applicable to your sector or business (mandatory for all companies, or specific depending on your activity).

#2 Mobilize the right expertise

We're not going to lie, the process of issuing an ESRS report can quickly become like a bag of knots for neophyte companies 😱. It requires a perfect grasp of social and environmental issues, not to mention mastery of the legal framework.

We therefore recommend that you mobilize the right expertise:

• by recruiting a professional in the field, such as a CSR director or manager. This option is best suited to large groups;
• by training an employee in these issues. Beware, however, of the amount of time he/she will have to allocate to CSRD missions, especially if you want him/her to continue to carry out other tasks in parallel;
• by calling on external experts, such as a sustainability and ESG consultancy.

#3 Build a team and involve all stakeholders

Because of the scope of its analyses, the CSRD report touches on the majority of corporate functions. That's why we advise you to involve all stakeholders in the project, from finance and human resources to sales and production.

In this way, you can ensure that ESG information is collected completely and accurately, and take into account the impact on all stakeholders.

At the same time, you gain greater internal support for sustainability objectives.

☝️ Don't forget to mobilize management and ensure that they oversee the process to guarantee company-wide commitment.

#4 Structure the project and draw up a roadmap

The next step is to structure the project by drawing up a roadmap. The aim? Organize ESG data collection, analysis and reporting operations as precisely as possible.

More precisely, with a well-crafted roadmap, you :

• clarify responsibilities
• identify key milestones;
• anticipate challenges;
• meet regulatory deadlines;
• streamline coordination between the various stakeholders.

#5 Deploy data collection systems

Data collection is one of the crucial challenges of the CSRD report: you need to obtain accurate, complete and verifiable information on your company's performance, all in compliance with the numerous regulatory requirements!

The CSRD report therefore implies not only the exhaustive collection of this data, but also its reliability.

How do you go about it? Follow these steps:

1. identify internal data sources: HR systems, financial databases, internal environmental reports, etc. ;
2. automate data collection wherever possible, to avoid errors and increase productivity;
3. introduce data verification processes to ensure accuracy.

#6 Apply the principle of double materiality

Here we are 😉.

It's time to talk about the famous double materiality, a major component of the CSRD report used to identify the information to be published.

In concrete terms, this principle means that companies must assess and report :

• not only how sustainability issues affect their financial performance (financial materiality);
• but also how their own activities impact the environment and society (impact materiality).

This rule then provides a comprehensive and transparent view of sustainability risks and opportunities, for both the organization and its stakeholders.

#7 Prioritize the information to be included in the CSRD report

Depending on the type of company, there's no need to publish all the information. As a reminder, only ESRS 2 is mandatory. For the rest, it all depends on the reality of your activities.

To help you make your selection, you can of course rely on the materiality analysis.

In addition, some experts recommend conducting a parallel gap analysis between ESRS requirements and information already published (DPEF, URD, climate report, etc.). This comparison provides an overview of the gaps that need to be filled to comply with the obligations. In fact, some existing data may already partially meet ESRS requirements, although a thorough review is still necessary to ensure complete coverage of relevant topics.

#8 Have the report checked by an external auditor

As a reminder, the CSRD requires sustainability information to be verified by a third party, whether an auditor or an independent body.

Note, however, that the Corporate Sustainability Reporting Directive also extends the responsibility of corporate governance bodies. These prerogatives are designed to ensure the quality and reliability of the reports.

☝️ Hence the fact that robust internal control and collaboration with auditors or third-party bodies from the very start of the reporting process are essential for effective implementation.

#9 Digitize and tag the report

Finally, the CSRD requires companies to publish their reports in a tagged digital format, in line with the European Electronic Reporting Format (ESEF).

The aim is to ensure greater comparability and automated data analysis by investors and other regulators.

What are the penalties for non-compliance?

Companies that fail to meet their obligations risk penalties that vary from one EU member state to another.

In France, for example, they risk :

• 30,000 euros in fines and up to 2 years' imprisonment if sustainability information is not certified;
• 75,000 euros in fines and up to 5 years' imprisonment for obstructing the certification of information.

In addition, in the event of non-compliance with CSRD reporting requirements, an organization can be ordered by a court to :

• disclose the information ;
• be excluded from public procurement or concession procedures.

In short, CSRD is no laughing matter!

Do I need help to produce my CSRD report?

And since we're serious about CSRD, it's sometimes better to get help!

As we have seen, there are firms specializing in ESG, providing sustainability strategy services. These include companies such as Quantis and Carbone 4.

But you can also rely on software developed to optimize data collection. Some of these tools even turn out to be rather affordable (yes, the cost of the CSRD process remains one of the sore points for impacted companies, especially for the more modest 😬).

🛠️ Such is the case with Carbo, a solution that enables you to collaboratively collect all the data relating to your CO2 emissions. The aim is to facilitate the preparation of your carbon footprint, but also to complete the section on climate change as part of the CSRD report. At the same time, Carbo can help you define a strategy for reducing your environmental impact, taking into account the specific features of your organization and activities.

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What can we learn from the CSRD report?

Since January 1ᵉʳ, 2024, the preparation and subsequent publication of extra-financial reporting has become mandatory for many European companies. And this legislation is set to expand over the coming years.

Based on ESRS standards, this document is intended to provide precise, harmonized information on the sustainability performance of organizations . This approach encourages them to question their current practices... with a view to reducing their impact on the future!

But the CSRD report is demanding: understanding the scope of this new regulation, applying the principles of double materiality, identifying the information to be included in the document and soliciting the right indicators... there are many subjects to master!

Fortunately, you can get help and support. There are numerous online resources published by official bodies. You can also call on the services of dedicated experts, or even technological solutions (very useful for data collection!). It's up to you to find the best way to proceed, one that meets your obligations while striking a good cost/time balance.

Finally, we can only recommend that you embark on a truly sincere sustainable approach, without falling into the trap of greenwashing. In an increasingly competitive business world, it will help you find favor in the eyes of demanding consumers!