New regulations, comprehensive guidelines
The EU Corporate Sustainability Reporting Directive (CSRD), effective since January 2023, mandates large and listed EU-based companies to publish annual reports on their environmental, social, and governance performance.
Who must comply?
All EU- Based companies who meet two of the following conditions:
- $50 million in net turnover
- $25 million in balance sheet totals
- 250 or more employees
or All Non-EU Based companies who exceed $150 Million in revenue in the EU.
Dates for reporting
Compliance reporting for CSRD starts in 2024. Financial penalties will be issued for companies who fail to comply with the mandated CSRD reporting requirements.
ESRS: The CSRD reporting standards
European Sustainability Reporting Standards (ESRS) provides the framework and methodology for reporting on sustainability issues. This includes guidance on:
- The double materiality principle.
- Application of material sustainability matters and disclosure requirements.
- Preparation and presentation of sustainability information.
Double materiality
Double materiality is the basis for sustainability disclosures and stakeholder relevance.
The ESRS breaks double materiality into two categories: impact materiality (positive and negative sustainability-related impacts that is connected to the business) and financial materiality (sustainability-related risks and opportunities that may trigger financial impact to the business).
To determine if a sustainability matter is material, it has to meet the criteria for impact materiality, or financial Materiality, or both.
Conducting a double materiality assessment
- Understand organizational context: Map business activities, relationships, and sustainability context
- Engage stakeholders: Identify key internal and external stakeholders, consulting relevant parties.
- Identify IROs: List actual and potential areas of impact, risk, and opportunity (IROs), based on ESRS guidance.
- Assess impact materiality: Evaluate impact severity based on scale, scope, and irremediable nature.
- Assess financial materiality: Evaluate financial risk and opportunities associated with
areas of impact and dependencies based on their likelihood and magnitude of financial effects. - Establish reporting thresholds: Determine reporting thresholds based on impact, severity, and likelihood.
What do you need to know about the ESRS?
The European Sustainability Reporting Standards (ESRS) provide guidance on CSRD reporting requirements and disclosures.
- 12 standards
- 82 disclosures
- + 1,100 data points
- Sector-specific and assurance standards coming
- Double materiality required
- Disclose environmental & social impacts, including the value chain
How can BSI help?
As a global standards organization with over 100 years of business experience, BSI works as a convener across companies, industry associations, communities, non-governmental organizations,
governments, and other expert groups. We are well-versed in bringing diverse groups together and ensuring their input is considered and incorporated into decisions accurately.
BSI will partner with your organization and stakeholders to help you meet this requirement by:
- Providing access to subject matter experts on ESRS requirements like:
- Double Materiality Assessment (basis for sustainability disclosures and relevance)
- Preparation and presentation of sustainability information
- Evaluating what is applicable reporting for your organization.
- Working with you to better understand the reporting requirements.
- Helping you engage with relevant stakeholders and incorporate valuable input.
- Developing a simple step-by-step roadmap on reporting requirements and compliance.
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Watch our Five-Part CSRD series to stay informed on the latest in sustainability reporting.
- Introduction to CSRD and Double Materiality
- CSRD Climate Change Reporting Requirements
- Own Workers and Upstream Workers
- Resource Use and Circular Economy
- CSRD Reporting Requirements on Water Impacts
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