Corporate Sustainability Reporting Directive (CSRD)

The Corporate Sustainability Reporting Directive (CSRD) is a new European Union (EU) regulation that establishes sustainability reporting requirements for companies. Its goal is to improve the transparency and comparability of sustainability information, allowing investors and other stakeholders to make better-informed decisions.

Objectives of the CSRD

The CSRD aims to:

• Integrate sustainability into business strategy: Companies must consider sustainability-related risks and opportunities in their planning and decision-making processes.
• Improve the quality and comparability of information: Sustainability information should be accurate, complete, relevant, and comparable across companies.
• Promote sustainable investment: Transparent, standardized disclosures help investors identify sustainable businesses.
• Increase accountability: Companies must be accountable for their social and environmental impacts.

Scope of the CSRD

The CSRD applies to all large companies and all listed companies in the EU, including non-EU companies operating within the EU single market. This includes:

• Large companies: Those with more than 250 employees and either €40 million in revenue or €20 million in total assets.
• Listed companies: Regardless of their size or sector.

What companies must report

Under the CSRD, companies are required to report on a wide range of sustainability topics, including:

• Governance: How sustainability is integrated into the company’s strategy and governance.
• Strategy: Sustainability-related risks and opportunities and how they are managed.
• Impact: The company’s environmental and social impacts, including its carbon footprint.
• Metrics and targets: Key performance indicators and the company’s sustainability goals.

Carbon Footprint and the CSRD

The carbon footprint is a central indicator of a company’s environmental impact and is a key disclosure requirement under the CSRD. Companies must report their greenhouse gas emissions across:

• Scope 1: Direct emissions from owned or controlled sources
• Scope 2: Indirect emissions from purchased electricity, heat, or steam
• Scope 3: Other indirect emissions across the value chain

These disclosures should follow internationally recognized standards like the GHG Protocol.

Why measuring the Carbon Footprint matters

Measuring a company’s carbon footprint enables it to:

• Identify major emission sources and reduction opportunities
• Set and track emissions reduction targets
• Communicate environmental performance to stakeholders
• Comply with growing regulatory and disclosure requirements

Benefits of the CSRD for businesses

The CSRD offers a range of benefits, such as:

• Better risk management: Identifying and addressing sustainability-related risks strengthens long-term resilience
• New business opportunities: The shift toward a sustainable economy creates new market prospects
• Stronger reputation: Transparent, accountable sustainability practices enhance brand image and stakeholder trust
• Investor appeal: Clear sustainability disclosures attract responsible investment and capital

Reporting standards

The CSRD builds on internationally recognized reporting standards, including:

• Global Reporting Initiative (GRI)
• Sustainability Accounting Standards Board (SASB)

The European Commission is also developing its own European Sustainability Reporting Standards (ESRS), which will be mandatory for all companies subject to the CSRD.

CSRD implementation timeline

The CSRD will be rolled out in phases starting in 2024, depending on company size and type. Companies should begin preparing now to ensure compliance with the new reporting requirements.

Manglai can support your company throughout this process, offering tools to measure your carbon footprint, manage sustainability data, and generate CSRD-compliant reports.