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

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

So it's easy to see why the business world, in tandem with the political sphere, needs to take a leading role in this ecological direction, as demonstrated by the legislative developments in this area...

... starting with the new WEEE Directive, which came into force in January 2024. The aim of this directive is to broaden the scope of companies covered by the obligation to prepare and present non-financial reports on their sustainability performance. This will provide valuable information on where an organisation stands and how it can improve.

But who is really affected by the 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 the CSRD and the CSRD report?

The CSRD, an acronym for the Corporate Sustainability Reporting Directive, is a European directive requiring organisations 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 extending the number of companies now covered. It also reviews the standards to be adopted in order to produce compliant and harmonised reports. These are the ESRS, or European Sustainability Reporting Standards, promoted by EFRAG.

Finally, the CSRD report simply defines the document detailing the sustainability performance of the organisations concerned.

💡 If you would like more details, please refer to the official text on the CSRD: Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022.

What's new in the CSRD?

As we have just seen, the CSRD replaces the NFRD, which was ultimately deemed too limited to meet the growing challenges of sustainable development in business.

While one of the major differences lies in the increase in the number of entities concerned, there is also a question of :

• gathering more accurate and reliable information ;
• standardising this information by introducing European sustainability reporting standards;
• strengthening the principle of double materiality, to which we will return in more detail;
• require the CSRD report to be audited by a statutory auditor or an authorised body;
• 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?

To improve the transparency and comparability of ESG information

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

In other words, it is not just a question of obliging companies to publish information, but also of ensuring that it is more accurate and harmonised, to make it easier to interpret.

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

Encouraging the transition to a sustainable economy

By encouraging this transparency, the directive enables investors, but also consumers and other stakeholders (institutions, commercial partners, etc.) to make fully informed decisions.

At the same time, the CSRD encourages organisations to adopt more sustainable and responsible practices, in particular 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!

In fact, this document helps to strengthen the confidence of the various stakeholders, starting with consumers and employees, at a time when companies are :

• 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 understand where it is heading. And that's an excellent argument for selling more or recruiting the best talent.

Who is affected by the 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 summarising the organisations concerned and the timetable for implementation:

☝️ The CSRD report therefore concerns a large number of organisations, increasing the number of companies affected (compared with the NFRD) from 11,600 to around 50,000.

How often should the CSRD report be published?

The report must be communicated 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 financial year.

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

💡 Example of a timetable:

• Financial year-end: 31 December 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 should also 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 provide a framework for the way in which companies are required to report their sustainability information as part of non-financial reporting.

😀 This standardisation makes it easier to compare the performance of different companies.

Briefly, there are several types of standards:

• transversal standards (ESRS 1 and ESRS 2) ;
• thematic standards, based on the three traditional 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 is a summary table:

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

• for ESRS E1, to prove why your organisation is not concerned by climate change, and why there is no need to report on this issue;
• for the other ESRSs, to use the dual materiality analysis to identify the issues that 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 the 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, and also to know 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 company (mandatory for all companies or specific depending on your activity).

#2 Mobilise 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 the social and environmental issues at stake, not to mention mastery of the legal framework.

We therefore recommend that you mobilise the right expertise :

• by recruiting a professional in the field, such as a CSR director or manager. This is an option best suited to large groups;
• by training an employee in these issues. Beware, however, of the amount of time they will have to allocate to CSRD tasks, especially if you want them to continue to carry out other tasks at the same time;
• by calling in 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 affects most of the company's functions. That's why we advise you to involve all the 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 account of the impact on all the players involved.

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

☝️ Don't forget to involve management and ensure that they oversee the process to guarantee the commitment of the whole company.

#4 Structure the project and draw up a roadmap

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

More specifically, with a well-crafted roadmap, you will :

• clarify responsibilities
• identify the key stages
• anticipate challenges;
• meet regulatory deadlines;
• facilitate 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 the company's performance, in compliance with the numerous regulatory requirements!

The CSRD report therefore involves not only collecting this data exhaustively, but also making it more reliable.

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 go 😉.

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 practical 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 makes it possible to provide a complete and transparent view of the risks and opportunities associated with sustainability, both for the organisation and for its stakeholders.

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

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

To make your selection, you should of course rely on the materiality review.

In addition, some experts recommend conducting a parallel gap analysis between the ESRS requirements and the information already published (DPEF, URD, climate report, etc.). This comparison provides an overview of the gaps that need to be filled in order to comply with the obligations. In fact, some existing data may already partially meet the requirements of the ESRS, even though an in-depth examination is still necessary to ensure complete coverage of the 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 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 outset of the reporting process are essential for effective implementation.

#9 Digitise and tag the report

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

The aim is to improve comparability and enable investors and other regulators to analyse the data automatically.

What are the penalties for non-compliance?

Companies that fail to comply with 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 the sustainability information is not certified;
• 75,000 in fines and up to 5 years' imprisonment for obstructing the certification of information.

In addition, if an organisation fails to comply with the requirements to publish its CSRD report, it can be ordered by a court to :

• disclose the information ;
• be excluded from procedures for awarding public contracts or concessions.

In short, CSRD is no laughing matter!

Do you need support to produce your CSRD report?

And since CSRD is no laughing matter, sometimes it's better to get help!

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

But you can also rely on software developed to optimise data collection. Some of these tools are even proving to be rather affordable (yes, the cost of the CSRD process remains one of the sore points for impacted companies, especially the smaller ones 😬).

🛠️ Such is the case with Carbo, a solution for collaboratively collecting all the data relating to your CO2 emissions. The aim is to make it easier to draw up your carbon footprint, but also to complete the section on climate change as part of the CSRD report. At the same time, Carbo will help you to define a strategy for reducing your environmental impact, taking into account the specific characteristics of your organisation and your activities.

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What can we learn from the CSRD report?

Since 1ᵉʳ January 2024, the preparation and then publication of non-financial reporting has become mandatory for many European companies. And this legislation will be extended in the coming years.

Based on the ESRS standards, the purpose of this document is to provide precise, harmonised information on the sustainability performance of organisations . 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 dual 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 support. There are many online resources published by official bodies. You can also call on the services of dedicated experts, or even technological solutions (which come in very handy when it comes to collecting data!). It's up to you to find the best way to go about it, 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. Because in an increasingly competitive professional world, it will help you to find favour in the eyes of demanding consumers!