7 May, 2021
It’s no secret that customers, investors and regulators are paying more attention to corporate sustainability disclosures. With stakeholder decisions increasingly guided by the sustainability data made available in annual reports, corporate websites and investor briefs, it’s essential that this information is meaningful, comparable and reliable.
Enter the Corporate Sustainability Reporting Directive (CSRD), a proposed amendment to the EU’s sustainability reporting requirements. Announced in April this year, the CSRD will considerably expand the scope of non-financial reporting requirements (currently set out in the Non-Financial Reporting Directive, or NFRD) to both cover more companies and require more comprehensive disclosures.
The CSRD – which is due to come into effect in 2023 – couldn’t be more timely, as growing concerns about corporate greenwashing are prompting calls for stronger regulatory action in the US and UK. But while we welcome the EU’s enhanced requirements for disclosure, it’s worth noting that the proliferation of standards and guidelines in the sustainability reporting space is a growing source of confusion for companies.
To that end, it’s reassuring that the EU has recognised the need for the CSRD to build on and contribute to the standardisation of reporting initiatives at a global level. Greater alignment of voluntary and mandatory reporting frameworks would be key in empowering stakeholders to make informed decisions about the businesses they choose to engage with. For those stakeholders based in the EU, the CSRD is a promising first step.
By Louise Podmore