In 5 steps on the way to reporting according to the CSRD
The Corporate Sustainability Reporting Directive (CSRD) requires companies to report according to standards set by the EU. On the one hand, the way we report is changing. Companies will report more, and more concretely, on sustainability. On the other hand, the urgency for a business strategy in which sustainability has a central place is increasing. Companies also need to have more insight into their own chain, while paying close attention to human rights and the environment. Mandatory reporting ensures that more companies act on sustainability and communicate transparently about it.
The CSRD will apply to many organizations operating in the EU. The expectation is that the CSRD will take effect for:
• Public Interest Entities (PIE), from fiscal year 2024.
• Large unlisted companies, from fiscal year 2025.
• Medium-sized and small listed companies, from fiscal year 2026 (with possibility of postponement).
In 5 steps we show how your company can prepare for the CSRD.
Step 1. Map out the chain and stakeholders
Companies must have insight into their chain activities and where the responsibilities, risks and impact on sustainability lie. Above all, it shows companies where it can add value in the short and long term. Step 1, therefore, focuses on mapping (activities in) the chain and important stakeholders in that field. They are essential in realizing positive impact.
Step 2. Determine a strategy
When a company has a clear picture of the chain and stakeholders and knows where it can possibly add value and make an impact, the question is where a company wants to add value and should focus on in the short and long term. On which themes can a company achieve quick wins? Where can we make a positive impact in the long term? What do employees and external stakeholders find most important? This information not only contributes to value creation and a solid positioning on sustainability, but also, for example, to employee engagement and support from stakeholders.
We can investigate this with the help of a materiality analysis. We use our own online tool (materiality scan) for such an analysis. We use this to provide insight into the most important sustainability themes in a materiality matrix. To know more, read here.
Step 3. Set sustainability goals
Once the strategy and most important sustainability themes have been determined, this requires concretization and SMART objectives. SMART objectives are specific, measurable, achievable, realistic and time bound. Objectives can be set on the so-called ESG themes: Environmental, Social, Governance. What is important here is that the objectives are properly monitored and secured in the organization.
Step 4. Develop a sustainability report
Every year, companies must report on their sustainability efforts in accordance with standards set by the EU. These are expected to be about Environment, Social and Governance (ESG). The insight into the chain in step 1, the strategy in step 2 and the objectives formulated in step 3 provide a good basis for this: reflect in a report, for example, on the results and approach per objective. This information can be included in the management report.
Step 5. Activate stakeholders
The report offers opportunities to include employees and external stakeholders in the steps you take as a company towards sustainability. It is therefore valuable to spread the report and bring it to life. It can lead to more knowledge sharing, support and new collaboration partners. It is important that the communication meets the information needs of the target group. Make the messages and additional resources appealing to your target groups.
Does your company have specific questions on the way to reporting according to the mandatory CSRD? You can contact our CSRD team, who will help you every step of the way towards reporting according to these EU standards.