The Corporate Sustainability Reporting Directive (CSRD) is a significant piece of new sustainability regulation put in place by the European Union, which aims to increase transparency and accountability in corporate sustainability practices. It mandates that large companies with the EU -regulated market-listed securities will need to report according to CSRD requirements.
In this way, investors and other stakeholders can assess the impact of companies on people and the environment, and make better comparisons of sustainability-related preparations and performance between organisations within the same sector.
CSRD is a crucial step towards a more sustainable future, ensuring that companies take accountability for their impact on the environment and society in a fair and transparent way. The regulation entered into force on 5 January 2023 and will be integrated for the first wave of EU-based companies during the 2024 financial year, for reports published in 2025. As companies prepare for this new way of reporting, we explain what CSRD is about, and how Stahl is readying itself for the changes ahead.
The concept behind CSRD is simple: the directive is made up of 12 individual reporting standards (European Sustainability Reporting Standards – ESRS). As a first step, companies must assess which standards are specifically important, or ‘material’ for them as a business via a process known as a double materiality assessment. If a topic is material, you must disclose information on it. For example, if you have a big impact on water, you must disclose information about water. If your impact is very low, disclosing information is voluntary. The nature of the information to be disclosed is explained in the ESRS.
However, the aim is not simply to report: as ESG performance becomes more quantifiable and easier to measure, the ultimate goal is to increase the economic flow towards more sustainable business models throughout the European Union.
The concept behind CSRD may be simple, but its implementation is anything but that. That's why, at Stahl, we have been working on developing our CSRD readiness since the beginning of 2023. Time is also a factor - while Stahl does not have to start reporting in line with the Directive until the 2025 financial year, we have to start reporting to our majority shareholders, Wendel, over the 2024 financial year.
Our approach to CSRD at Stahl goes beyond compliance: we see it as a strategic opportunity to explain what we already do, to learn how we further can improve and work on a structural dialogue with our key stakeholders. Sustainability reporting is not new to us: we have been reporting on our sustainability ambitions and achievements since 2013.
Continue reading about our CSRD journey in part 2.