ECG — 2024-03-06
News from ECG
The writing on the wall is clear. You and your company are responsible for your actions. And it is your job, as a person of responsibility, to build a responsible place to work. A place that adheres to common standards that ensure both people and planet are respected. And while these common standards seem pretty much common sense, the need for an actual framework to report the metrics of complying has come about due to the sheer volume of ‘greenwashing’ that takes place. And so, the writing on the wall is clear: make sure you comply with the EU Corporate Social Responsibility Directive otherwise known as CSRD.
From 1st January this year (2024), public listed companies with over 500 employees need to start reporting under the CSRD, with the report due in 2025. From 1st January 2025, companies with 250 employees or turnover of Euro 40 million, need to report under the CSRD framework with reports due in 2026. And from 1st January 2026, all small & medium enterprises (SMEs) but not micro-enterprises, need to start CSRD reporting with reports due in 2027.
So how does one start? The best starting point is to look at the existing metrics used for current reports under the company Environment, Health & Safety (EHS). Many larger companies will also have been used to completing the Non-Financial Reporting Directive (NFRD), which is basically the pre-emptive policy to the CSRD. Use the people power you have in your EHS reporting line and gauge the strength of the metrics and data used in the reports. Start baselining and target setting by checking the Sustainability Accounting Standards Board (SSAB). You need about 1,000 data points so begin by listing the ones you have already. The targets you have already outlined to achieve, what data can you collate. The Commission has worked hard to ensure that there is a high level of alignment between the European Sustainability Reporting Standards (ESRS) and existing sustainability standards such as those from the ISSB and GRI. The CSRD is not a trap. It’s simply a way for us all to play our part in protecting our people and planet.
“Sustainability and ESG has evolved very quickly and as such most companies are at different stages in their maturity. Those that have been reporting via Sustainability/ESG/Corporate Responsibility Reports will have made a good start,” says Mary Foley, Expert Services Director at Enhesa in conversation with ECG-the Association of European Vehicle Logistics.
Indeed, Fanni Arvai, Innovation & Sustainability Manager, ICO Terminals states that they have created a targeted division for this. “We have introduced a ‘Sustainability’ department 1 year ago,” says Arvai.
Companies often have beautifully produced ESG-Environmental, Social & Governance reports, but are these CSRD compliant?
“It depends on what reporting frameworks they have been reporting against and whether or not they have had these reports independently assured. Those Reports which do not have either element may lack the rigour required to meet the requirements of the CSRD.”
Arvai agrees. Existing ESG reporting structure needs to be realigned for compliance with CSRD. “No, our strategy is still under making, which is also related to the CSRD materiality analysis. We already have a draft but will realign once there is clarity on CSRD.”
And Foley states that the very first step to check whether what you have already can be used for your CSRD reporting is materiality.
Under the guidance of the European Financial Reporting Advisory Group (EFRAG): The European Sustainability Reporting Standards (ESRS) require that the sustainability statement includes sustainability information related to material impacts, risks and opportunities (IROs) identified through a materiality assessment (MA) process that applies the principles of double materiality.
So what is Double Materiality? EFRAG states that: Double materiality covers both impact and financial materiality. Impact materiality pertains to the material information about the undertaking’s impacts on people or environment related to a sustainability matter; financial materiality pertains to the material information about risks and opportunities related to a sustainability matter.
Understanding the concept of materiality is crucial.
“The very first step is to carry out a Materiality Assessment as everything else flows from that requirement. What they need to report on is based on the results of this Assessment. If their previous reports have not included this step then I’m afraid that they will not meet the requirements of the CSRD,” says Foley.
And so what about once the ESG report has been completed under what you, and those in your company feel meets the CSRD requirements. Who checks this?
“The requirement for Independent Assurance allows the company to select their own Assurer. Section 54 of the CSRD will give you an idea of the bodies which can provide this service and how they will be regulated,” explains Foley.
Begin the process of your ESG compliance now, it’s simply a gauge to assure the future of the planet and its people are protected; and by completing the tedious data gathering and verification of your company targets and processes, you will actually be certain you are adhering to sustainable goals, and you are doing your bit for tomorrow’s world.
“Yes, we have started work on preparation and publication of our ESG report for 2022 and 2023. We would like to do it in accordance with CSRD and ESRS. It’s a real challenge, ” says Michał Kujawski, Communication Manager, Adampol S.A.
For more information ECG Members & Partners can access the latest Business Intelligence Report: EU ESG & FVL-Understanding the EU’s Environmental, Social & Governance targets