The Company Director's Guide to CSRD and what to consider regarding sustainability reporting in 2024
CAS Advisory, Chartered Accountants
CAS Advisory is a firm of Chartered Accountants, based in Fitzwilliam Sq, Dublin 2. Responsive, Innovative, Attentive.
If you are an Irish company Director or lead a group structure with an Irish-presence, you’ve likely heard about the EU Corporate Sustainability Directive (“CSRD”). However, you might not have fully considered what your company needs to do to comply with the directive, and what your strategy is regarding sustainability disclosures in general.
In this brief article, we will explain when your business will impacted by CSRD from a financial reporting perspective and what you need to consider in the short term to stay competitive. Our experts will also demystify some of the common terms used in the context of CSRD and sustainability, to help you navigate the changes effectively.?
Firstly, what is CSRD?
The Corporate Sustainability Reporting Directive (CSRD) is a European Union (EU) law requiring companies to report on their sustainability efforts and environmental impacts. It aims to provide investors, customers, and stakeholders with clear information about how businesses handle environmental and social challenges like climate change and diversity. The CSRD replaces the Non-Financial Reporting Directive (NFRD), expanding both the number of companies covered and the scope of disclosures required.
When Does My Company Fall Into Scope for CSRD?
Here's a quick rundown of when different companies need to start complying:
2024 (Reports Published in 2025): EU-listed companies (including international companies listed in the EU) with more than 500 employees. Companies already subject to the NFRD.
2025 (Reports Published in 2026): Large companies not currently subject to the NFRD, with more than 250 employees and/or over €50 million in net turnover, €25 million in total assets.
2026 (Reports Published in 2027): EU-listed small and medium-sized companies (SME’s) with more than 50 employees or over €10 million in net turnover, or €5 million in total assets.
2028 (Reports Published in 2029): Subsidiaries of non-EU companies with over €150 revenue in the EU. At least one subsidiary or branch in EU.
What are Scope 1, 2, and 3 Emissions and how do they impact my business?
Scope 1: Direct emissions from sources owned or controlled by the company, like emissions from company-owned vehicles.
Scope 2: Indirect emissions from purchased electricity, heating, HVAC or similar.
Scope 3: Other indirect emissions in the value chain, including emissions from business travel (a common challenge under CSRD) or emissions from the production of raw materials used in your products / services.
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What Should You Consider as a Supplier to a Larger Firm?
Under Scope 3 emissions, if your company supplies goods or services to a larger firm subject to CSRD, you'll likely need to provide data on your emissions. For many businesses not currently in scope for CSRD, this is the most critical aspect to consider in 2024 and beyond. Providing data by department will likely be too challenging, therefore you may need to report your overall environmental impact as a business in the short term.
Double Materiality in CSRD
Double materiality means looking at both how your company is affected by environmental and social issues and how your business influences the environment and local communities around you. Again, this will be a challenging aspect of CSRD, as it may be difficult to quantify these impacts.
What Else Should You Think About Regarding Sustainability Disclosures in the Short Term?
Many businesses are opting to set self-imposed Net Zero targets or sustainability goals, in order to stay competitive, attract talent, and acquire customers. Some organisations are even opting to push for accreditations that demonstrate their sustainability efforts, for example seeking B Corp status or working to achieve ISO 50001 / LEED / BREEAM status, showcasing energy efficiency in buildings.
Outlined below are some of the aspects you may wish to consider in the shorter term regarding sustainability disclosures.
Practical Steps to Begin Your Sustainability Journey
If you do choose to accelerate your sustainability plan, here are some suggestions as to how you can get started, although we do recommend you seek expert advice:
As we conclude our guide, we sincerely hope you found this CSRD update valuable. As always, should you need our support, feel free to reach out to our experts by emailing [email protected] or browse our solutions at www.casaccountants.ie.
We look forward to helping you on your journey to a sustainable future!