Sweep for CSRD

Under the Corporate Sustainability Reporting Directive, companies are obligated to provide more comprehensive and standardized reporting on their progress towards sustainability targets. This includes more detailed reporting requirements related to environmental, social, and governance factors. 

Environmental – Companies must report on their environmental impact, including their greenhouse gas emissions, water consumption, and biodiversity. 

Social – They also need to disclose sustainability data on social matters including human rights, labor practices, and diversity initiatives (including diversity on company boards). 

Governance – Factors like anti-corruption policies, board composition, and executive compensation must also be disclosed using verifiable non financial data. 

Note that the CSRD will have to be reported on in the management report – instead of a separate sustainability report. It should be submitted in a standardized digital format to allow for easier checking against the European single access point database.

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Companies subject to the Corporate Sustainability Reporting Directive (CSRD) must conduct a double materiality analysis, which considers both the financial materiality and the sustainability materiality of their activities. The concept recognizes that sustainability risks (i.e. those arising from climate change and other sustainability issues) can have significant impacts on a company's financial performance and its ability to create long-term value. 

Under the CSRD, companies are obligated to disclose information on their sustainability performance and risks, taking into account the potential financial consequences and the broader societal and environmental implications of their operations. By incorporating double materiality, the CSRD aims to encourage businesses to recognize the interconnectedness between financial and non-financial data across their entire value chain, fostering more comprehensive and transparent reporting practices that support green investment and stakeholder engagement. Note that the CSRD that it also requires an external audit of reported information. 

Complying with the CSRD offers several business benefits for companies. 

Transparency

The Corporate Sustainability Reporting Directive allows companies to build trust and credibility among stakeholders, including investors, customers, civil society organizations and regulators. By providing comprehensive and standardized financial and sustainability information, reporting companies can effectively communicate their commitment to environmental, social, and governance (ESG) factors, allowing more informed decision making regarding sustainable investments.

Risk management

Complying with the CSRD helps companies identify and manage the risks and opportunities arising from sustainability issues more effectively, leading to improved operational efficiency and long-term sustainability. 

Innovation

It also enables companies to align their business model and strategy with sustainable development goals, driving innovation and fostering resilience in the face of climate change and a rapidly changing business landscape. 

Boosted reputation

Additionally, by complying with the CSRD, companies can demonstrate their commitment to environmentally sustainable economic activities. In doing so, they will enhance their reputation, attract and retain top talent, and strengthen relationships with external stakeholders, fostering long-term business success.

By following these steps, organizations can proactively prepare to comply with the CSRD:

1. Assess current practices: Take time to fully understand the disclosure requirements. Then evaluate your existing sustainability reporting practices and identify any gaps or areas that need improvement to align with CSRD requirements. 

2. Enhance data collection and management: Establish robust data collection processes to capture relevant sustainability information. Note that you should take into account your entire value chain. Sweep can help.

3. Define reporting boundaries and methodologies: Determine the scope and reporting requirements, including which entities, operations, and activities are covered. Develop appropriate methodologies for measuring and calculating sustainability indicators and consider adopting recognized reporting frameworks, such as GRI or TCFD.

4. Strengthen internal collaboration: Foster cross-functional collaboration between departments responsible for sustainability, finance, HR, and operations. Establish clear communication channels to ensure the availability and accuracy of data for reporting purposes.

5. Implement sustainability reporting: Use Sweep to regularly report on progress towards achieving full compliance against key performance indicators to investors, customers and all other stakeholders. Note that you should publish detailed and transparent information in a dedicated section of your company's annual management report.

Businesses already subject to the Non Financial Reporting Directive (including public interest entities) will have to start reporting on the 2024 financial year in their annual report. 

Large companies not currently subject to the Non Financial Reporting Directive will have to start reporting on the 2025 financial year. 

SMEs, small and non-complex credit institutions and captive insurance undertakings will have to start reporting for the 2026 financial year.