Knock Knock. Who’s There? CSRD. CSRD Who? Exactly.

Just when you thought it was safe to go back in the water.  Wow, that’s a very old movie reference.  But what’s not very old is the new European sustainability reporting regulations (CSRD) and the associated standards (ESRS) for those companies with material operations in the EU.  What the heck is that, you ask?  Allow me to explain.

If you are an EU-domiciled company, then you will likely already know all about these standards as all enterprises in the EU will have to eventually report to them.  If you are not a European company, you should also know about them as they may still apply to you (essentially based on the scale and scope of your business in the EU).

The CSRD became EU law in January of 2023.  The most important distinction I would highlight from reporting standards which North American companies are used to is the application of “double materiality” – companies must report on matters which materially impact their own financial results (“financial materiality”) as well as those which have material social or environmental impacts outside of their entity (“impact materiality”).

If you do fall under the umbrella of CSRD, your reporting timeline will depend on the size of your company (revenue, number of employees).  Smaller entities will be phased in over a couple of years.  Larger companies should already be collecting 2024 data for 2025 reports.

And while there is some interoperability with other reporting standards, it is not perfectly aligned and will require some up front work to set it all up.  Our company and other consultants can help you navigate this process, but you really should be looking into it yourselves initially to determine if you are deemed to be “in scope.”

Better answer that door.  Someone is knocking, and they’re not going away.

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