CSR is becoming increasingly important to both employees and consumers. Engaging in CSR can help an organization attract and retain employees, as well as improve its public image. In fact, 70% of consumers want to know how the brands they support are engaging in CSR-related activities.
But it’s not just consumers and employees that care about corporate social responsibility. It’s legislators too. The European Commission has just passed the “Corporate Sustainability Reporting Directive”, or CSRD, which mandates certain companies to disclose information on the way they operate and manage social and environmental challenges. Wondering if this new directive affects you or your organization? Find out below!
What is the CSRD?
The CSRD, or Corporate Sustainability Reporting Directive, requires organizations to report on their social and environmental policies. This act aims to help investors, organizations, consumers, policymakers, and other stakeholders evaluate the non-financial performance of companies and encourages companies to develop a responsible approach to business.
This new directive requires more detail and covers more types of organizations. It will be mandatory for the companies concerned.
It extends the scope to all large companies and all companies listed on regulated markets (except listed micro-enterprises), requires the audit of reported information, and introduces more detailed reporting requirements, as well as a requirement to report according to mandatory EU sustainability reporting standards.
According to the CSRD, companies must include reporting on:
- Environmental matters.
- Social matters and treatment of employees.
- Respect for human rights.
- Anti-corruption and bribery.
- Diversity on company boards (in terms of age, gender, educational and professional background).
- Double materiality concept (sustainability risk including climate change & companies' impact on society and environment).
- Process to select material topics for stakeholders.
- More forward-looking information, including targets and progress from thereon.
- Discharge info related to intangibles (social, human and intellectual capital).
- Reporting in line with SFPR and EU taxonomy regulations.
Finally, the report must include: integration in auditor's report; involvement of key audit partner; and scope to include EU taxonomy and process to identify key relevant information.
- Who will the CSRD affect?
- All large companies that meet 2 out of 3 of the following criteria: more than 250 employees; €40 million turnover; €20 million total assets.
- Listed companies on EU-regulated markets (SMEs have an extra 3 years to comply) except for listed micro-enterprises (less than 250 employees and less than €20 million in turnover).
- When does it come into effect?
Organizations must submit the report on 1 January 2024 for the 2023 fiscal year.
- What happens if you don’t do it?
According to this act, sanctions for non-compliance are expected to be quite significant. However, the nature of the sanction and fines amount will be decided upon by each member state. It is expected that it will be more severe in some member states than others.
How Can Optimy Help You?
You get the picture: CSRD requires you to report on your CSR and social impact activities, fast. At Optimy, we know reporting can be complex, even more so if you don't have an intelligent process in place. Manual work is tedious and data loss happens more often than you'd think. Optimy's all-in-one platform helps you digitize your CSR activities so you can manage them from your central dashboard easily and report on them in one click. And this applies to all CSR activities, from corporate giving, to volunteering or grants management.
Eager to see what Optimy can do to help you get ready for the CSRD? Get in touch with us!