In the realm of corporate sustainability, the Corporate Sustainability Reporting Directive (CSRD) emerges as a game-changer, steering companies toward a culture of transparency regarding their impact on people and the environment. Before CSRD, large EU companies adhered to reporting principles outlined in the Non-Financial Reporting Directive (NFRD). However, CSRD takes a giant leap forward, introducing more comprehensive reporting requirements to address gaps in its predecessor.
The Who and What of CSRD
Who is Affected?
CSRD casts its net wide, covering all large EU and EU-listed companies. Even non-EU companies with significant business interests in the EU market find themselves under the CSRD umbrella. Notably, small and medium-sized enterprises (SMEs) are exempt unless they have securities listed on regulated markets.
When Will these Rules Take Effect?
The CSRD rules roll out in phases from 2024 to 2028, depending on factors like company size and applicable member state. By January 1, 2028, all companies falling under the directive’s scope must comply.
Still Confused About CSRD? We Can Help.
As companies gear up for CSRD compliance, they face a series of reporting obligations defined by the European Sustainability Reporting Standards (ESRS). This includes reporting on sustainability-related impacts, opportunities, and risks. Here’s where Lunum steps in:
1. Business Model and Strategy Reporting:
CSRD Requirement: A description of the company’s business model, strategy, and sustainability risks and opportunities.
Lunum’s Contribution: We can align sustainability and supporting strategies across organizations, providing guidance for informed decision-making.
2. ESG-related Targets and Progress Reporting:
CSRD Requirement: Reporting on environmental, social, and governance-related targets and annual progress.
Lunum’s Contribution: We utilize the Employment Impact Framework to measure and track your company’s impact work, focusing on the social component.
3. Sustainability Statements:
CSRD Requirement: Separate sustainability statements in management reports.
Lunum’s Contribution: We provide industry benchmarking, analysis, and performance comparison against the sector.
4. Transition to a Sustainable Economy:
CSRD Requirement: Implementation plans for transitioning to a sustainable economy.
Lunum’s Contribution: We offer insights and impact values to measure internal and external impacts.
Alignment with Lunum’s Impact Work
The proposed European Sustainability Reporting Standards (ESRS) standards from the technical committee align closely with Lunum’s impact work, ensuring a comprehensive analysis of various aspects:
ESRS S1 Own Workforce: Lunum conducts third-party verified wage equity audits and assessments, ensuring transparency and consistency in wage condition reporting.
ESRS S2 Workers in the Value Chain: Lunum delivers impact assessments to measure, track, and inform targets and remediation of material impacts.
ESRS S3 Affected Communities: Lunum assesses job creation impact and provides data on community-related risks and opportunities.
ESRS S4 Consumers and End Users: Lunum Supports companies in reporting policies and targets for managing impacts on consumers and end users.
Reporting Considerations: Double Materiality and Due Diligence
Companies must consider double materiality—reporting impacts from both an investor and wider stakeholder perspective. Additionally, due diligence processes are crucial, with the EU negotiating new corporate sustainability due diligence rules. Lunum, as a reliable partner, assists companies in identifying, assessing, preventing, mitigating, and remedying negative impacts throughout their value chain.
Forward-Looking Disclosures, Assurance, and Lunum’s Expertise
CSRD mandates forward-looking and retrospective reporting. Assurance standards, starting with “limited assurance” and moving toward “reasonable assurance,” play a pivotal role. Lunum, as a third-party reporting entity, excels in providing reliable data inputs, ensuring compliance with ESRS, and supporting companies in achieving sustainability goals.
Embrace the Future with Lunum.
As the CSRD revolutionizes corporate sustainability reporting, Lunum stands as your strategic ally. Our human-driven, uplifting, and data-driven approach ensures not just compliance but excellence in navigating the complexities of sustainable business practices. Reach out to our team today—let’s build a sustainable future together.
