The new European Union directive CSRD (Corporate Sustainability Reporting Directive), which concerns non-financial reporting, has been in effect since January 2024. It significantly expands the obligation for companies to report on their ESG (environmental, social and governance) activities. The directive primarily applies to companies with more than 250 employees, annual turnover exceeding 50 million euros or a balance sheet total exceeding 25 million euros. In the Czech Republic, these new rules will now affect more than a thousand companies.
Why Is the EU Introducing the CSRD Directive?
With this directive, the EU is responding to climate change and requiring greater transparency from companies. This allows investors and banks to easily identify companies that are actively reducing their environmental impact, take good care of their employees and operate transparently. Transparent companies then gain better access to financing, while companies without a clear ESG strategy may face more complicated access to loans and investments.
What Benefits Do Companies Gain from CSRD?
Easier access to capital: Banks and investors will prioritise companies with demonstrable ESG responsibility. These companies can obtain more favourable loans and easier access to investments.
Competitive advantage: Transparent ESG reporting increases a company's credibility with customers and business partners. It also provides a competitive advantage in tenders where ESG criteria play an increasingly important role.
Transparency and credibility: Companies can clearly communicate their ESG activities without the risk of being accused of greenwashing, thereby strengthening their market position.
Internal efficiency: Regular monitoring and reporting of ESG activities helps identify areas where costs can be saved and internal processes optimised.
When Will CSRD Take Effect for Individual Companies?
2025: The first ESG reports under CSRD will be published by large companies that already report under the older NFRD directive, covering the year 2024.
2026: The obligation will extend to all large companies meeting the criteria (more than 250 employees, turnover over EUR 50 million). Reports will cover the year 2025.
2027: Listed small and medium-sized enterprises (SMEs) will begin reporting in a simplified format for the year 2026.
2029: The reporting obligation will also extend to non-European companies with significant operations in the EU, with the first reports covering the year 2028.
How to Properly Prepare for CSRD?
Map your current ESG status: Start by analysing your current ESG activities, identify strengths and weaknesses, and determine what to focus on next.
Create a clear ESG strategy: Set specific goals and clear responsibility for achieving them. Every employee should know their part in meeting these goals.
Implement an effective data collection system: Introduce suitable tools to facilitate the collection and processing of ESG data. This will significantly simplify the creation of regular reports.
Train your employees: Inform your team about ESG principles. Organise training sessions and workshops that explain how everyone can contribute to improving the company's sustainability results.
Start as Soon as Possible
Do not delay your preparation. The sooner you start with ESG reporting, the easier it will be to meet legislative requirements and gain a competitive edge.
Investing in CSRD preparation is not just a necessity due to new legislation. It offers companies a unique opportunity to become more sustainable, transparent and economically efficient businesses. An excellent first step is the electrification of the company fleet, which immediately reduces the carbon footprint and brings savings in vehicle operating costs. If you are thinking about how to start the transition
Author
Filip Zapletal
