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Written by Violette Demain
On September 21, 2023, Positive Company® held a webinar on the new CSR standards and regulations. In this article, you will find a summary to gain a clearer understanding of the CSRD and the new requirements for CSR reporting!
We had the chance to welcome Iris Chabrol, an expert in accounting and CSR at PKF ARSILON, to break down these topics, as well as Emilie Le Gall and Fanny Deleuze, both CSR managers at ARPP and REWORLD MEDIA, to share their own experiences.
The Corporate Sustainability Reporting Directive (CSRD) comes into effect on January 1, 2024, marking a major evolution in the standardization of non-financial reporting for European companies. This directive, succeeding the NFRD of 2014, aims to strengthen the already established standards and address the limitations of the previous system.
1. Evolution of the Previous System
The first stone of the building was laid with the Accounting Directive of 2013, encouraging large European public interest entities to provide a detailed management report that "contains a true and fair view of the evolution of the business, the results and the situation of the company, as well as a description of the main risks and uncertainties it faces."
Subsequently, the NFRD Directive of 2014 made this obligation for non-financial reporting mandatory for the companies concerned, integrated into the management report. This report must include "information, to the extent necessary for understanding the evolution of the business, performance, the situation of the company and the impacts of its activities, relating at least to environmental issues, social and personnel issues, respect for human rights and the fight against corruption."
However, this system had significant limitations:
- The information published was insufficient to fully assess the impact of companies on the environment and society.
- No guarantee of clarity and security surrounded the information presented to the public.
- The previous guidelines lacked precision, both quantitatively and qualitatively.
- The scope was limited to only 11,000 companies.
2. The CSRD renewal of non-financial reporting
These findings have therefore prompted Europe to implement a new directive, the CSRD (Corporate Sustainability Reporting Directive), which aligns with the perspective of the European Green Deal aiming for carbon neutrality by 2050.
The stakes are threefold:
● Encouraging the financial system to evolve towards a sustainable finance strategy
To achieve this goal, Europe has decided to constrain the financial system through a specific directive (SFDR) that provides essential information to guide financial flows. The SFDR (Sustainable Finance Disclosure Regulation) is a regulation that aims to promote sustainability in the finance sector in Europe.
● Promote the sustainability of the European economic fabric
The goal here is to stabilize the European economy and solidify it against environmental, social, and societal impacts.
● Ensure interoperability with international frameworks
In the same spirit as the ISSB (International Sustainability Standards Board) which aims to develop a global framework for sustainability information disclosure.
3. The main innovations
The CSRD will therefore apply to companies exceeding 2 of the following 3 thresholds:
- €40M in Revenue
- €20M in Balance Sheet
- - Effectif > 250
4. How to prepare for the CSRD?
The 7 steps to successfully integrate CSR into your company.
Focus on the principle of double materiality
With this new directive, we now talk about double materiality including the financial materiality and impact materiality:
- - Financial materiality or simple materiality examines the impact of societal and environmental issues on the economic performance of the company.
- - The materiality of impact will focus on the positive and negative impact of the company's activities on the environment and society.
To better understand this double materiality, let’s take the example of a company working in the press sector. Concerns related to deforestation can lead to paper shortages or increased paper costs, which impacts the financial materiality of the company, as it will have to spend more to purchase paper. At its level, the company has the option to choose certified paper, produced more responsibly, thus contributing to having a positive impact on the environment.
● Interests of the exercise
- - To project oneself in 3, 5 to 10 years
- - Being attentive to the expectations of your market, your partners, and your employees
- - Prioriser ses engagements RSE
● How to implement the double materiality matrix?
The 5 steps to successfully implement its double materiality matrix.
Testimonials from the ARPP
Despite its status as an association and thus outside the scope of the CSRD, the ARPP, an association of 25 employees, has made the voluntary choice to adopt double materiality for several reasons:
- To speak the same language as its partners and members eligible for the CSRD
- To prepare for potential future requests for non-financial reporting in order to anticipate them rather than suffer them
- To structure its CSR approach by identifying priority issues
- To meet the labeling requirements that require simple materiality, while going beyond these expectations
- To inspire and engage the actors in its ecosystem to adopt this proactive approach
To realize this project, the ARPP chose to partner with Positive Company® to benefit from external and professional expertise. This collaboration included sending an anonymous questionnaire to stakeholders, weekly follow-ups to oversee the project, and a summary of the results to develop the double materiality matrix.
Testimony REWORLD MEDIA
REWORLD MEDIA, a large French company in the media sector that has 73 subsidiaries and is already subject to the exercise of the DPEF. It must therefore prepare itself for the new requirements. To do this, and to meet the expectations of its stakeholders, the group has decided to proceed step by step:
- To train on the methodology and standardize CSR knowledge within the group
- To identify relevant themes in collaboration with the department and CSR governance
- To create a mapping of stakeholders
- To question the scope to adopt for the CSRD and their carbon footprint
REWORLD MEDIA approaches the CSRD as a research opportunity to better understand itself. Their goal is to produce a sustainability report that aligns with their actions, to communicate it, and to establish a roadmap to define strengths and areas for improvement.
In conclusion, it is clear that the CSRD and its new requirements will transform the business landscape. Some will be compelled to comply, while others will choose to do so voluntarily and proactively, in order to anticipate deadlines and meet the growing expectations of stakeholders. As Fanny Deleuze pointed out, "we are all someone else's scope 3." This phrase illustrates how closely interconnected we all are. These new regulations will indeed affect each of us and will have an impact on all ecosystems. It is therefore essential to synchronize our actions by collaborating to move in the same direction.