Increased reporting requirements
One of the new sustainability laws is the EU’s Corporate Sustainability Reporting Directive (CSRD), on which the EU reached political agreement in June 2022. In short, the directive means that large companies and listed companies must report sustainability reporting, which involves reporting on each company’s impact on the environment and human rights. As an annex to the directive, there are draft reporting standards – the European Sustainability Reporting Standards (ESRS) – which will help companies identify what to report on and how.
The EU has been ambitious and the disclosure requirements are far more extensive than what companies are reporting today. It will be mandatory to follow sustainability reporting standards. It will not be enough, for example, to map one’s own CO2 emissions. According to the CSRD, companies will have to report CO2 emissions in their own value chain (together with company contracting parties). Other sustainability topics that need to be informed are the company’s water consumption, its impact on biodiversity, decent working and wage conditions in the value chain, equality, discrimination and lobbying. to only cite a few. Although the reporting requirements will initially be extensive, the bottom line will be that companies must perform thorough materiality assessments and report the results. The question then is, what is a materiality assessment?
