Preparing for CSDDD
The Corporate Sustainability Due Diligence Directive (CSDDD) obliges large companies to identify, mitigate and, where necessary, remedy human rights and environmental impacts in their operations and ‘chain of activities'.
The EU Corporate Sustainability Reporting Directive (CSRD) requires companies in scope of the directive to compile and report on significant amounts of sustainability data in their annual reports. These data must be uncovered and reported in accordance with the European Sustainability Reporting Standards (ESRS), which mandate a double-materiality assessment to determine information that is material to the business and that is to be included in the sustainability statement. Reporting will require external assurance by a certified provider.
The CSRD must be transposed into member state law by 6 July 2024. France was the first country to do so in 2023, and legislation is expected to be published in Ireland in the coming weeks.
Becoming “CSRD-Ready” is a significant undertaking, requiring value chain and sustainability expertise to better understand activities in operational control as well as upstream and downstream activites. The project will involve stakeholders across the value chain, requiring leadership to steer the process, and input from legal, finance, audit and risk as well as guidance from external advisors. A useful starting analogy is the undertaking in organisations to be “GDPR-Ready”. However, value chains and the range of potential sustainability impacts, risks and opportunities are significantly more complex to map and understand, and the context of the environmental crisis infinitely more urgent. Under CSRD/ESRS, entities must make a “reasonable effort” to implement processes to collect data, initially using as much primary data as possible in the first instance, with estimates and explanations for any gaps. In later iterations, entities are expected to narrow the performance gap in data reliability.
Companies are advised to undertake an immediate internal review to determine if they are in scope for CSRD and to understand the requirements for the upcoming years.
These are the reporting requirements in stages:
It is important for all companies, big and small, to note the following:
For more information, read our technical guidance Preparing for the CSRD 2024:
Preparing for the Corporate Sustainability Reporting Directive (CSRD) - Forvis Mazars Group
To learn more, contact Johnny Meehan, Head of Sustainability Consulting.
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