As promised in our previous blog, we continue our journey into the new CSRD legislation. In this blog, you will read more about the usefulness of this directive, the requirements, and how to prepare for future changes.
Ready? Let’s dive into it!
A good way to understand CSRD is to know its theory.
In 2019, the European Commission introduced the concept of “double materiality” in the context of sustainability reporting. To make it simple, we can say that “double materiality” serves the purpose of putting in one single report the financial aspects and performance of an organization, and the impact of the same organization on society and the environment.
However, to understand the concept of “double materiality” we need first to know what “materiality” is. In a few words, “materiality” defines all the information that is material, aka relevant, to evaluate an organization. Until recently, this concept mostly referred to the financial aspects of companies, including the influence of external matters, for example climate change, on companies’ bottom line. We can call it “Financial materiality”.
As preoccupation and regard for the environment and society grew more and more important, so did the need for a better assessment of companies which would also consider the impact of companies’ activities on climate and society. Just to give it a name, let’s call it “Impact materiality.”
As images speak louder than words:
The importance of the introduction of the “double materiality” concept, combining both impact and financial materiality, lies in the undeniable fact that what is not measured can be easily ignored. On the contrary, what gets measured gets managed. The necessity of disclosing data on the environment and people, will make companies more aware of the impact of their activities and directly affect their behaviour. This will lead to companies’ sustainable development and better channeling of investments toward environmentally friendly activities.
Let’s get practical
What does actually mean to comply with the CSRD? Which data must be disclosed? How will these data be assessed and handed in?
This is a general list of the data required for the CSRD:
- environmental matters
- treatment of staff and approach to social matters
- respect for human rights
- anti-corruption and bribery measures
- diversity on company boards (age, gender, educational and professional background)
- double materiality (sustainability risk: companies’ impact on social and environmental issues + how these issues are likely to affect companies’ performance)
- Targets and progress of companies’ strategies
- Intangibles (social, human, intellectual capital)
A novelty of the new legislation will be the assessment of data. To ensure organizations’ compliance with the rules and transparency, data must be certified by an accredited independent auditor.
Moreover, CSRD information must be standardized in order to be easily certified. The information must be delivered in xHTML format. This will further facilitate the standardization and verification of the data. Companies will be expected to provide CSRD information together with their financial/management report. The goal is to learn to consider all these data as a whole, rather than separate entities.
Flexibility is a must
As already mentioned in our previous blog, being flexible with your reporting framework is essential. Sustainability and societal issues are growing in importance and constantly changing. Therefore, it is reasonable to expect that the reporting landscape will keep developing as well. To enhance flexibility in your reporting framework and be able to adapt to any kind of variation in regulations, it is important to have constant and complete access to all data your company may need to report on.
Start thinking already of a way to collect and save your information. Technology will help with specific software to keep data secure, verifiable, and easily accessible. Having everything digitized and stored properly will help you with any upcoming reporting requirements.
The early bird catches the worm.
It is recent news that the Council of European Union gave the green light to the CSRD (Check the official news here). However, you don’t need to wait for it to come into force to start working on your sustainability performance. A critical part of the CSRD will be reporting on Scope 3 emissions. Greenhouse gases, particularly CO2 emissions, are of the utmost importance in sustainability reporting. You can already start changing these data by choosing the right partners for your supply chain. Your shipments, for example.
Emons Cargo 2WINcan contribute to improving your carbon footprint with an alternative and sustainable freight solution and help you with data tooling for the calculation of your carbon emissions.
Emons Cargo’s tool of choice is BigMile. It provides information on the CO2 emissions and savings of our trucks. Furthermore, it is extremely useful to calculate the improvements in terms of carbon emissions a company can gain with our 2WIN solution.
Take the food company Ecotone, for example. In 2021, they started using our 2WIN double-deck trailers to increase the volume of their shipments. As a result, they saved 7 tonnes of CO2 emissions on their transportation between the UK and France alone. The estimation of CO2 emissions savings for their flows between Germany, the Netherlands, and France amounts to an impressive 280 tonnes.
Have a look at Ecotone’s CO2 savings on page 27 of their report. No wonder we deserved a mention as “Pioneers with impact!”
Find out more about our alternative 2WIN solution on our sustainability page.
And stay tuned for another episode of our CSRD saga!