Welcome back for our third blog on the Corporate Sustainability Reporting Directive (CSRD). In our previous blogs, we went through the main aspects of this new legislation.
We covered some terminology, the number and type of organization involved, and the challenges to be faced to comply with it (CSRD part I). Then, we briefly discussed the theory behind the CSRD, practical matters like the kind of information companies will be asked to disclose, and some general advice on the importance of a flexible reporting framework (CSRD part II).
Now, it is time to speak about the advantages of this new directive.
Why should companies be happy to comply?
It is a matter of fact that, sometimes, compliance with new laws and regulations, as necessary and useful as they are, mostly implies efforts that cost organizations time and money. In terms of the efforts required, the CSRD is no exception. At the same time, there are many aspects of this new directive that make complying with it more advantageous than not.
As we wrote in our previous blogs, preparing for the CSRD requires the collection of data and planning of strategies and goals that, though demanding, will lead to a thorough knowledge of every aspect of a company. And knowledge, we can easily declare, is always advantageous.
- Insights. Acquiring a better knowledge of your own organization can lead to useful insights. You might discover links in your supply chain that can be improved, new ways to cut costs or greenhouse gas emissions that you didn’t know before having access to specific data.
- Strategy. Getting to know your company’s performances in-depth can help you to plan strategies and goals with more precision, avoiding waste of time and investments.
- Risks. Your ability to predict developments and possible changes can improve due to a better understanding of your company and its performance. Consequently, your risk management can become more agile and effective.
- Partners. Establishing strategic partnerships will be easier. Having access to more data, you will be able to choose a partner that aligns with your own needs and targets not only financially, but also in terms of sustainability. Alliance with companies with high sustainable standards will contribute to the improvement of your own carbon footprint and general performance. In short, to the global value of your organization.
- Trust. Transparency will enhance trust in your company’s name. Being transparent about your organization’s performance in financial, environmental, and social matters will force you to strive for always better results and will help you build trust and loyalty for your brand.
- Standardization. In preparation for the CSRD, your company may be obliged to invest part of its capital. Nevertheless, this new directive aims at standardizing necessary reports. Standardization always makes things easier, more accessible, and consequently, less expensive in the long run.
What’s in for customers and stakeholders?
While organizations should be happy to comply with the new directive, customers and stakeholders will surely be pleased to have access to more data for their tactical and strategical decisions on different business topics.
Their advantages, in fact, relate to the possibility of making more informed decisions for their purchases and better targeting their investments. The holisticapproach of the CSRD helps with a detailed overview of companies to better evaluate them. Standardization, in its turn, is useful to facilitate the analysis and interpretation of the information disclosed.
In business-to-business relationships, for example, a directive like the CSRD greatly contributes to reaching organizations’ sustainability targets, as well as those of the Paris Agreement. Every company will be forced to pay much more attention to its own and its business partners’ impact on the environment and society. This will lead to a shift in investments toward sustainable companies. Consequently, companies that are not yet on the same page as others in terms of sustainability will be obliged to set their targets and strive more to reach them to avoid being left behind in their business.
Another advantage of the CSRD is that it will spell the end of greenwashing. The misleading practice of falsely advertising an organization as green will no longer be feasible. The mandatory disclosure of data on companies’ sustainability performance will make it impossible. Companies will have to be sustainable in fact and not just show a façade of sustainability. This will also limit cases of unfair competition and increase public trust in green marketing. All to the advantage of companies, customers, and stakeholders.
What’s in store for the future?
You don’t really need to be Nostradamus to phantom how sustainability targets and legislations will develop in the near future. It is easy to predict that sustainability goals will become more ambitious and regulations more stringent.
As much for general predictions. As for more particular ones, let’s try to foresee what can change in terms of reporting, technological tools, and even in the general way of thinking about companies’ global value.
As the habit of reporting will take hold, stakeholders and customers alike will probably become more demanding. They will require more in-depth and detailed information on more specific topics to meet their needs. They will want to know always more precisely the value and the performance of the organizations they might want to invest in. Reporting will become more audience-led, with a more accurate study on the side of companies of their audience’s needs and demands. A one-size-fits-all reporting approach will no longer be considered satisfactory.
It will also be important to have a better understanding of trends and of how sustainability and social topics might change over time. Data analytics tools will become crucial to enhance organizations’ adaptability and agility. Digitization and AI will significantly improve the automatization, collection, and reporting of data. This will contribute to boosting companies’ optimization in terms of time and costs.
As for the mindset, real holistic reporting requires a holistic way of thinking. Social, financial, environmental, and governance matters will naturally come to be considered as components linked to each other that cannot be separated in order for the whole mechanism to work. If until recently financial data were most important in the evaluation of an organization, soon enough this kind of hierarchy of information will not be conceivable. Social matters, sustainability developments, and governance issues have already gained much more attention than in the past, and their importance will keep growing.
Do you want to be ahead of time?
As mentioned before, the financial and sustainability data you will disclose to comply with the CSRD will give a complete picture of your company’s value to customers, partners, and stakeholders. At the same time, you might need to find valuable partners for your own supply chain. Once the new reporting directive will enter into force, you will be able to pick and choose your partners based on precise and multiple data.
But, on second thought, is it really necessary for you to wait until 2024 to choose the right partner? Maybe not. At least for what concerns transportation. You can be ahead of time and already start improving your performance.
Emons Cargo 2WIN can be your partner on all these topics right now!
Our freight solution has been chosen as a partner by several companies like EPSON, Primark, Ecotone, DHL, Yankee Candles, and many others. By the by, if you didn’t do it yet, check how much CO2 emissions Ecotone saved this year with our 2WIN trailers.
We offer the opportunity of loading and shipping more volume with fewer truck movements and cutting CO2 emissions by up to 40%. We constantly monitor our customers’ sustainability data while using our 2WIN trailer with tools like BigMiles, and regularly compile sustainability reports. We ourselves regularly undergo internal and external audits.
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Keep following us, one more CSRD blog is on its way with more practical information!