The first reporting period for the Corporate Sustainability Reporting Directive (CSRD) is now firmly on the horizon. CRSD significantly expands the scope of the Non-Financial Reporting Directive (NFRD), requiring businesses to capture value chain impacts and is set to radically change the way businesses consider their environmental and social impact.
Learn more about value chain jargon terms used in the CRSD here.
The CSRD consists of 12 Standards, two cross-cutting standards (ESRS 1 and ESRS 2) and ten topic-specific standards for subject areas covering environment, social and governance. Within the ten topic specific standards there are three that focus more heavily on value chain reporting. Here we provide a helpful summary of each of these. To read more about the increased scope and best practices for accurate value chain data collection and analysis read our Ultimate Guide to the Corporate Sustainability Directive here.
ESRS E1 Climate Change
The Standard requires companies to report on their climate impact including total Scope 3 greenhouse gas emissions, Scope 3 reductions and the percentage of Scope 3 calculated using primary data.
ESRS E4 Biodiversity and Ecosystems
Under ESRS E4 companies are expected to explain how potential biodiversity and ecosystem impacts have been identified and assessed in their site locations and value chain and how they are responding to them. Additionally, how a company’s biodiversity targets relate to risks and opportunities identified within the upstream and downstream value chain.
ESRS S2 Workers in the Value Chain
As the title of the Standard suggests, companies will be required to disclose how workers in the value chain are impacted by their upstream and downstream contributions. This includes the disclosure of human rights issues and incidents connected to the value chain and how the company manages impacts, risks and opportunities associated with workers in the value chain.
The introduction of CSRD represents a significant step in the collection and reporting of value chain information. CSRD recognises the material impact a business has in a broader context than has been considered previously. To read more about the increased scope and best practices for accurate value chain data collection and analysis read our Ultimate Guide to the Corporate Sustainability Directive here.
