Prepare Your SME for Future Sustainability Standards
The EU's new Corporate Sustainability Reporting Directive (CSRD) is a significant development in corporate sustainability reporting. Although the directive primarily focuses on large corporations, it can also have indirect consequences for small and medium-sized enterprises (SMEs). It's worth noting that many SMEs are not legally obligated to report under the CSRD, but they may encounter requirements from suppliers or partners who must comply with these new guidelines.
Why Should SMEs Pay Attention? The CSRD provides a structured framework for sustainability practices, helping businesses minimise their negative environmental impact and improve social engagement. Complying with or adapting to CSRD standards can serve as a mark of quality at a time when both customers and employees value sustainability. From a financial perspective, adapting to CSRD requirements can make a business more attractive to banks and investors increasingly focused on sustainability metrics.
The CSRD involves specific requirements for corporate sustainability reporting based on the principle of "double materiality", meaning that companies should report on both their significant environmental impacts and social governance practices.
CSRD Requirements Include:
Scope: CSRD applies to all publicly-listed companies and certain SMEs.Content: CSRD reports must include information on environmental, social, and governance impacts. These details must be relevant, reliable, and comparable.
Format: CSRD reports must adhere to a standard format defined by the EU Commission.
Audit: CSRD reports must be audited by an independent auditor.
Specific Information Companies Must Report:
1. Environmental Impacts- Greenhouse gas emissions
- Water and energy consumption
- Waste production
- Raw material consumption
- Pollution
- Working conditions
- Social investments
- Human rights
- Sustainable production.
3. Governance Practices:
- Corporate governance
- Anti-corruption
- Risk management
- Objectives and strategies.
Preparation for this new sustainability reality starts with assessing your current sustainability performance, helping identify areas requiring further effort. The next step is to develop a comprehensive plan for your sustainability reporting, including what data to collect, how to present it, and when to report it. If you find this process overwhelming, consider consulting a sustainability expert; Complete7 is always ready to assist you in navigating this complex process.
Although many SMEs are not legally required to follow the CSRD, there are significant benefits to understanding and potentially adapting to these new guidelines. This will not only improve your company's sustainability profile but also position you more advantageously in a market increasingly focused on sustainability initiatives. Is your SME ready to step into a more sustainable future? Contact Complete7 to learn more about how we can prepare you for the future demands and calls for more sustainable initiatives.