CSRD compliance Hedgehog Company

What we can do for your CSRD report

CSRD is coming

In spring 2021, the European Commission presented its proposal for the Corporate Sustainability Reporting Directive. The CSRD is the reviewed and revised version of the Non-Financial Reporting Directive (NFRD) and promotes the disclosure of sustainability related parameters in companies’ reporting practice. One of it’s main building blocks: double materiality. This involves that companies report on the effect of climate change on their companies on the one hand, while reporting on the impact of the companies activities on environmental and social aspects. 

Where the NFRD aimed at about 11.000 companies operating within the EU, the CSRD extends its reach to over 50.000 companies. And besides putting pressure on larger companies via the Directive, it simultaneously aims at simplifying the reporting process for sustainable companies. Currently there is a large amount of standards and frameworks supporting both companies and financial institutions in their sustainability information gathering, disclosures and reporting. The CSRD provides a one-stop-shop providing companies with a single solution that meets the information needs of investors and other stakeholders.

Green Deal

the objective

The aim of the CSRD is to stimulate corporate sustainability. Furthermore it will identify how companies will implement their strategies sustainably in order to contribute to limiting global warming and the EU’s climate goals. This applies to all large companies that fall under EU law or have an establishment within an EU Member State.

A large company is defined in this case if two of the three points below apply:

  • €40 million net sales;
  • €20 million on balance sheet;
  • 250+ employees.

 

CSRD compliance Hedgehog Company
ghg protocool
ESG

CSRD reporting

So, what would we actually report on? Good question. There are several thematic aspects within the directive that, for now, are still part of the CSRD’s predecessor: the Non-Financial Reporting Directive (NFRD). It is to be expected that, in the future, these thematic elements will return within the CSRD.

Within the disclosed report, all thematic aspects should be discussed. On environmental matters a company is expected to disclose relevant information on the actual and potential impacts of its operations on the environment, and on how current and foreseeable environmental matters may affect the company’s development, performance or position. Examples of what should be included are;

 


  • material disclosures on pollution prevention and control;


  • environmental impact from energy use;


  • direct and indirect atmospheric emissions;


  • use and protection natural resources (e.g. water, land) and related protection of biodiversity;


  • environmental impacts from transportation or from the use and disposal of products and services; and

 

  • development of green products and services.

 

double materiality

The CSRD focuses on the ‘double materiality’ perspective. It states that both internal and external perspectives are considered with regard to the company, in accordance with the Paris Agreement.

Internal perspective deals with the company’s exposure to sustainability risks and opportunities. The external perspective is about the impact of the company on society and the environment.

The focus of reporting will thus be on dual materiality and should be consistent. Companies must report on its strategy and business model, sustainability objectives and indicators, all environmental matters, social considerations, governance processes and external and internal control and risk management.

when will the csrd come into effect?

Strictly speaking, you must report over the year 2022, no later than the end of July 2023 in your annual report. However, it will only be enforced from January 1, 2026. It will also become mandatory that there is an independent third party to verify the reported information.

The CSRD must be part of the annual report. This means that financial and sustainability information is reported simultaneously and that companies must make the information available digitally in the upcoming European Single Access Point (ESAP). This information must be in accordance with EU regulations.

how can we help?

The CSRD covers the Environmental, Social and Governance elements (ESG) within the company. Hedgehog Company supports your organization in uncovering your data disclosures for the CSRD. We have experience in modelling GHG emissions on scope 1,2 and 3 according to the GHG protocol. Our experts can model the entire environmental impact of your organization. Combining our expertise in LCA development and GHG emission modelling provides the data that is needed to report on the environmental element of the CSRD. 

Currently, ESG methodology is often applied to create and report on environmental information. However, this is not sufficient in order to comply with the CSRD. The problem is that this data comes from generic sources, often based on industry averages. This means that when a company opts for a sustainable strategy, this is not included in the ESG data. As a result, there is a need for company-specific data. Hedgehog Company can map and analyze this data for companies in order to comply.