Q&A – CSRD 2024

CSRD is a new and complex regulation set up by the European Commission that requires large companies to report their impact on environmenta, social and financial aspects. As this regulation is so complex to comprehend, we put together several frequently asked questions that we encountered along the way.

At Move to Impact we have many CSRD expert knowledge available. Our Impact project managers guided already several companies in their CSRD journey in different sectors. We have gained indepth knowledge about the bottlenecks of the process. Based on our knowledge, we have created a digital CSRD platform and other tools to guide companies through the process in an easy-to-understand way.

We want to share our knowledge with you. Therefore we listed a collection of questions and answers to accelerate your path in making positive impact. Multiple questions are displayed according to different levels: General, Advanced & Detail-oriented.

General Questions

What does CSRD stand for?

CSRD stands for Corporate Sustainability Reporting Directive

What is CSRD?

CSRD is a directive from the European Union that requires large companies to report their impact on environmental, social, and financial aspects.

To whom does the CSRD apply?

Companies that have at least 2 of the 3 following aspects

250 people personnel
40 million in revenue
20 million in balance sheet total

When does CSRD start? What is the CSRD timeline?

Large companies have to report in 2025 over financial year 2024. So have reporting instruments ready in 2023. Listed small to medium-sized enterprises have to report in 2026 over financial year 2025. So have reporting instruments ready in 2024.

When should I start with CSRD preparations? /How long will the CSRD roadmap take me/? How long should I plan for CSRD?

Start as fast as possible. I you need to report over 2024 you need to set up your reporting instrument in 2023. But be on time because this preparation process can take up to 2 years.

Does the CSRD report have to be audited just like a yearly financial report?

Yes it will. Since a lot of companies are not experienced with this way of reporting it is expected that in the first years limited assurance will suffice. After some years it is expected to shift to reasonable assurance.

Advanced Questions

What resources do I need to prepare for the CSRD?

There are various ways to prepare for CSRD reporting. Depending on what you choose, costs will differ. Underneath are some options:

Consultant based approach: Hire consultants to do most of the work
Own approach: Get your own CSR division to do everything (hire new staff)
Mixed approach: Hire consultants for strategic advice and do it partly yourself

Which departments need to be involved internally for CSRD?

Completing the newly required non-financial reporting will require collaboration and support from multiple stakeholders within your company. For example, we foresee the need for the following actors to play differing roles:

C-level
CSR
CSRD team
Finance
Operations
Procurement
Cooperation/account management
Facilities
Strategy
HR
IT

In most organizations, the financial department will be responsible for the reporting. However, to comply with CSRD, finance will require a lot of sustainability data from multiple departments.

What is ESRS?

ESRS stands for European Sustainability Reporting Standards. The standards are drawn up by the EFRAG (a EU funded private organization that focuses on accounting standards).

What is EFRAG?

EFRAG stands for European Financial Reporting Advisory Group and is a private organization that is supported by the European Union and focuses on producing reporting standards on financial, environmental, and social topics.

What is meant in CSRD by a forward-looking approach?

Target setting (future goals) for KPI’s coming forth of ESRS

What is a materiality analysis?

Materiality analysis is measuring the impact a company has on environmental, economic, and social factors.

What is double materiality?

Double materiality is the impact a company has on the environment, economic and social factors AND the impact that these factors have on a company (for example Co2 emissions, environmental changes, water shortages, and social factors).

What is a double materiality analysis?

A double materiality analysis is done by measuring the impact a company has on the environment, economic and social factors AND measuring the impact these factors have on the (future) company.

How long does a CSRD trajectory take?

The duration of a CSRD trajectory takes on average between 9-12 months. This is because there are many stages to go through within the company which can take a lot of time.

Detailed Oriented Questions

Which organizations are involved with CSRD?

Underneath are the organizations that you, as a company will likely deal with during the CSRD process.

European Commission
European Financial Reporting Advisory Group
National CSRD reporting institution
National government (yet unknown)
Your stakeholders throughout your value chain (from raw materials to end consumer)
External advisory party
External assurance party.

What are the most important aspects my company needs to complete for CSRD?

These are the most important aspects:

Double materiality analysis
Providing information about non-financial aspects like social capital, Co2 emissions, and water usage
Start with ESG measuring of around 130 indicators (and new KPI/goal setting). In standardized format.
Assurance (auditing) from an external party (accountant) this will first be limited assurance but probably later be reasonable assurance
Setting up a reporting structure (since data has to be made available on a regular basis it is advised to set up a bottom-up data structure)
Integration in (management) reporting

What stakeholders can be involved in completing the materiality analysis for CSRD?

Industry leaders
Consultants
Academics
Sector organizations
NGOs
Competitors
Similar organizations
Internal stakeholders/employees (make sure to have a mix from different divisions)
Vulnerable groups
Local communities
Certification institutions
Financial institutitions
Municipalities/governments
Customers
Suppliers (of raw/ semi-finished materials)
Production partners (packaging etc.)
Transporting partner
Clients retail/wholesale

Will preparing for CSRD bring extra costs for my company?

In the short term the analysis will cost some resources. On the other hand

- The market is asking for more non-financial information so they would have to report a large part of CSRD requirements anyway
- Before CSRD there were multiple overlapping reporting requirements. These are now all incorporated and simplified into CSRD
- The commission aims to reduce cost for companies in the mid/long term because companies get insights into their risks by doing this analysis