A guide to the new EU Corporate Sustainability Reporting Directive
Have you heard of the Corporate Sustainability Reporting Directive (CSRD) yet? If your business is operating in the European Union (EU), you may need to familiarise yourself with the forthcoming directive.
In this article, we’ll explore what the Corporate Sustainability Reporting Directive is, why it’s being introduced and how you can prepare your business for the impact the CSRD may have on your company’s operations through sustainable packaging and packaging optimisation.
What is the Corporate Sustainability Reporting Directive?
The EU Corporate Sustainability Reporting Directive (CSRD) is the new EU legislation that will require all large companies to publish regular reports on their environmental and social impact. It helps investors, consumers, policymakers and other stakeholders to evaluate large companies’ non-financial performance.
It is set to be introduced following the vote which was held in November 2022 to adopt the new reporting rules..
Why is the Corporate Sustainability Reporting Directive being introduced?
The aim of the directive is to update and amend the non-financial reporting requirements set for companies under the Non-Financial Reporting Directive (Directive 2014/95/EU, the NFRD).
Legislators hope changes to the current non-financial reporting standards will:
- To ensure transparency about environmental impact, social affairs and governance matters becomes the norm for large businesses
- more businesses become publicly accountable
- Position the EU as a front runner in global sustainability reporting
Overall, sustainability reporting is important as it helps make an organisation’s decision-making processes more efficient, helps reduce risk, reduces waste, and can even yield cost savings. It can also make things easier for potential investors and customers who need to consider environmental, social and governance criteria in their investment and purchasing processes.
Who does the Corporate Sustainability Reporting Directive apply to?
When the directive is introduced, it will apply to all large companies operating in the EU, including those that have non-EU parent companies.
The directive will apply to EU companies that exceed at least two of the following criteria:
- more than 250 employees;
- a turnover of more than €40 million; or
- total assets of €20 million.
If a non-EU company has EU-generated turnover of €150 million or more from one of its subsidiaries or branches, the CSRD will also apply. Listed SMEs will also be included eventually, but they will have more time to comply with the new directive.
This requirement to collect and share sustainability information will impact around 50,000 companies trading within the EU.
When will the Corporate Sustainability Reporting Directive be introduced?
It’s expected that the first set of standards for the CSRD will be published in 2023. The new sustainability reporting rules will then start to apply between 2024 and 2028 depending on the type of business.
- From 1 January 2024 for large public-interest companies (with over 500 employees) already subject to the non-financial reporting directive, with reports due in 2025;
- From 1 January 2025 for large companies that are not presently subject to the non-financial reporting directive (with more than 250 employees and/or €40 million in turnover and/or €20 million in total assets), with reports due in 2026;
- From 1 January 2026 for listed SMEs and other undertakings, with reports due in 2027. SMEs can opt-out until 2028.
If your business is one that’s going to be impacted by this new sustainability reporting directive, where do you start to collate the required information and make improvements?
How will the Corporate Sustainability Reporting Directive transform your organisation?
While the full details of the required reporting are yet to be revealed, businesses affected will need to go above and beyond their current disclosures.
Some of the expected, extended standards will include general sustainability reporting around environmental matters, such as climate change and biodiversity, as well as social matters. It is predicted that there will be sector-specific standards, plus the requirement to analyse value chains and their impact on the environment.
Businesses will also be required to provide forward-looking disclosures as well as historic disclosures.
The role of packaging in the Corporate Sustainability Reporting Directive
You might be thinking: where do your packaging materials factor in when you think about the CSRD?
The packaging materials you use have a direct tie to your impact on the environment and your value chain. Of course, packaging is necessary to ensure the protection of your products but it must be designed, used and disposed of responsibly.
Have you ever considered the CO2e of your packaging? Or the packaging waste your business creates? Is your packaging easy to recycle? There are lots of factors to consider when it comes to the potential role of packaging and the incoming directive.
While it will seem like a lot to factor in initially, the packaging materials you use can represent an opportunity to reduce your impact on the environment.
Understanding the volume of packaging currently used, the types of packing material, and the carbon impact in your supply chain, can create a platform for making sustainable changes. These include material switches and reducing how much packaging your business uses.
The impact of these changes can maximise the use of resources. For example, by improving pallet payloads and reducing the number of vehicle trips required to deliver your goods, this can reduce both the amount of fuel used and carbon emissions.
These changes have an impact on the carbon footprint of your operation and help you to meet corporate sustainability goals.
If you’re a UK based business, another benefit of being familiar with the details of the packaging you use is that it helps you plan for packaging waste reporting under current Producer Responsibilities and will stand you in good stead for incoming Extended Producer Responsibilities.
Using packaging optimisation to prepare for the directive and make your operation more sustainable
Optimising your packaging will help you prepare for the CSRD and make your operation more sustainable.
At Macfarlane Packaging we use our Packaging Optimiser to truly assess what your packaging is costing you and the environmental impact. The tool allows you to see the true carbon impact of your packaging including the material manufacture and recyclability, as well as other factors like storage, transport and damages.
The approach used by the Packaging Optimiser is a win-win as the sustainability improvements it can illustrate often go hand in hand with cost reduction.
A good example of packaging optimisation in action is our work with Exertis. By reassessing their use of stretch wrap, we identified the opportunity to remove 17 tonnes of plastic material annually from their packing operation. This would reduce their overall material use by 24% and remove an estimated 45 Tonnes of CO2e from their carbon footprint.
Managing the complexities of sustainability and sustainable packaging throughout Europe
At Macfarlane Packaging we provide a single point of supply chain management across multiple European countries removing logistical challenges, administrative demands, and reporting challenges. We have multiple sites across the continent and a multi-lingual team of experts that can help businesses manage the complexity of sustainability and sustainable packaging.
We source and vet suppliers, ensuring product sustainability, quality, branding and managing order placement. We can consolidate invoices across operations and into a single currency, so there are less invoices to track. This ensures smooth packaging movement from location to location and maintains continuity of supply. This removes complexity, cost and carbon emissions from our customers’ operations. Our easy order portal, Simplicit.e, provides you with the tools to assess packaging usage by site, generating packaging use analysis at the click of a button.
Contact us today to find out how we can support your business with packaging distribution in Europe.