CSRD: Delay, simplification - or a brake on competition?

Content:

Europe focuses on sustainability - but at what speed?

With the presentation of the Competitiveness Compass, the EU has outlined its economic strategy for the future. The message is clear: decarbonization remains a key factor for competitiveness. While the USA is focusing on protectionism with "America First", the EU is pursuing a different approach with "Europe United" - transparent standards, uniform reporting and sustainability as a driver of innovation. 

The CSRD is a key instrument here. It obliges companies to disclose where they stand in terms of CO₂ reduction. But now there are new developments: Simplifications, delays and political disagreement are shaping the debate. 

CSRD on hold? The current discussions

Various EU member states, including Germany and France, have questioned the implementation of the CSRD - either by starting later or by softening the reporting obligations. The reasons for this: 

  • Overloading companies: The extensive requirements of the European Sustainability Reporting Standards (ESRS) with over 1,000 data points are a challenge for many companies, especially SMEs. 
  • Political disagreement: German ministries have asked the EU Commission to soften the reporting obligations. France is also calling for a later start. 
  • EU-wide adaptation proposals: The Commission itself proposes to postpone sector-specific sustainability standards by two years. 

These discussions have far-reaching implications for companies. Should there be a relaxation or delay, the framework conditions for sustainability reporting could change significantly: 

  • Postponement of reporting obligations by up to two years for companies that were not already subject to the previous Non-Financial Reporting Directive (NFRD). 
  • Higher thresholds so that fewer companies are required to report. 
  • Simplification of ESRS requirements to reduce the burden on companies. 

But while some companies are hoping for relief, there is growing concern in other circles: won't a delay lead to even more uncertainty and competitive disadvantages in the long term? 

Delay or opportunity? Why companies should act now

Regardless of whether the CSRD reporting obligations are postponed or not, sustainability remains a key success factor. Companies that act early will not only gain a head start in terms of compliance, but will also secure strategic advantages. Regulatory requirements will continue to evolve, and those who are already dealing with ESG reporting obligations now will remain flexible and able to act. 

At the same time, decarbonization offers economic opportunities. The demand for climate-friendly products is growing, both due to legal requirements and changing market demands. Companies that establish sustainable business models and low-carbon processes position themselves as pioneers and secure market share. Those who take a wait-and-see approach, on the other hand, risk being overtaken by more innovative competitors. 

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A key success factor is an efficient ESG data strategy. Sustainability indicators must be reliable, verifiable and automated instead of being lost in manual Excel spreadsheets. Only with a solid database can regulatory requirements be met efficiently and sound business decisions made. With our ID-Report software solution, we support companies in implementing their sustainability reporting efficiently and consistently - from systematic data collection to compliance with current ESG standards. Companies that take action now will benefit in the long term - both in terms of reporting and competition. 

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FAQ's

1. What does the CSRD Directive say?

The Corporate Sustainability Reporting Directive (CSRD) obliges companies to prepare detailed sustainability reports. It replaces the previous Non-Financial Reporting Directive (NFRD) and significantly expands the group of companies subject to reporting requirements. 

2. Is CSRD part of the EU taxonomy?

No, the CSRD and the EU taxonomy are two different but closely related sets of rules. CSRD regulates who must report on sustainability and what information must be disclosed. The EU Taxonomy defines what is considered sustainable economic activity and provides a classification system for this. 

3. How are EU taxonomy and CSRD related?

The EU taxonomy defines which economic activities are considered environmentally sustainable. Companies subject to the CSRD must align their sustainability reports with the EU taxonomy in order to indicate the extent to which their activities meet these criteria. 

4. What is the CSRD materiality analysis?

The CSRD materiality analysis helps companies to determine which sustainability issues are relevant to them. It comprises two perspectives: financial materiality, i.e. which ESG factors affect the company economically, and impact materiality, i.e. what influence the company has on the environment and society. This dual materiality makes CSRD reporting more comprehensive than previous sustainability standards. 

5. What is CSRD and ESRS?

The European Sustainability Reporting Standards (ESRS) are the detailed standards that companies must meet in order to implement the CSRD requirements. They contain specific indicators, key figures and report content that ensure comparable and transparent sustainability reporting. 

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