The EU Corporate Sustainability Reporting Directive and Biodiversity
Posted 12th December 2022
The new EU Corporate Sustainability Reporting Directive (CSRD) was finally approved on 28 November 2022 and provides a huge boost meaning that all publicly listed companies, companies with +250 employees and non-EU companies with a net turnover of EUR 150 million will be required to publicly disclose their environmental and social impact activities across their entire value chain covering Scopes 1,2,3. And this now includes new biodiversity assessment requirements.
About the new Directive
On 10 November 2022, the European Parliament adopted the new CSRD1 which extends the scope of Environmental, Social and Governance (ESG) reporting in order to drive increased quality of reporting under a common reporting framework. The aim of CSRD is also to start business realignment in order to ensure investments are aimed at more sustainable technologies and companies.
The new CSRD captures the following large companies, which will need to report from January 2024 (reporting in 2025):
- – 250 employees and/or
- – EUR 40 million turnover and/or
- – EUR 20 million of total assets
- – All publicly listed companies in the EU
- – Non-European companies by 2029
SME’s will also need to comply from January 2026 reporting in 2027.
The CSRD will require reporting to cover:
- – Double materiality concept – reporting impacts of their business on sustainability issues and the risks companies run as a result of those issues (e.g. climate change)
- – Involvement of stakeholders
- – Forward-motion ESG framework and evidence of policies, plans, KPIs and progress
- – Disclosure on intangibles
- – Due diligence on supply chain and operations
- – Reporting in line with Sustainable Finance Disclosure Regulation (SFDR) and the EU Taxonomy Regulation.
- – Involvement of an external auditor for annual reporting
This means businesses will need to start reporting how sustainability risks may impact on their activities/performance.
What does this all mean for biodiversity?
For a lot of businesses, this will mean development of an entirely new policy framework for biodiversity, providing strategic guidance, evidence-based information and targeted KPIs. However, to develop the framework for governance and strategy, CSRD will also comply businesses to identify and quantify their impacts across supply chains and value chains (upstream and downstream) which may involve multiple regions impacting on numerous ecosystems, habitats, and ecological communities. To do this will require overlaying a biodiversity/ecosystems knowledge layer, running a risk and impact assessment to identify where and what sensitive values may be caught up in the companies operational activities.
HOW INTERNATIONAL BIODIVERSITY CONSULTANTS LTD CAN HELP
IBC have already been assisting two European multinationals identify and document potential biodiversity impacts, and are also supporting development of mitigation action programmes to address negative impacts across their global footprints.
Corporate Sustainability Reporting (European Commission, 2022)
The End of Business As Usual? IBC Blog, 3 December 2022.
- European Parliament (2022) Sustainable economy: Parliament adopts new reporting rules for multinationals. European Parliament, Brussels. Dated: 10 November 2022. Accessed at: https://www.europarl.europa.eu/news/en/press-room/20221107IPR49611/sustainable-economy-parliament-adopts-new-reporting-rules-for-multinationals in December 2022.
- European Commission (2022) Corporate Sustainability Reporting. European Commission, Brussels. Accessed at: https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en in December 2022.