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On January 5, 2023 the EU Corporate Sustainability Reporting Directive went into force. The directive broadens the scope of companies report on sustainability issues, adds to the amount of information that needs to be reported, and even requires external assurance, reports Elena Sychenko (LinkedIn), Adjunct Professor at the Department of Management at the University of Bologna and currently a Fulbright Scholar at the Wharton School of Business.
The directive now covers all listed companies with the exception of micro enterprises. Also falling under it are non-EU companies that have a significant presence in the EU.
The reporting requirements, which are still being fully developed, closely follow the Global Reporting Initiative (GRI) standards and focus on ESG explicitly, with several areas of reporting under E, S, and G. These include:
- E: climate change, pollution, water, biodiversity
- S: the organization’s own workforce, the workforce in the value chain, affected communities, consumers and end users
- G: business conduct in general
Compliance teams will need to ensure that the reporting is accurate. One area to watch out for, she notes, is vagueness. A company may choose to provide overly vague information that could be misleading.
Listen in to learn more about the directive and the risks involved.