As the first Corporate Sustainability Reporting Directive (CSRD)-compliant reports are being published, the European Union (EU) Commission is revisiting the CSRD regulation alongside the EU Taxonomy and Corporate Sustainability Due Diligence Directive (CSDDD) in an effort to ease the reporting burden and enhance the competitiveness of EU companies.
In a recent conversation between Lucy from Procurement Heads and Baishakhi Sengupta, an ESG and sustainability expert with over 20 years of international experience, we explored the Corporate Sustainability Reporting Directive (CSRD) and its growing significance for UK-based organisations.
What is CSRD?
The CSRD is a European Union directive introduced under the broader Corporate Sustainability Due Diligence Directive (CS3D). Its core aim is to standardise and enhance sustainability disclosures across businesses, ensuring consistency, comparability, and transparency.
It replaces and expands upon the earlier Non-Financial Reporting Directive (NFRD), which the UK had adopted through the Companies Act in 2016—prior to Brexit. As a result, many UK organisations are already familiar with the directive’s foundations.
Why UK Companies Should Take Notice
Despite the UK’s departure from the EU, companies operating within EU markets or listed on European stock exchanges are still affected. Additionally, UK regulations continue to align with many European standards, meaning that CSRD requirements could indirectly apply to a broad range of UK-based entities.
CSRD introduces approximately 1,000 standardised reporting data points, primarily focused on environmental areas such as greenhouse gas emissions, climate risk, and energy usage. Much of this overlaps with the UK’s TCFD (Task Force on Climate-related Financial Disclosures), already mandatory since 2021.
“The timeline may have shifted for some, but the urgency hasn’t. CSRD isn’t just about ticking boxes…it’s a chance to build trust, improve resilience, and show investors you’re serious about sustainability.” – Baishakhi Sengupta MSc,PIEMA
Key Areas of Focus Within ESG
The Corporate Sustainability Reporting Directive (CSRD) is a rule that makes businesses share clear and detailed information about their impact on the environment and society. Companies must use a structured format, consider both how sustainability affects them and how they affect the world (double materiality), and stick to strict deadlines, so they need to get ready quickly.
1. Data and Reporting Format
Organisations already producing sustainability or annual reports may find they are 60–70% compliant. The main challenge lies in gathering data on newer topics such as biodiversity and supply chain due diligence. All reports must be submitted in XBRL format—a structured, machine-readable standard accepted by the European Commission.
2. Double Materiality
A hallmark of CSRD is its focus on “double materiality.” Companies must evaluate both the impact of sustainability risks on their business and their business’s impact on the environment and society. This dual perspective provides a more comprehensive view of sustainability risks and opportunities.
3. CSRD Readiness Timelines
Businesses already covered by the UK Companies Act and NFRD were expected to begin CSRD-aligned reporting from the 2024 financial year. Others, such as large private companies not yet in scope, have a two-year window to prepare. However, the advice is clear: don’t delay.
A minimum of 6–9 months is typically required to complete the necessary gap analysis, develop internal processes, and align with CSRD’s framework.
What’s Coming Next?
One area flagged as likely to gain prominence is biodiversity reporting—particularly in sectors that depend heavily on natural resources. Though not yet mandated across the board, it is expected to become a mainstream requirement.
Additionally, with increasing investor pressure and the finance sector’s growing reliance on standardised ESG data, the direction of travel is clear: transparency and accountability are no longer optional.
What Can You Do To Prepare?
Baishakhi emphasised that CSRD should not be viewed as a burden but as a chance to raise standards and drive meaningful change. Businesses should work closely with legal and governance teams, conduct double materiality assessments, and begin aligning with the directive’s expectations—regardless of whether they fall under immediate scope.
By acting now, companies not only ensure compliance but also future-proof their sustainability strategies in a rapidly evolving regulatory landscape.
The Timelines are constantly shifting, but the urgency will not waiver:
- Engage early with legal and governance teams.
- Conduct a gap analysis to determine current alignment with CSRD standards.
- Begin working on double materiality assessments.
- Stay alert to emerging areas such as biodiversity, which may become mandatory soon.
