On this Energy Minute episode, Dana Dohse and Steven Goldman take a deep dive into the Corporate Sustainability Reporting Directive (CSRD) legislation that will be taking effect in the European Union in 2024. Under the new legislation, aligning with Paris climate goals or ensuring ethical supply chains will move from voluntary practices or proactive risk management to regulatory requirements with oversight by EU nations.
Listen in as they examine the legislation's details, requirements, and potential impact on businesses and society, discuss the differences between the CSRD and the proposed SEC rules on climate-focused disclosure, how they reflect existing sustainability reporting standards such as SASB/ISSB standards, and analyze the legislation's implications and advise companies on how to prepare for compliance.
Key Takeaways
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The EU adopted a “double materiality” approach as the basis of the new legislation, meaning it encompasses not only ESG issues with material impacts on financial performance, but also impacts of the company's operation on the environment and society.
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Environmental, social, and governance (ESG) factors covered by the CSRD will be significantly more far-reaching than the proposed SEC rules on climate-focused disclosure, encompassing issues including climate change mitigation and adaptation, water and marine resources, equal treatment and opportunities, sustainability risk management and internal controls, and anti-corruption policies, to name a few.
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Unlike the proposed SEC rules, the CSRD explicitly includes Scope 3 emissions in its carbon footprint disclosure requirements.
References
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Press release on the adoption of the CSRD: https://www.europarl.europa.eu/news/en/press-room/20221107IPR49611/sustainable-economy-parliament-adopts-new-reporting-rules-for-multinationals
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Harvard Law School analysis: https://corpgov.law.harvard.edu/2022/08/23/eu-corporate-sustainability-reporting-directive-what-do-companies-need-to-know/
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