Product Carbon Footprint (PCF)

The Corporate Sustainability Reporting Directive (CSRD) is a directive by the European Union that replaces the Non-Financial Reporting Directive (NFRD), significantly expanding the scope and depth of corporate sustainability reporting requirements. It requires companies to report on the impact of their activities on the environment and society and mandates the audit of the reported information to ensure reliability and transparency. This directive is part of the EU’s broader goal to integrate sustainability into corporate governance and align with the European Green Deal objectives​. Scope of Application: -> CSRD applies to all large EU companies, all listed companies (except micro-enterprises), and non-EU companies operating within the EU. This includes companies meeting certain size thresholds under Directive 2013/34/EU​​ -> Small and medium-sized enterprises (SMEs) may opt into voluntary reporting based on future standards​​ Double Materiality Principle: Companies are required to report on the financial risks and opportunities arising from sustainability issues and their impact on society and the environment. This approach is central to the European Sustainability Reporting Standards (ESRS)​​ Reporting Standards (ESRS): Companies must comply with European Sustainability Reporting Standards (ESRS). These cover general requirements, disclosures, and topic-specific issues, such as climate change (E1), biodiversity (E4), and business conduct (G1). The ESRS were developed by EFRAG based on stakeholder input​​​ Streamlined Reporting: CSRD aims to reduce reporting burdens by phasing in requirements and ensuring compatibility with existing regulations like the Taxonomy Regulation and Sustainable Finance Disclosure Regulation (SFDR)​​ Alignment with International Standards: ESRS are aligned with global frameworks like the GRI Standards and ISSB to ensure interoperability and reduce redundancy​​ Materiality Assessment: Companies must perform a robust materiality assessment, identifying significant sustainability impacts, risks, and opportunities across their operations and value chains​​ Digital Reporting and Assurance: Encourages the use of digital taxonomies to facilitate seamless data integration and emphasizes external assurance of sustainability data to enhance reliability​​ *UPDATE: The European Commission's "Simplification Omnibus" package, introduced in February 2025, proposes significant changes to the Corporate Sustainability Reporting Directive (CSRD) to reduce administrative burdens and enhance competitiveness. Key proposed changes: 1/ Reduced Scope of Applicability To applicable only to companies with over 1,000 employees and either: -> €50 million in net turnover, or -> €25 million in total assets. 2/ Delayed Reporting Deadlines -> Second-wave companies: Reporting postpone from 2026 to 2028. -> Third-wave companies: Reporting postpone from 2027 to 2029. 3/ Simplified Reporting Standards (ESRS) Revisions to the European Sustainability Reporting Standards include: -> Reduction in required data points -> Elimination of sector-specific standards -> Prioritization of quantitative over narrative disclosures 4/ Voluntary Reporting for Smaller Companies Companies with fewer than 1,000 employees are no longer mandated to report but can opt to do so using a simplified voluntary standard developed by EFRAG 5/ Assurance Requirements Maintained at Limited Level The anticipated shift from limited to reasonable assurance has been removed. Companies will continue with limited assurance, reducing compliance costs.​ ​The European Commission's "Stop-the-Clock" proposal, part of the broader Omnibus Simplification Package, intend to agree on postponement of the directive. 🔗 EP, EC, EFRAG