Understanding CSRD: A Simple Guide to Carbon Reporting for Irish & EU Companies

The Corporate Sustainability Reporting Directive (CSRD) is a significant development in the realm of environmental reporting for EU companies. This guide provides a comprehensive overview of the key aspects of CSRD, with a particular focus on carbon reporting and environmental standards.

1. Scope of CSRD

   CSRD expands the reporting requirements for organisations with over €20 million in total assets, a net turnover of €40 million and/or 250+ employees. These entities are referred to as ‘large undertakings’ within the CSRD and include both EU companies and EU subsidiaries of non-EU companies.

   EU companies, mandating them to disclose environmental, social, and governance (ESG) information. It aims to enhance transparency and comparability in sustainability reporting, promoting sustainable business practices across the EU.

2. Carbon Reporting

   Under CSRD, companies are obligated to report their carbon emissions, energy consumption, and related data. This includes both direct emissions (Scope 1) and indirect emissions from purchased electricity, heating, and cooling (Scope 2). Additionally, companies must disclose their value chain emissions (Scope 3), considering emissions from suppliers, transportation, and product lifecycle.

3. Environmental Standards

   CSRD aligns reporting standards with international frameworks such as the Global Reporting Initiative (GRI) and the Task Force on Climate-related Financial Disclosures (TCFD). It emphasises the use of recognised methodologies and calculation tools to ensure accuracy and comparability of reported data.

4. Reporting Process

   Companies are required to implement robust data collection, measurement, and verification processes to ensure the accuracy and reliability of their reported information. They must establish clear boundaries for emissions calculations, engage with stakeholders, and conduct regular audits to demonstrate compliance.

5. The CSRD’s Timeline

   Reporting for companies to begin in four stages:

   • 1 January 2024 for financial year ("FY") 2025 –companies already subject to existing reporting rules under the Non-financial Reporting Directive;

   • 1 January 2025 for FY 2026 - large companies not already subject to existing rules;

   • 1 January 2026 for FY 2027 – listed SMEs (non-listed SMEs can opt out until 2028), captive insurance undertakings and non-complex credit institutions;

   • 1 January 2028 - non-EU companies. 

6. Implications for EU Companies

   CSRD presents both challenges and opportunities for EU companies. It requires significant investment in data management systems, reporting frameworks, and internal capabilities. However, it also offers the chance to enhance sustainability performance, attract investors, and align with the EU's ambitious climate targets.

Main components of the CSRD

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The Corporate Sustainability Reporting Directive (CSRD) is a game-changer for EU companies, necessitating comprehensive carbon reporting and environmental disclosure. By embracing CSRD requirements, companies can drive sustainable practices, strengthen stakeholder trust, and contribute to a more sustainable future.

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