CSRD: what impact for companies outside the EU?
Summary
The EU's CSRD marks a major change in environmental, social and governance responsibility for companies.
Although directly applicable to European companies,the CSRD also concerns non-EU companies. The CSRD aims to standardise the disclosure of ESG information in order to improve the comparability of data and encourage sustainable management.
Non-European companies operating in the EU must comply with the CSRD requirements, which requires adjustments to their reporting and management systems.
In this way, the CSRD encourages companies worldwide to assess and improve their environmental and social impact in order to remain competitive on the European market.
Although directly applicable to European companies,the CSRD also concerns non-EU companies. The CSRD aims to standardise the disclosure of ESG information in order to improve the comparability of data and encourage sustainable management.
Non-European companies operating in the EU must comply with the CSRD requirements, which requires adjustments to their reporting and management systems.
In this way, the CSRD encourages companies worldwide to assess and improve their environmental and social impact in order to remain competitive on the European market.
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Introduction
The adoption of the CSRD by the European Union marks a turning point for companies in terms of environmental, social and governance responsibility. While its direct impact mainly affects European entities, this directive also affects companies outside the EU. In this article, learn about the effects of CSRD on businesses outside the EU.
CSRD: Missions and objectives
The Corporate Sustainability Reporting Directive (CSRD) represents a major evolution of the previous Non-Financial Reporting Directive (NFRD). The main objective of the CSRD is to provide a uniform framework for the disclosure of ESG information, thereby facilitating the comparability, reliability and relevance of data.
It also aims to encourage companies to adopt more sustainable management by integrating ESG considerations into their strategy and operations. The Directive also seeks to align corporate reporting with the EU's objectives on sustainable finance and the transition to a carbon-neutral economy.
CSRD: Non-European companies operating in the EU
The CSRD imposes requirements on non-European companies operating in European markets, provided that they meet certain criteria of size and economic nature. These companies must meet standards similar to those imposed on European companies, to ensure that all market participants share the same level of commitment to sustainability.
Non-EU companies with subsidiaries or legal entities in the EU that meet the thresholds set by the CSRD will be obliged to produce sustainability reports in accordance with the Directive. The sustainability report must therefore include information on how the subsidiary manages environmental, social and governance issues related to its activities in the EU.
The non-European companies concerned must therefore work to integrate ESG data collection and management systems, align with the reporting standards required by the CSRD and prepare their subsidiaries to meet these obligations.
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CSRD transcends borders, encouraging global companies to strengthen their sustainability in order to maintain their access to the European market.
Towards a convergence of international standards
The emergence of the European Union's Corporate Sustainability Reporting Directive (CSRD) is part of a growing global movement towards greater transparency on sustainability and corporate responsibility. This reflects increased pressure on companies to adopt unified international standards, enabling improved comparability and understanding of sustainability performance globally.
Thus, the CSRD strives to align its requirements with internationally recognized standards, such as those of the GRI and SASB, while integrating the specificities of the European context. The aim is to facilitate the integration of CSRD reports into an overall framework while maintaining a high level of accuracy and relevance for sustainability-related information.
This convergence is also a response to investors' growing demand for standardized and reliable information that can inform their decisions on sustainable investing and the assessment of risks related to climate and other ESG factors.
CSRD: What are the implications for companies exporting to the EU?
Non-EU companies exporting to the EU may be indirectly affected by the requirements of the CSRD, even if they are not directly subject to the regulation. Indeed, transparency and sustainability reporting requirements are influencing exporting companies to adopt similar standards in order to maintain their access to the European market.
One of the significant implications of CSRD for exporters is supply chain management. EU companies are required to report not only on their own sustainability practices, but also on those of their supply chain. This means that exporters to the EU must prove that their operations, and potentially those of their own suppliers, adhere to certain sustainability standards.
De facto, the CSRD encourages European companies to select suppliers and business partners who can attest to their commitment to sustainable development. Thus, suppliers and partners outside the EU are obliged to comply with sustainability and reporting expectations in order to continue exporting to the EU.
The CSRD therefore acts as a lever of influence, pushing companies outside the EU to assess and improve their environmental and social impact. Although not directly subject to the directive, the impact of the CSRD may reshape the policies and practices of exporting firms.
The CSRD is much more than just a European directive. It inspires companies around the world to adopt enhanced sustainability practices. For non-EU companies, understanding and integrating the requirements of the CSRD becomes crucial in order to maintain their access to the European market. To help organizations regain control over their emissions, it is possible to use a carbon footprint calculation software such as D-Carbonize.
