As of January 5, 2024, the Corporate Sustainability Reporting Directive (CSRD) and the accompanying reporting standards have come into effect in the EU, setting a new benchmark for large corporations and, over time, extending its reach to include SMEs as well. This directive mandates a transparent accountability and reporting regime regarding the Environmental, Social, and Governance (ESG) performance within companies’ supply chains, making it a critical piece of legislation for any business engaged in trade with the EU, regardless of their home country.

For instance, a clothing company based in the EU must now report on the carbon footprint of its partners in Turkey, Egypt, and other countries, showcasing the directive’s broad scope that not only targets companies within the EU but also those aiming to internationalize and participate in global supply and value chains. This requirement mirrors the regulations implemented by the U.S. Securities and Exchange Commission (SEC) for companies listed on the stock exchange, underscoring the global push towards enhanced sustainability reporting.

In light of these developments, companies exporting to the EU must urgently consider conducting carbon footprint assessments in alignment with the GHG Protocol and/or ISO 14064 standard. Recognizing that this is uncharted territory for many, we have compiled a brief guide outlining the essential steps for those new to sustainability and ESG reporting, hoping to provide valuable insight:

  1. Review the CSRD Legislation: Understanding the CSRD is fundamental as it outlines what information companies need to report, how this information should be collected and assessed, and the overall framework for the reporting process.
  2. Examine the ESRS Standards Published by EFRAG under CSRD: These standards ensure comprehensive reporting on companies’ sustainability activities, offering guidance on addressing and reporting different sustainability dimensions.
  3. Develop a Sustainability and ESG Compliance and Reporting Strategy: Identify the risks, opportunities, targets, and key stakeholders related to sustainability, and create a strategy. Include stakeholders in the strategy development process.
  4. Conduct a Double Materiality Analysis: This analysis evaluates the internal and external impacts of your company’s sustainability performance, helping to determine which topics to report on.
  5. Identify and Collect the Information and Data to be Reported: Decide on the topics to be included in your report, and plan how to collect the required information and data.
  6. Transform Collected Data into a Readable and Transparent Report**: Data should be converted into a well-organized report that can be shared with stakeholders. At 10k Consulting, we recommend using the reporting index developed by GRI.

At 10k Consulting, we offer training and consulting services to companies looking to undertake sustainability reporting. Our expertise can simplify and expedite your reporting process, while also helping to establish a sustainable infrastructure, workforce, and knowledge base within your organization for future reporting endeavors.