For several years now, non-financial communication by major companies has been increasingly regulated.
The latest directive to contribute to this environmental and social framework is the new CSRD directive, and in this article we cover the key elements to bear in mind.
Non-financial communication - its role in sustainability awareness
Non-financial communication, also known as extra-financial reporting or CSR (Corporate Social Responsibility) reporting, refers to the communication of non-financial information by a company or organization, mainly with regard to environmental, social and governance (ESG) aspects.
Unlike financial communication, which focuses on the company's economic and financial performance, non-financial communication aims to report on the company's overall impact on society and the environment.
It enables stakeholders such as investors, customers, employees, regulatory authorities and civil society to assess a company's social and environmental contribution, as well as its level of social responsibility.
The European Non Financial Reporting Directive (NFRD), which currently governs non-financial performance declarations at European level, is to be replaced by a new directive, the Corporate Sustainability Reporting Directive (CSRD).
CSRD - the start of a new era
Clearly, the CSRD marks a new era in the integration of sustainable development principles by companies.
CSRD is one of the cornerstones of the European Green Pact, encouraging economic players to reconsider the impact of their activities on the planet and respect for human rights.
Its main objectives:
- To provide a normative framework for the European Union's social market economy
- Encourage companies to report on the sustainability impacts of their activities.
According to many experts, this new directive is seen as a veritable tsunami in the field of CSR.
Nearly 40 years after the Brundtland Commission defined sustainable development, the CSRD makes sustainability reporting part of a formalized process.
Basically, the directive will require companies to disclose information on the environmental, social and governance impacts of their activities.
These more stringent requirements are part of a historic trend towards greater awareness of environmental issues, particularly those linked to climate change.
This regulatory change will have a direct impact on a large number of European companies, including ETIs and SMEs. The number of companies required to disclose environmental information is set to quadruple over the next two years.
Implementation schedule
- From January 1, 2024, listed companies with more than 500 employees will have to comply with the CSRD.
- From January 1, 2025, it will be the turn of companies with at least 250 employees to adopt this directive.
CSRD marks an ideological shift from voluntary to normative CSR. It requires companies to account for their impact on society and the environment, while offering an opportunity to mobilize employees around a corporate project focused on sustainability.
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