See the possibilities with CSRD and strengthen your competitiveness

2023-04-12

The consulting company Goodpoint has more than 40 years of experience in consulting within the sustainability sector with a focus on leadership, profitability and communication. We had a chat with Magnus Boman, CEO and Elin Nilsson, consultant and CSRD expert, about the new EU legislation and what it will mean for companies when it comes into force in 2024.

CSRD, which stands for Corporate Sustainability Reporting Directive, is the directive for mandatory sustainability reporting and involves extended reporting requirements for non-financial information. The directive is being introduced gradually with reporting starting from the business year 2024 and covers all major companies that meet at least two of these three criterias below.

1. More than 250 employees
2. Net sales over EUR 40 million
3. Balance sheet over EUR 20 million

The new law is introduced because the previous one (NFRD) was considered too unclear and vague. CSRD must therefore be both clearer and stricter, and the objective is to raise the quality of the information that is reported and make it comparable. The purpose of the law is also to make it easier for companies to report the social and environmental impact the companies have, in a reliable and transparent way. CSRD also contributes to the EU's green contribution, a sustainable transition and connects to the Paris Agreement.

The new legislation affects more companies than before and reporting according to CSRD will be both complex and extensive as CSRD covers 85 disclosure areas and roughly 1100 data points within the ESG factors.

- For affected companies, CSRD will mean a lot of time and resources to prepare. But the new directive also means opportunities, as the disclosure requirements make visible potential risks within a broad ESG scope throughout the value chain. A broader perspective on risk management can ultimately strengthen competitiveness, says Elin Nilsson, CSRD expert at Goodpoint.

How the reporting should be done in practice is described in detail in the EU's accounting standards, ESRS. One of the biggest differences compared to previous accounting directives is that the sustainability reporting must not be submitted separately, but must be included as part of the company's management report. Nowadays, it is increasingly important for investors, owners and other stakeholders to become aware of how a company's financial results can be affected by sustainability risks, such as climate change.

- Another important difference is that the reporting must take place with so-called double materiality in focus, which means that the scope of what must be reported will be greater. Concerned companies will be required to report the effect the business has on the environment and on social issues, but also the financial effect that sustainability issues have on the business in the short and long term. It can be things like drought or increased amounts of rain leading to products not being able to be produced in the same way as before or that there is an increased risk of natural disasters that destroy material values, explains Elin Nilsson.

How then can the companies covered by CSRD best prepare?

- We see a huge demand for knowledge about how CSRD should be applied in practice. Right now, many companies are busy with training and raising skills, and many can probably feel a slight panic, but it is possible to prepare, says Elin Nilsson.

- Our best advice is to set aside time to conduct a GAP analysis of current reporting against the requirements of the CSRD, followed by a dual materiality analysis to determine what information the reporting should include to meet the requirements of the CSRD. Many companies have already taken external support, but we still see an increased demand from the consulting companies, says Magnus Boman CEO.

Goodpoint is participating at NSE as an exhibitor and with two points in the stage program. The lecture on CSRD will focus on preparation for reporting according to the new directive and how companies can best tackle the challenges, but also many opportunities, that follow from the directive. Their lecture is at the expo scene at 09:40.

In program item number two, Magnus Boman will hold a conversation together with Professor Berit Olofsson, chairman of the board Stockholm University Center for Circular and Sustainable Systems (SUCCeSS), with a focus on circular processes and how we can create collaborations between universities and business, in order to enable the transition to a resource-efficient and sustainable society. SUCCeSS is an interdisciplinary research center at Stockholm University that invests in connecting natural science with other research areas to facilitate the transition to a more sustainable and circular society. Magnus and Berit can be seen at the expo scene at 15:40.