In line with the European Green Deal, the European Commission approved the Corporate Sustainability Reporting Directive (CSRD) in late 2022. Companies will be required to provide qualitative and quantitative information on their environmental performance. The Directive, expected to impact around 50,000 companies, represents another stride towards transparency of information with regards to sustainability and a strategy to standardize and align the efforts and goals of European companies. Among other novelties, it introduces a new concept, that of double materiality, which is the need to report on both the impacts of the company on its environment, especially in terms of the environment and society, and the environmental issues that can affect the company’s development and value.

The information to be included in the annual reports will be determined by the European Sustainability Reporting Standards (ESRS). The circular economy standard is E5 and includes new key aspects that must be communicated, such as input and output resources, waste, resource optimization, the selected indicators to assess circularity, and the company’s action plans to achieve its objectives, among others.

Some of the companies affected by the new Directive will be required to issue reports on their circularity as early as 2024, which means that in 2023 they must begin to identify the risks and opportunities associated with the circular economy, develop strategies, and start collecting data to monitor environmental compliance. The EU recommends that companies not directly covered by the new Directive voluntarily comply, as it is expected that these criteria will eventually be universally applied.

If you have any doubts or inquiries regarding the requirements set forth in the CSRD Directive, please do not hesitate to contact us.