The Corporate Sustainability Reporting Directive (CSRD) is one of the most significant and comprehensive legislative efforts to drive a common approach for environmental social governance (ESG) disclosures.
Who is affected?
CSRD will initially require larger businesses (those with >250 employees and with a turnover >€40M and/or total assets >€20M) to disclose their information as of 2024, but it will also encompass SMEs operating in Europe from 2026. UK Companies in European supply chains will be asked to provide relevant and aligned sustainability data and reports.
Disclosure requirements
Unlike previous ESG standards, affected companies will be obligated to disclose their ‘impact materiality’ to explain how their activities and investments affect society and the environment. The disclosure requirements of CSRD are outlined in a range of European Sustainability Reporting Standards (ESRS).
One of the standards that companies will be mandated to consider is ESRS E5 – Resource Use and the Circular Economy. If your business relies on manufacturing, placing physical products on the market, or recycling you will be required to disclose your impacts and explain what policies, actions, and targets you have in place to address more circular business models.
Performance reporting
Circular economy performance reporting is complex, requiring an assessment of both input and output materials, along with a determination of product design and different business models. Through the adoption of concepts such as the mass balance approach and material passports tracking materials through their various life cycles will become more standardised.
Considering the Circular Economy – we can help
The Circular Economy affects nearly all industries and global value chains. It encompasses how, as a society, we can develop more coherent sustainable business models that can maximise the value of our assets. Consideration of the circular economy can mitigate the risks of linear practices that deplete resources and degrade our ecosystems. It demonstrates good governance and provides a practical means to reevaluate ‘business as usual’ practices and transition to more equitable economic and sustainable practices.
As experts in both ESG and the circular economy Valpak and Rio are ideally placed to support businesses with this process.