With the Corporate Sustainability Reporting Directive (CSRD), the European Commission demands that companies report on their material sustainability issues, and improve transparency. The CSRD covers various sustainability topics, with biodiversity being the most complex and significant. It is vital to stop biodiversity loss. The importance of preserving biodiversity is evident in the goals outlined by the Green Deal and the Kunming-Montréal Global Biodiversity Framework (GBF). How does your business approach biodiversity and how to incorporate it into your sustainability reporting?
The CSRD is a European directive that aims to promote transparency, standardisation, comparability and increased quality of environmental, social, and governance (ESG) information. The directive applies to large companies and listed SMEs operating in Europe. In short, it brings sustainability reporting up to the same level as financial reporting.
CSRD blog series: With the implementation of the CSRD fast approaching, TAUW takes you through the ins and outs of this directive and takes a deeper dive into different environmental topics and how they link to the CSRD.*
The first step towards sound sustainability reporting is to carry out a materiality assessment. On the one hand, you examine the impact of your business strategy on biodiversity. In doing so, you focus not only on the impact of your own sites, but also on the impact of the entire value chain: what materials do you use? Where do they originate from? What is the impact on the ecosystems from which they are extracted? Does your business model contribute to the introduction of invasive exotic species? Are your operations located near sensitive natural areas where you could have an impact on ecosystem health and biodiversity?
On the other hand, consider the impact of biodiversity on your business strategy: how vulnerable is your business model to potential changes in biodiversity? What are the biggest risks, where are your opportunities, and how do you make the business model resilient to these developments? This is called double materiality analysis, a fundamental concept of CSRD. Both analyses require a thorough examination and assessment of your value chain and operations.
If the analysis shows that biodiversity is a material issue for your business, then your policy is the next step. This should be considered through the lens of the European Sustainability Reporting Standards (ESRS), in this case biodiversity (ESRS E4).
Do you already have a policy in place to mitigate risks to or from biodiversity? Can you make a positive impact with relatively simple adjustments to your supply chain and business model, or is a complete shift in raw material sourcing required? The EU Biodiversity Strategy for 2030 is a good assessment framework for developing or refining your biodiversity policy. Developing a transition plan to adapt your business model or operations is a voluntary step under the CSRD.
Next, the CSRD expects an action plan with clear objectives to make your policy a reality, including setting up adequate due diligence to address negative impacts. And this is where it gets tricky, as there is currently only a limited set of widely accepted and applied criteria and indicators to make biodiversity measurable for specific situations. These criteria need to be tailored to your business, which requires expertise in biodiversity.
Various methods are available to carry out baseline measurements and regular monitoring and evaluation of the results of actions taken, such as:
To ensure effective monitoring, comprehensive reporting, and proper verification, it is essential to undertake consistent data processing, interpretation, visualisation and to maintain a clear dashboard. With this information, you can demonstrate that your policy is effective and contributes to the protection and restoration of biodiversity.
TAUW developed a Biodiversity Framework on behalf of a.s.r. real estate. This project was an important step for a.s.r. real estate as part of the CSRD and its commitment to a sustainable and biodiverse environment. Over a period of six months, we worked closely together to develop an outline framework. It includes
With this biodiversity framework, a.s.r. real estate has a solid basis to monitor its commitment to nature and biodiversity and to meet the reporting requirements of the CSRD.
Your sustainability report is included as part of your annual financial report. Your auditor audits this with limited assurance, evaluating whether your company has made the necessary trade-offs while assessing the materiality of biodiversity. Failing to provide complete information could lead to your auditor not approving the annual report, which could affect the realtionship with your stakeholders. Through CSRD sustainability is arriving at the heart of your business strategy and has become a shared responsibility of the financial manager (CFO) and the sustainability manager.
The CSRD requires companies to be transparent about their impact on biodiversity. And to reach that point it requires thorough consideration of the importance of biodiversity for their business model and potential risks and opportunities longer term. . The CSRD is an opportunity for companies to strengthen their strategies and create positive impact and reputation on biodiversity. The CSRD can be a lever to a successful, sustainable business, helping future-proof your company.
At TAUW, we support our clients in the following aspects on their road to CSRD compliance:
With the CSRD fast approaching, there is an urgent need to start your journey towards a sustainable future and ensure that the process and reporting you follow on this journey enables you to comply with the CSRD.
We look forward to working with you to further explore this issue and streamline the process.
*A blog on essential frameworks for biodiversity reporting will be published soon. These frameworks, such as the Global Reporting Initiative (GRI), the Science Based Targets Network (SBTN) and the Taskforce on Nature-related Financial Disclosures (TNFD), provide valuable guidance on assessing, collecting information and reporting on biodiversity. Keep an eye on our website for the publication of this blog.
In the first blog article, we focus on the importance of soil management and its relation to CSRD compliance. We present five key takeaways that your company should keep in mind to ensure successful reporting.
In this second blog, you can find valuable insights and guidance on effectively engaging stakeholders in the context of the CSRD, including information on the importance of stakeholder engagement, best practices, and practical strategies for successful implementation.
Visit our webpage specifically dedicated to the CSRD (Corporate Sustainability Reporting Directive) on our website. On this page, you will find background information, details about the directive, and relevant resources to help you understand and navigate the requirements of the CSRD.