EU's Corporate Sustainability Reporting Directive (CSRD)

Understanding the EU's CSRD and its impact on food companies

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The European Union's Corporate Sustainability Reporting Directive (CSRD) represents a significant step towards enhancing corporate transparency and accountability in sustainability practices. This regulation, which came into force in 2024, requires a wide range of companies to disclose detailed information on their environmental, social, and governance (ESG) impacts. For food companies, the CSRD brings both challenges and opportunities in their sustainability journey.

Key requirements of the CSRD

  • Expanded Scope: Unlike its predecessor, the Non-Financial Reporting Directive (NFRD), the CSRD applies to a broader range of companies. This includes all large companies, whether listed or not, and small and medium-sized enterprises (SMEs) that are publicly listed, except for micro-enterprises.
  • Detailed Reporting Standards: The CSRD mandates the use of European Sustainability Reporting Standards (ESRS), which provide detailed guidelines on the ESG metrics that need to be reported. These standards are aligned with the Global Reporting Initiative (GRI) and other international frameworks to ensure consistency and comparability.
  • Audit and Assurance: To enhance the credibility of sustainability reports, the CSRD requires companies to obtain third-party assurance on the reported information. This means that external auditors will verify the accuracy and completeness of the disclosed data.
  • Digital Reporting: The CSRD introduces a requirement for companies to submit their sustainability reports in a digital format, facilitating easier access and analysis by stakeholders.

Impact on Food Companies

For food companies, the CSRD presents a unique set of challenges and opportunities:
  • Increased Transparency: Food companies will need to provide detailed disclosures on their environmental impact, including greenhouse gas emissions, water and energy usage, and waste management. This transparency will not only meet regulatory requirements but also build trust with consumers and investors who are increasingly concerned about sustainability.
  • Supply Chain Management: Given the complexity of food supply chains, companies will need to ensure that their sustainability practices extend beyond their direct operations to include suppliers and partners. This will involve collecting and reporting data on the ESG performance of suppliers, which can be a significant undertaking.
  • Innovation and Improvement: The CSRD can drive innovation in the food sector by encouraging companies to adopt more sustainable practices. This includes investing in renewable energy, reducing food waste, and developing sustainable packaging solutions. Companies that excel in these areas can gain a competitive advantage and appeal to the growing segment of eco-conscious consumers.
  • Risk Management: Enhanced ESG reporting can help food companies identify and manage risks related to climate change, resource scarcity, and regulatory compliance. By proactively addressing these risks, companies can ensure long-term resilience and sustainability.
  • Cost Implications: Compliance with the CSRD will incur costs, including investments in data collection systems, reporting tools, and assurance services. However, these costs can be offset by the benefits of improved sustainability performance, such as cost savings from resource efficiency and increased market opportunities.

Who is affected?

The CSRD applies to a broad range of businesses, including large companies, listed SMEs, and non-EU companies with significant operations in Europe. This expansion means that many companies, previously exempt, must now adhere to stringent reporting requirements.

Timeline for compliance

  • 2024: The directive enters into force.
  • 2025: Companies already subject to the NFRD begin reporting based on 2024 data.
  • 2026: Reporting obligations extend to other large companies.
  • 2027: Listed SMEs begin reporting.
  • 2029: Non-EU companies with substantial EU operations start reporting.
Large companies already reporting under the NFRD will begin reporting for the financial year 2024, while other large companies will follow in 2025, and listed SMEs by 2026, with an option to delay by two years. Non-EU companies will start reporting by 2029​.

How to prepare for CSRD compliance

Food companies can take several steps to prepare for CSRD compliance:
  • Understand the ESRS: Familiarize your team with the European Sustainability Reporting Standards, as these will guide your reporting efforts.
  • Assess Current Practices: Conduct a thorough assessment of existing sustainability practices and reporting processes to identify gaps and areas for improvement.
  • Establish Comprehensive Data Systems: Invest in systems that allow for the accurate and efficient collection, management, and audit of sustainability data.
  • Engage Stakeholders: Collaborate with stakeholders, including suppliers, customers, and investors, to gather the necessary data and ensure alignment on sustainability goals.
  • Plan for External Assurance: Prepare for the requirement of third-party auditing by ensuring your data is verifiable and meets the necessary standards.
  • Continuous Improvement: Use the insights gained from sustainability reporting to drive continuous improvement in ESG performance and achieve long-term sustainability goals.
The EU's CSRD represents a significant regulatory shift that will impact food companies across Europe. By embracing the requirements of the CSRD, food companies can enhance their sustainability practices, build trust with stakeholders, and drive long-term value creation. Proactive preparation and strategic investments in sustainability will be key to navigating this new regulatory landscape successfully.

Get help preparing for CSRD compliance. Schedule a time to talk to learn about HowGood’s solution and support.