CSRD Compliance, which tools to use?

With the entry into force of the Corporate Sustainability Reporting Directive (CSRD), European companies are now required to adopt more rigorous and transparent sustainability reporting practices. Complying with these new requirements may seem complex, but several tools and methodologies are available to facilitate the process. This article explores two major tools to help companies comply with the CSRD: the ACT (Assessing low-Carbon Transition) methodology and the Global Reporting Initiative (GRI).

CSRD: An Overview

The CSRD, which replaces the Non-Financial Reporting Directive (NFRD), requires large European companies to disclose detailed information on their environmental, social and governance (ESG) impacts. The directive aims to improve the transparency and comparability of sustainability reporting, by aligning with global standards such as the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and the sustainability standards of the Global Reporting Initiative (GRI).

Key CSRD requirements

The CSRD requires companies to report on several key aspects:

1. Climate risk Identifying and managing climate risks.
2. Sustainability objectives Definition of clear, measurable sustainability objectives.
3. ESG performance ESG performance evaluation and disclosure.
4. Transparency Provide accurate, verifiable information on sustainability practices.

Tool 1: ACT Methodology

The ACT (Assessing low-Carbon Transition) methodology, developed by ADEME and CDP, is designed to help companies assess and improve their performance in the transition to a low-carbon economy. Here's how it can help comply with the CSRD:

1. Initial Diagnosis and Climate Risk Assessment :
   • The ACT methodology begins with a comprehensive diagnosis of the maturity of the company's decarbonization strategy, including a climate risk analysis. This assessment identifies physical and transition risks, in line with CSRD requirements on climate risk management.
2. Setting climate targets :
   • ACT helps companies define clear, ambitious targets for GHG emissions reduction, aligned with the objectives of the Paris Agreement. These targets can then be integrated into sustainability reports, meeting the CSRD's requirements for sustainability targets.
3. Action Plan and Implementation :
   • The development of a detailed action plan and the implementation of concrete measures are essential steps in the ACT methodology. These documented actions can be used to provide accurate and verifiable information on sustainability practices, in line with CSRD standards.
4. Monitoring & Evaluation :
   • ACT includes a system for continuous monitoring and evaluation of progress made in reducing emissions. This enables us to report accurate, up-to-date data on ESG performance, in response to the CSRD's transparency and verifiability requirements.

Tool 2: Global Reporting Initiative (GRI)

The Global Reporting Initiative (GRI) is one of the most widely used sustainability reporting frameworks in the world. It offers a set of standards to help companies disclose their economic, environmental and social impacts. Here's how the GRI can facilitate CSRD compliance:

1. GRI Standards and Indicators :
   • The GRI standards provide detailed guidelines on the performance indicators to be used for sustainability reporting. These standards cover a wide range of ESG topics, helping companies to comply with CSRD disclosure requirements.
2. Transparency and comparability :
   • By using the GRI standards, companies can ensure greater transparency and comparability in their sustainability reporting. This is particularly important when it comes to meeting CSRD expectations regarding the provision of accurate and comparable information.
3. Integration with other managers :
   • GRI is designed to be compatible with other international frameworks and standards, such as the recommendations of the TCFD (Task Force on Climate-related Financial Disclosures). This integration facilitates the creation of comprehensive and consistent reports, meeting the various requirements of the CSRD.
4. Training and Resources :
   • GRI offers educational resources and training to help companies understand and apply its reporting standards. These resources can be essential in ensuring compliance with the new CSRD requirements.

Tool 3: Sustainability Accounting Standards Board (SASB)

The Sustainability Accounting Standards Board (SASB) proposes sector-specific standards for the disclosure of material financial information related to sustainability. Here's how SASB standards can help you comply with the CSRD:

1. Sector approach :
   • SASB standards are developed for different industry sectors, providing precise guidelines on sustainability issues relevant to each sector. This enables companies to focus on the performance indicators most relevant to their sector, in alignment with CSRD requirements.
2. Financial Materiality :
   • SASB focuses on the financial materiality of sustainability information, helping companies to identify and report those aspects of sustainability that have a significant impact on their financial performance. This approach is in line with the CSRD's expectations for the disclosure of relevant and material information.
3. Compatibility with other standards :
   • Like GRI, SASB standards are designed to be compatible with other reporting frameworks, facilitating the integration of multiple reporting requirements into a single coherent report. This helps meet CSRD requirements while ensuring consistency in sustainability reporting.