What are CSRD & CSDDD?

In recent years, the European Union (EU) has demonstrated a robust commitment to sustainability through its initiative to achieve climate neutrality by 2050, known as the European Green Deal. This comprehensive strategy encompasses a set of policies and laws designed to enhance sustainability across environmental, social, and governance (ESG) dimensions.

Two pivotal directives within this framework are the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). These directives usher in a shift where companies can no longer disclose sustainability information selectively. Instead, they are legally mandated to systematically collect all pertinent information and report on topics that are most material to them (and the impact they gave on stakeholders).

The CSDDD (The EU’s Corporate Sustainability Due Diligence Directive)

The CSDDD (Corporate Sustainability Due Diligence Directive) aims to hold businesses accountable for the negative impacts of their activities. This directive sets a consistent EU-wide standard, mandating both EU and non-EU companies to implement due diligence strategies concerning human rights and environmental issues. It necessitates companies to recognise and rectify adverse impacts on human rights and the environment within their operations, subsidiaries, and supply chains.

The CSDDD was approved by the European Parliament and formally adopted in 2024. The directive will phase in its requirements, affecting companies three to five years after it becomes effective​. For the most up-to-date information regarding EU directives, please consult EU sources.

The CSRD (The EU’s Corporate Sustainability Reporting Directive)

The CSRD’s aim is to improve and broaden sustainability reporting among companies operating in the EU. The proposal was introduced in 2021, aiming to address the limitations in the EU’s previous sustainability reporting directive, the Non-Financial Reporting Directive (NFRD). Under the CSRD’s more comprehensive framework, companies need to disclose their social and environmental impacts by following the EU’s sustainability standards (ESRS).

The CSRD was formally adopted in 2023, and large in-scope companies are required to submit their first reports by January 2025.