How to ensure compliance with the CSRD’s emissions reporting requirements

In a market increasingly shaped by sustainability regulations, businesses can differentiate themselves with how they manage and reduce their environmental impact.

Some frontrunners implemented environmental management systems years ago to measure and reduce their greenhouse gas emissions. By doing so, they’ve even been able to reap the business benefits of carbon management.

On the other hand, some businesses are realising that they now need to comply with sustainability regulations and get a grip on their emissions data. They want to get started to ensure compliance and gain a competitive advantage, but where should they start?

The EU’s Corporate Sustainability Reporting Directive (CSRD) is a mandatory non-financial reporting regulation that has been put into law. It will require companies to disclose how they measure, manage, and reduce the emissions related to their business activities and value chain.

New regulations can be panic-inducing for businesses waking up to these requirements, but it’s important not to lose sight of how compliance can bring a range of business benefits to those proactively working towards it.

CSRD compliance and Scope 3 emissions data

With the CSRD, businesses will be expected to disclose emissions data from their direct and indirect activities. By indirect, we’re referring to Scope 3 emissions, which cover all the emissions released throughout the company’s value chain.

To report their emissions under the CSRD, businesses need to get closer than ever to their supply chain. This means gathering granular and comprehensive data on their emissions with innovative supplier engagement strategies and leveraging the latest emissions reporting platforms.

Ready or not, the CSRD is coming for businesses that operate in the EU. An emissions reduction strategy is no longer optional, and companies must disclose it. Gathering the information needed might take a while, but it isn’t too late. Companies like Emitwise streamline the reporting process, so it’s time to partner up and ensure CSRD compliance.

Who is required to comply with the CSRD, and what is needed?

The first businesses impacted by the CSRD are those currently subject to the Non-Financial Reporting Directive (NFRD). They have a turnover of more than €40m, a total balance sheet greater than €20m, or more than 250 employees.

Companies must report their sustainability data in a format that aligns with the CSRD’s standards. These standards are informed by the European Financial Reporting Advisory Group (EFRAG).

Within the European Sustainability Reporting Standards’ (ESRS) E1 standard, companies must disclose data on their Scope 1, 2 and 3 emissions, climate change mitigation plans, emission reduction targets and supplier engagement strategies.

The EFRAG includes guidance covering the whole spectrum of ESG considerations, from human rights risks to business codes of conduct, but climate change is the only section that’s mandatory for all businesses.

Businesses will also be required to standardise their sustainability data so that it can be disclosed digitally and audited by a third party. Special attention will need to be paid to the auditability of their carbon data, which will be subject to audits as stringent as those of their financial reports.

The timeline

• End of 2023: The Council and European Parliament signed off on standards, and they became effective
• From 2024: Requirements will be phased in after EU law is implemented into the national law of EU member states
• January 1, 2024: Companies that are already subject to the Non-Financial Reporting Directive (NFRD) will need to report their 2024 data (reporting year 2025)
• January 1, 2025: Other large undertakings not previously subject to the NFRD to start reporting (reporting year 2026)
• January 1, 2026: SMEs to commence their reporting (reporting year 2027)
• January 1, 2028: Non-EU companies to start their reporting (reporting year 2029)

Emitwise’s solution for CSRD compliance

CSRD compliance requires disclosing evidence on how companies intend to achieve emissions reduction targets. For this, companies will need to be able to make data-informed decarbonisation decisions.

Emitwise’s carbon accounting platform can help businesses acquire audit-ready Scope 1, 2 and 3 emissions data they will need to comply with the CSRD.

The vast majority of emissions come under Scope 3, and they’re also the hardest to measure. That’s why Emitwise’s Procurewise platform provides suppliers with the tools to measure their emissions, and that data will feed directly into your own.

To pass the audits, the CSRD demands that carbon accounting meets the same standards of rigour as financial accounting. That’s why Emitwise integrates with financial reporting platforms to provide audit-ready data.

With Emitwise, companies go beyond compliance as they are empowered to make data-driven decisions to reduce their emissions. Ace CSRD compliance, pass emissions data audits and engage your suppliers on your decarbonisation journey with Emitwise.