What is it?

The CSRD is a ​new EU legislation that requires companies to  report on sustainability-related issues, increasing transparency for every stakeholder​. It involves a double-materiality assessment

It constitutes one of the efforts of the European Union to move towards an increase in sustainability and become the first climate-neutral economy by 2050.

What do companies have to do?

Companies will have to include a sustainability report attached to their financial reports. This report will provide a thorough analysis of the business practices across environment, social and governance. It will include a value chain analysis and assess the product’s impact on the environment and the people. To ensure the report is comprehensive, it will include a double materiality assessment.

A double materiality assessment is an important matter which ensures that businesses not only take into account the effect and risks of climate change in their business model, but expands to the impact of the business operations on the environment and the planet across the ESG framework.

Criterias required will be: 

• product impact, including the environmental impact of materials and processes used to labour conditions

• risk management by disclosing how they identify and manage sustainability-related risks

• supply chain transparency and traceability 

• ​complete sustainability strategy from what are the goals and targets to a deep description of the plan to achieve them 

To comply with the criteria it’s crucial to go beyond carbon emission and mention: 

• Scope 1, 2, and 3 GHG 

• Water and marine resources

• Land usage

• Fossil fuel usage

• Product’s impact on human health: from human toxicities (cancerous and noncancerous) to ionising radiation

• Ozone depletion

Scope of sustainability matters to be included:

• General Standards

• Standards on environment

• Social Standards

• Governance Standard

When is it implemented?

The CSRD was implemented on the 5th of January 2023 and it will roll out on:

• ​1 Jan 2024 (first report in 2025): All EU-Large public interest entities (total assets of EUR 20 million and/or net turnover of EUR 10 million and/or an average of 250 employees during the financial year) already subject to the Non-FInancial Reporting Directive

• 1 January 2025: Non-EU companies operating in the EU, generating a net turnover of at least  EUR 150 million 

• ​1 January 2026: Listed EU small and medium-sized undertakings ("SMEs") (total assets of EUR 4 million and/or net turnover of EUR 8 million and/or an average of at least 10 employees during the financial year); subject to an opt-out until 2028

How can MetrikFlow help?

MetrikFlow for Fashion and Retail empowers companies to comply with the new regulation. Our assessments evaluate the sustainability of the company and its partners, according to the ESG framework. Our software solution supports product footprint calculations as well as Scope 3 emissions, making it an effortless process. Finally, our team of climate experts can support your journey and strategy setting towards net-zero.