What is the CSRD?
The Corporate Sustainability Reporting Directive (CSRD) came into effect in January 2023, marking a significant shift in sustainability reporting for companies operating in the EU. In this article, we explore what the CSRD entails and who it affects, shedding light on the changes in reporting standards.
Implications of the CSRD
Companies operating in the EU will be required to report their measurements according to the CSRD, which supersedes the existing Non-Financial Reporting Directive (NFRD) and goes beyond the Task Force on Climate-related Financial Disclosures (TCFD).
Unlike the NFRD, the CSRD mandates independent assurance and imposes penalties on non-compliant entities.
Even companies that follow the TCFD now will likely need to expand the nature and extent of their disclosure to comply with the CSRD.
Starting from 2024, companies with ≥500 employees will be required to report their measurements in line with the CSRD. In subsequent phases, other large EU companies, listed EU small and medium enterprises, and non-EU parent companies with subsidiaries in the EU will also be required to comply.
How Terrascope facilitates CSRD compliance
Carbon accounting
Terrascope helps companies meet CSRD reporting requirements for:
Setting targets (E1-4)
Tracking energy consumption and mix (E1-5), and
Measuring and calculating scopes 1, 2, 3 GHG emissions (E1-6)
When it comes to measuring Scopes 1, 2, and 3 emissions, Terrascope leverages robust data science and machine learning to improve speed and accuracy.
The CSRD requires companies to disclose gross emissions from each significant Scope 3 category. Terrascope offers full support for this, in alignment with the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard (Version 2011).
Disclosing mitigation plans
Beyond quantitative measurements, Terrascope can also help companies with disclosing their transition plan for:
Climate change mitigation (E1-1)
Actions and resources in relation to climate change policies (E1-3)
GHG removals and GHG mitigation projects financed through carbon credits (E1-7), and
Internal carbon pricing (E1-8).
In reporting, Terrascope can help companies explain the decarbonisation levers identified and key actions planned, including changes in the company’s product and service portfolio and its adoption of new technologies, by reference to GHG emission reduction targets and the climate change mitigation actions.