Impact European sustainability directive

Europe rolls out a lot of abbreviations all over us, such as CSRD, ESG and ESRS. Chances are you've never heard of them, but you may have seen them pass by before. All of these abbreviations have to do with sustainability reporting.

As of 2024, all listed companies and large corporations are required to report on sustainability policies and performance. This includes the impact of their activities on people and the environment. This is a direct result of the European directive "Corporate Sustainability Reporting Directive (CSRD).

According to the CSRD, a company is considered "great" if it meets two of the following three criteria:

1. The company has 250 or more employees.

2. The balance sheet total exceeds 25 million euros.

3. Net sales exceed 50 million euros.

The CSRD addresses three areas: Environment, Social, and Governance, also known as ESG.

The area environmental concentrates on the environmental footprint, for example with respect to carbon emissions, water use and waste management. The area social revolves around a company's relationship with its employees, customers, suppliers and the broader community. Examples include working conditions, diversity, human rights and contributions to the community. The Governance area assesses how a company is governed. It includes topics such as business ethics, transparency and the structure of governance, through which a company operates ethically, transparently and responsibly.

ESG provides a framework for companies to assess and improve their sustainability efforts, while CSRD has specific requirements for reporting these efforts. The ultimate goal is for companies to improve their impact on the world. ESG and CSRD provide the insights needed to do this.

The guidelines of "European Sustainability Reporting Standards" (ESRS) outline exactly what you need to report on these areas so that every company does so in a uniform way. 

Compliance with the CSRD is mandatory. Failure or inadequate compliance with the CSRD can have financial consequences. Companies that fail to report may face fines.

As indicated, the CSRD legislation applies to large companies. That is not to say that this legislation does not affect smaller (SME) companies. Because of the responsibility in the chain, SMEs can also be affected. We already see an example of this chain responsibility in the case of safety, where for projects, clients and contractors require a certain level on the safety ladder.

As a result, the sustainability directive will have a much greater impact than previously anticipated. The first companies in the facade industry will soon be faced with these European regulations.