By generating more standardized and comparable data according to the European Sustainable Reporting Standards criteria, we expect the CSRD’s corporate reporting requirements to solve some key data scarcity and quality issues across E, S and G themes.
Crucially, in addition to disclosing information on policies and initiatives, the CSRD requires organizations to set targets (including absolute GHG emission reduction targets), select a baseline, and report progress towards these targets. Furthermore, the CSRD extends the reporting scope with reference to a company’s whole value chain within the EU and in third countries. By providing a much more comprehensive view of the sustainability profile of an investment universe, the new rules will ultimately improve transparency for the end investor.
Q: How does the CSRD align with the International Sustainability Standards Board standards released in June?
The CSRD sets out mandatory requirements that are broad in scope and address both environmental and financial impacts – double materiality. The ISSB standards are voluntary, currently focused exclusively on climate, and address financial materiality only.
But there are overlaps. Critically, both draw heavily on the work of the Taskforce on Climate-related Financial Disclosures. They therefore have not been established in silos and ultimately converge around the same terminology.