CSRD; the new standard for sustainability reports

Many companies and organisations have already included elements related to sustainability in their annual report or have prepared a separate report for this. Sometimes out of obligation, but also often out of responsibility. The CSRD will be mandatory for many companies from 2025 and seems to be becoming the standard. It therefore replaces a large number of other methods and names for this part of the report.

Sustainability reports have been given many different names over the years:

• CSR report
• Sustainability report
• Social year report
• Impact annual report
• Social annual report

For all organisations that are also required to prepare an annual report, the CSRD accountability must be a clearly recognizable part of it. Perhaps we will soon call this CSRD report, but perhaps something else. At the moment CSRD means little to most people.

The CSRD guideline provides a number of components that are mandatory to report on for all CSRD-compliant organisations. And a number of components that the organisations themselves can determine whether they apply to them. In addition, there are a number of optional components which are not part of the CSRD guidelines, but which show how you improve sustainability within your organization.

The different components can be divided into the following 4 sub-areas:

• General
• Environment
• Social
• Governance

When you dive deeper into the guidelines and have knowledge of existing frameworks around sustainability, you will recognise many things.

Until recently, the frameworks below were widely used in sustainability reporting and will probably disappear in due course because the CSRD will become the standard and, unlike most of the following, mandatory.

The Global Reporting Initiative (GRI) is the most widely used standard for sustainability reporting. In 1997, thousands of industry, accounting and academic experts worked together to develop this standard. The GRI standard is extensive and contains general criteria, sector-related criteria and criteria for specific sustainability topics. The aim of the standard is to assist companies in reporting on material sustainability topics that are of interest to both the company and the environment. In addition, the GRI offers tools for determining these material topics together with stakeholders and for collecting data. The principles of the GRI and the theme-specific indicators are very much in line with the forthcoming Corporate Sustainability Reporting Directive (CSRD).

The Integrated Reporting Framework (IR) was developed in 2013 by the International Integrated Reporting Council (IIRC). This framework focuses on six different types of capital - financial, manufactured, human, relational, social and natural capital - that can help an organisation add or destroy value. The IR helps companies to transparently manage and report on how their strategy, governance, performance and outlook (integrated) contribute to value in the short, medium and long term. Mainly listed companies report in this integrated way, because it increases the relevance of information for investors, lenders and insurers.

The Sustainability Accounting Standards Board (SABS) was originally developed as a framework for investors. It allows companies to report on financially material sustainability topics (from the "outside-in" perspective), providing transparency about the financial value of sustainability management. Investors and analysts find it increasingly important to know how companies deal with sustainability issues before making investment decisions. SABS sets standards per sector and per sustainability theme, which largely correspond to the criteria of the Global Reporting Initiative (GRI). Companies often report according to GRI and also add an extra SABS index at the end of the report. While SABS focuses mainly on the "outside-in" perspective (potential risks and opportunities on sustainability topics that lead to a financial impact on the company), the GRI focuses more on the "outside-in" perspective (sustainability topics where the company has an impact on people and the environment). In 2021, SABS and the Integrated Reporting Framework (IR Framework) of the International Integrated Reporting Council (IIRC) have merged into the Value Reporting Foundation.

The International Financial Reporting Standards (IFRS) Foundation develops and manages the IFRS accounting standards used worldwide for financial reporting. In November 2021, the IFRS Foundation announced the launch of the International Sustainability Standards Board (ISSB). The ISSB is currently developing a new sustainability reporting standard called the IFRS Sustainability Standards. The Value Reporting Foundation (including the Sustainability Accounting Standards Board (SABS) and the Integrated Reporting Framework) is also part of the ISSB.

The United Nations launched the 17 Sustainable Development Goals (SDGs) in 2015, with the aim of creating a sustainable world by 2030. The SDGs cover various topics, such as combating poverty, health, equality, climate action and clean water. More and more companies are using the SDGs as a guideline for their sustainability strategy, for example by selecting a number of goals on which they can make the greatest impact and to manage them accordingly. The sustainability report is also linked to this. The SDGs are therefore not so much a guideline, but a shared language for sustainability that is used by companies.

The frameworks mentioned above are used within Europe and/or worldwide. There are also several sustainability initiatives in The Netherlands which are similar to the new CRSD guidelines:

• MVO Prestatieladder
• Prestatieladder Socialer Ondernemen
• Transparantiebenchmark
• CO2 Prestatieladder

The best way to prepare is to get started with the sustainability report right now. This way you experience what it is like to make such a report and what you need for this. Chances are you have to collect a lot of information from different departments. If you know who has to deliver what, you can make a plan for next year based on this experience. The report does not have to comply with the CSRD guidelines yet, so you cannot make any mistakes. And by starting now you are already laying a good foundation for your sustainability report.