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In March, the EU Commission released an omnibus package with proposed changes to climate laws, including the Corporate Sustainability Reporting Directive (CSRD). To help organizations navigate potential changes to the CSRD, Persefoni hosted a webinar with Kerstin Lopatta, Vice Chair of the Sustainability Reporting Board of the European Financial Reporting Advisory Group (EFRAG) and Special Liaison to the ISSB, Markus Weckman, VP, Corporates at the Upright Project, and Tamara Bálint, Sustainability Program Manager at Hyva. Below, we summarize top insights from their discussion.
1. The double materiality assessment remains a crucial component.
One thing that remains unchanged in the CSRD is the requirement that businesses conduct a double materiality assessment (DMA). That means you must disclose not just how sustainability matters impact your financial performance — but how your operations impact people and the environment. According to Lopatta, this is the step that organizations struggle with most. It requires them to think strategically about the negative and positive impacts that are coming in the future, and often demands a high number of data points, which can be overwhelming. Though it’s complex, the double materiality assessment is crucial — it’s the foundation on which you’ll build your CSRD report. Pierce noted that it’s important to bring a common-sense compass to the DMA — the process is really about identifying what matters to your business and what matters to your stakeholders.
2. Thresholds have changed, but out-of-scope companies may still want to report.
One of the most talked-about changes proposed by the Omnibus is to the threshold for reporting companies. Under the proposal, only the largest companies (those with more than 1,000 employees and either €50M EUR in net turnover or a balance sheet total above €25M EUR) now have to comply with CSRD. That means approximately 80% of previously covered businesses would no longer be required to comply with the CSRD.
However, Pierce pointed out, it will still make strategic sense for many out-of-scope companies to report. Disclosure regulations are taking hold globally, and regardless of what’s happening in the regulatory landscape, organizations need to understand the material risks and opportunities climate change poses — and be ready to meet stakeholder requests for information about their sustainability impacts. Bálint noted that, for Hyva, following the EU’s DMA process surfaced several business opportunities and risks the company had not previously considered.
3. Technology can streamline materiality assessment and disclosure.
Calculating emissions data and conducting a double materiality assessment for the CSRD can be incredibly resource-intensive. Technology can greatly ease this burden. For example, the free Persefoni Sustainability Reporting tool integrates context straight from the CSRD and enables users to collaborate and export reports. To ensure customers have access to robust, science-based materiality analysis, Persefoni has partnered with Upright, which offers DMA support through a data engine that integrates information from more than 300M sources.
4. Even with proposed changes, disclosure will take time and resources.
Though the Omnibus proposes deadline extensions and promises to simplify some aspects of CSRD reporting (for example, removing the original requirement to transition to reasonable assurance), the process will still take time and resources. According to Bálint, Hyva began preparing for CSRD reporting years ahead of their deadline. They quickly realized that the objective, data-driven DMA they sought would require substantial resources, so they decided to bring in external support from Upright. Bálint’s top advice to other companies preparing for CSRD reporting? Start now. The whole process, she explained, takes time and effort, and when you’re waiting to respond to a reporting deadline, you’re likely missing out on significant opportunities.
Building Resilience for What’s Next in Climate Disclosure
As the climate disclosure landscape evolves, companies should focus on strengthening their sustainability capabilities and establishing data systems that will allow them to stay nimble and respond to different regulatory frameworks and stakeholder demands. For more information, including a look at proposed changes to the Corporate Sustainability Due Diligence Directive (CSDDD) and the Carbon Border Adjustment Mechanism (CBAM), see our detailed analysis of the Omnibus package.
