Spotlight on Supply Chain Management: A Shift in Journalistic Priorities
The European Union is set to transform sustainability reporting with the introduction of the Corporate Sustainability Reporting Directive (CSRD), replacing the Non-Financial Reporting Directive (NFRD). This new regulation aims to standardize and enhance sustainability reporting by companies, focusing on environmental, social, and governance (ESG) factors, aligned with the European Sustainability Reporting Standards (ESRS)[1][5].
Starting from the 2024 financial year, the largest companies within the EU must comply with CSRD by disclosing standardized, verifiable sustainability information. Reports based on 2024 data will be published in 2025[2][5].
Regarding small businesses, the CSRD primarily targets large companies and listed entities, expanding the scope from the NFRD but still setting material thresholds. Generally, small and medium-sized enterprises (SMEs) are not directly subject to CSRD reporting obligations initially[2][4]. However, some smaller or mid-sized listed companies might be gradually included in the scope from 2026 onward[2][4].
The European Commission’s 2025 Omnibus proposal suggests raising employee thresholds to large-scale size definitions (e.g., 1,000+ employees) and delaying certain requirements until 2028, potentially easing the impact on smaller businesses[2][4].
Small businesses in the supply chains of CSRD-reporting companies may face indirect pressure to provide ESG-related data as these larger companies require consistent and verifiable sustainability information upstream[1][2].
Key implications for small businesses include preparing for increased scrutiny of sustainability data as their larger partners will demand ESG information for reporting under CSRD. Early voluntary alignment with ESRS frameworks can facilitate future compliance and improve business reputation[4]. There may be upcoming regulatory developments extending CSRD requirements to more SMEs, although concrete timelines and thresholds remain under discussion pending final EU decisions[4].
Sustainability reporting will be integrated into balance sheets starting from the 2024 financial year, making it a mandatory requirement. The CSRD directive is geared towards increasing transparency and accountability in sustainability practices, addressing issues related to complexity, and improving accessibility[1][2].
The changes are designed to provide more time for the public and to benefit small businesses. The CSRD directive is a real revolution for the involved audience, as it sets new standards for sustainability reporting, making it more standardized, verifiable, and accessible[1][2]. The initiative's goal includes reaching a broader market, aiming to untie certain knots or complications and increase the overall transparency in the EU's corporate sector[1][2].
- The integration of sustainability reporting into balance sheets, as mandated by the CSRD, will involve a focus on environmental factors, making it essential for small businesses to understand and adapt to the principles of environmental science.
- As the European Commission considers expanding CSRD requirements to more small and medium-sized enterprises (SMEs), the finance sector and businesses alike should prepare for the potential impact of climate-change policies and the associated reporting requirements on their operations and investments.
- The European Union's Corporate Sustainability Reporting Directive (CSRD) aims to promote transparency and accountability in businesses across the EU, aligning with the objectives of the broader field of environmental-science and corporate sustainability, thereby benefiting the overall health of the environment and economy.
