Will the CSRD be a catalyst for corporate climate action?

The European Union’s corporate sustainability reporting directive (CSRD) introduces stringent reporting requirements for large companies in the EU, compelling them to disclose their transition plans towards climate neutrality.

Specifically, the European Sustainability Reporting Standard (ESRS) E1 Climate Change Standard requires companies to disclose their emission reduction targets and detail how they align to limit global warming to 1.5°C. However, for the many companies still unclear on how exactly they will achieve this ambitious target, the new regulation serves as a wake-up call.

And with increased stakeholder pressure – whether from investors, rating agencies, customers or suppliers – the transparency and oversight unlocked by the CSRD promises to kickstart even the most reluctant into action. Below, find an overview of how the CSRD can help inspire and structure companies’ decarbonisation efforts, becoming a key strategic catalyst for change.

The CSRD: a transparent, harmonised reporting approach to decarbonisation

Here are a few ways CSRD connects with your decarbonisation journey:

What does the CSRD mean for your company’s net zero transformation?

Anti-greenwashing legislation around the world

Across the world, several countries are unveiling anti-greenwashing legislation to protect consumers and the environment. Let’s have a look at a few:

European Union (EU)

EU Parliament endorsed a provisional agreement for a new Greenwashing Directive at the beginning of 2024. The Directive sets stringent rules around green claims, the use of environmental labels and the early obsolescence of goods. The aim is to protect consumers from greenwashing and promote a circular and green EU economy. Some key highlights of the regulation include:

General Environmental Claims Now Banned
Sustainability Labels Soon to Be Regulated
Rewarding Durability

United States

The US Federal Trade Commission’s (FTC) Green Guides help organisations communicate transparently about their products and services by clarifying:

General principles that apply to all environmental marketing claims
How consumers could interpret certain claims
How to support marketing claims with thorough evidence and data

Our approach to avoiding greenwashing

At Nexio Projects, we are very conscious of the risks and implications of greenwashing for ourselves and our clients, and this is why we take serious measures to avoid it. We have an anti-greenwashing policy that helps us not just advise our clients, but ensure we are not engaged in greenwashing by association.

This protocol was drawn up by our in-house Ethics Committee led by Nexio Projects Chief Strategy Officer, Felix Keser. He shares:

Standards

Sustainability reporting standards are precisely defined guidelines and requirements for reporting, and usually are provided by a recognised authority. Standard-setters ask for very specific metrics for companies to report, and in the world of sustainability reporting, standards are generally regarded as the most thorough instruments available.

Some of the most prominent sustainability standards include:

Conclusion

In conclusion, navigating the vast and dynamic landscape of ESG reporting and communication tools requires a strategic understanding of the available options. As we’ve categorised the terrain into standards, frameworks, certifications, and ratings , it’s evident that each plays a unique role in shaping the sustainability narrative.

Standards establish a universal language for reporting, frameworks guide the narrative in the absence of strict metrics, certifications offer tangible proof of ESG commitment, and raters provide a quantitative lens for assessing sustainability performance and risk.