What is CSRD?

The Corporate Sustainability Reporting Directive (CSRD) is the European Commission's upcoming set of EU compliance and disclosure requirements. The CSRD goes far beyond the sustainability data many companies now track and report. The new directive will create additional ESG reporting requirements for U.S.-based companies with significant European operations.

The new EU directive strengthens the emphasis on rules concerning the social and environmental information that companies must report. In particular, CSRD requires disclosures from a “double materiality” perspective, which means that companies have to report how sustainability issues affect their business as well as how their business impacts people and the environment. This requirements also dictates that all data must be in a digital and auditable format.

CSRD is intended to provide relevant, comparable, reliable, and accessible sustainability information for investors and stakeholders . The purpose is to ensure investors and other stakeholders have access to the information they need to assess investment risks arising from climate change and other sustainability issues.

Why does this matter?

CSRD reporting covers the organization at a consolidated level, not just at the EU level. CSRD goes far beyond what many companies currently include in sustainability reports and exceeds the reporting scope planned in the SEC rule. Consequently, companies required to report under the CSRD, will have to disclose how sustainability risks and opportunities affect financial performance, position, and development (financial perspective) but also how the company’s performance, position, and development affect people and the environment (impact perspective). Conversely, the SEC’s proposed rule emphasizes investor materiality (financial perspective) only, not double materiality. U.S. companies with significant turnover in the EU will need to publish sustainability information that covers their entire operations, including its non-EU operations. For U.S.-based companies this likely means that steps they take to comply with the SEC rule, once it is finalized, might not be sufficient to meet the CSRD requirements.

How does Lynx prepare organizations for CSRD?

Lynx’s software allows users to capture data at the site level, anywhere in the world. In addition to alignment with the CSRD and many other global reporting frameworks, Lynx provides an audit log and secure cloud hosting so your company’s data is not only secure but will pass third party audit and ensure capital markets are informed of your sustainability data.

1. Alignment with the ESRS: aligning data to the European Sustainability Reporting Standards (ESRS) in a digital and auditable way is a key requirement of the CSRD. That’s where Lynx comes in. Data entered by staff is instantly aligned to the matching ESRS framework standard, cutting down on time spent retroactively compiling data. This save time and money on reporting and gives managers a real-time look at their global ESG profile.

2. Audit log: capturing data from the the moment is entered ensuring third party validation and assurance

3. Transparency: data captured can be shared internally and externally keeping your company and markets informed of latest developments

4. No more estimation: data is verified in the platform meaning exports and reports are real time and properly validated to ensure accuracy

5. Double materiality: Lynx’s platform not only meets requirements for internal company impact, but provides quantitative measurement of impact on environment and society, while fulfilling digital requirements of the new directive.