In recent years, the importance of sustainability and corporate responsibility has significantly increased worldwide. Consumers, investors, and governments are demanding more transparency from organizations, not only in their financial performance but also in their environmental and social impact. This has led to a shift in how companies are evaluated, with traditional economic metrics now accompanied by sustainability indicators.
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One key measure is ESG (Environmental, Social, and Governance), which has long been a standard for tracking and reporting companies? sustainability performances. With the introduction of the Corporate Sustainability Reporting Directive (CSRD) in Europe, the guidelines have become stricter, particularly in the areas of environmental management, including plastic waste and other forms of pollution.
For businesses, this means not only reducing their environmental footprint but also being far more transparent about their environmental performances. In this blog, we explain what CSRD is, which companies are affected, and how companies can find innovative solutions to meet the new guidelines.
What is CSRD?
The Corporate Sustainability Reporting Directive (CSRD) is a European directive that has been introduced in 2024. It replaces the existing Non-Financial Reporting Directive (NFRD) and significantly expands reporting requirements for companies, with a greater focus on environmental and social performance.
Where the NFRD primarily targeted large companies, the CSRD extends the obligation to report sustainability data to a much broader range of businesses, including listed small and medium-sized enterprises (SMEs) and even non-European companies operating in Europe that meet certain revenue thresholds.
Companies must report much more detailed information about their environmental and social impact, including their greenhouse gas emissions, resource use such as plastic, and impact on biodiversity.
Which Companies Must Comply with the CSRD?
The CSRD applies to a wider group of companies than the NFRD. Companies meeting the following criteria will need to prepare mandatory sustainability reports under the new directive starting in 2025:
- Large companies in the European Union that meet at least two of the following criteria:
- More than 250 employees.
- Annual revenue exceeding ?40 million.
- A balance sheet total exceeding ?20 million.
- Publicly listed companies: This includes small and medium-sized enterprises (SMEs) listed on stock exchanges, with a few exceptions.
- Non-European companies: Businesses from outside the EU that operate in the European market and reach certain revenue thresholds are also required to comply with CSRD reporting obligations. This broadens the scope of the directive and ensures that multinational companies with a significant presence in the EU report their global sustainability data.
This means that not only European companies are affected, but also non-European companies active in the region, increasing the global impact of the directive.
The Impact of the CSRD on Companies
The CSRD places a strong emphasis on sustainability and is part of the broader European Green Deal. Companies must provide detailed information about their environmental performance, such as their greenhouse gas emissions, biodiversity loss, and contribution to plastic pollution.
A key shift in the CSRD is the focus on the entire value chain, meaning that companies are not only responsible for their direct environmental impact but also for that of their supply chain. This requires companies to report on the materials they use, such as plastic, and how they manage their waste.
Companies that fail to report this information accurately and in a timely manner may face fines, penalties, and reputational damage. This makes it essential for businesses to proactively review their sustainability strategies and find innovative solutions to the challenges posed by the CSRD.
What Does the CSRD Mean for Companies? Plastic Footprint?
Plastic pollution is a global problem that is gaining increasing attention, and companies are now required to report on their plastic use and waste. However, for many companies, it is not yet possible to completely eliminate plastic from their production processes and supply chains. The CSRD imposes stricter requirements for companies to reduce the amount of plastic they use and make their waste streams more sustainable.
For many companies, this means they will need to develop new strategies for managing and offsetting their plastic use. This may involve revising their production processes, exploring sustainable alternatives to plastic, and investing in recycling and waste management systems.
Innovative Solutions for Companies: Plastic Credits
For businesses that are not yet able to eliminate plastic completely, innovative solutions such as plastic credits can be considered. Plastic credits work similarly to carbon credits, allowing companies to invest in projects that remove or recycle plastic from the environment. These projects help businesses offset their plastic footprint while working towards long-term solutions for reducing their plastic use.
Plastic credits offer companies the opportunity to make a positive impact on the environment, even if they are not yet fully plastic-free. They help reduce plastic waste by investing in projects that remove plastic from rivers and oceans and recycle it into usable materials such as pyrolysis oil. This contributes to the circular economy, where plastic waste is returned to its original state, reducing the pressure on natural resources.
Examples of Plastic Offset Projects
There are various projects worldwide focused on removing and recycling plastic waste. Companies can participate in these projects through plastic credits, helping them improve their environmental performance while complying with the strict requirements of the CSRD. Examples of such projects include:
- Plastic waste cleanup on beaches: These projects help reduce the amount of plastic in oceans by collecting and recycling plastic waste that washes up on shores.
- Plastic removal from rivers: Rivers are major sources of plastic pollution, transporting plastic from land to the oceans. By investing in projects that remove plastic waste from rivers, companies can make a direct contribution to reducing the amount of plastic entering the oceans. These projects often use advanced technologies, such as floating barriers, to capture plastic before it reaches the sea.
- Recycling collected plastic waste into usable materials, such as pyrolysis oil, which can be used to produce new plastic or as fuel for industrial processes. This type of recycling contributes to the circular economy and helps companies reduce their plastic footprint.
Innovative Approaches to Sustainability Management
In addition to plastic offset projects, there are other ways companies can meet the requirements of the CSRD. Sustainability innovation plays a crucial role in how businesses can reduce their environmental impact and optimize their processes to be more efficient and eco-friendly. Some examples of innovative approaches include:
- Scaling up current recycling efforts by investing in better waste separation systems and reusing materials in production processes.
- Switching to alternatives to plastic, such as biodegradable materials or renewable resources.
- Designing products and packaging to be more sustainable.
How Eco Progress Foundation Can Help
As businesses face increasing pressure to comply with new CSRD requirements, organizations like Eco Progress Foundation, in collaboration with Corsair Group International, can support their sustainability efforts. Corsair Group International provides the plastic neutrality service and recycles plastic waste into pyrolysis oil, which helps reduce the demand for virgin oil while creating a circular economy for plastic.
By partnering with Eco Progress Foundation and leveraging the services of Corsair, businesses can meet new regulations, reduce their plastic footprint, and actively contribute to a more sustainable future.
Conclusion: The CSRD and the Future of Sustainable Business
The CSRD represents a major shift in how companies must account for their sustainability performance. While this may pose a challenge, it also provides an opportunity to innovate, invest in sustainability, and make a positive impact.
Sources:
European Commission - Corporate Sustainability Reporting
European Commission - The European Green Deal
Global Reporting Initiative (GRI): GRI Standards
Plastic Pollution Coalition: Plastic Pollution Coalition
International Integrated Reporting Council (IIRC): IIRC Framework
Ellen MacArthur Foundation - Circular Economy