Unpacking the Impact of CSRD on US Businesses

You might have heard about the Corporate Sustainability Reporting Directive (CSRD) lately. It was to kick off in 2025 for reports on 2024 data. Just recently, the EU agreed to slow things down by delaying reporting for large companies for two years. In other words, fiscal year reports for 2027 will be published in 2028.

Basically, CSRD makes companies share their environmental and social impacts. In this article, you will understand how these new rules affect the United States.

Why US Businesses Need to Care

You’d think it only affects EU businesses, but it hits US companies, too. If you have operations in Europe, you’re going to be affected. Around 3,000 US firms are going to be affected. This is a big deal for many firms, so let’s break it down for you.

It Changes Your Reporting

Reporting under CSRD is a new challenge because you have to share so much more now. You’ll need to share your company’s carbon footprint, which means you will track all emissions, even from suppliers. This is called Scope 1, 2, and 3. It’s not easy to gather that data. Besides, you report on social issues, such as worker rights. This way, the EU wants full transparency and that you’re showing how you impact the world.

The Cost Can Be High

Compliance isn’t cheap, and you’ll have to spend a lot to get ready. Some say it will cost millions for big companies because they need new systems to collect data. Plus, you might need to hire experts to help. Audits are another cost to think about, and they are costly. Moreover, it takes time to set up. So, your budget might feel the strain, and that’s why you’ll need to plan carefully.

Operations Take a Hit Too

Your operations will feel this, too, since it requires double materiality. That means two things. First, how sustainability affects your business, and second, how you affect the environment. You need data for both. This can affect your usual processes, and you might need new teams to handle it. You’ll be busy making changes, which is quite a lot to manage at once.

Investors Are Watching Closely

Investors also care and will want to see your reports. In the EU, they expect transparency. Hence, if you comply, you look better to them, and it will build trust very fast. On the other hand, if you don’t, you might lose their support. Some contracts could be at risk, too. This way, it pushes you to act if you want to keep investors happy.

Final Thoughts

Getting ready for new directives takes effort, and that is why you should start now if you haven’t already done so. Look at your EU operations first and see if you need to report in 2025. Then, gather your data carefully. Talk to experts who know and they can guide you through it. This way, you won’t miss anything, and you’ll be ready when the time comes.

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Adam Regan: Deputy Editor

Features and account management. 3 years media experience. Previously covered features for online and print editions.

Email Adam@MarkMeets.com