Mandatory EU Reporting on Sustainability Impacts is Long Overdue

Supply chain managers should welcome the support the Global Reporting Initiative (GRI) has given to a new Corporate Sustainability Reporting Directive (CSRD) by the European Commission.

GRI is the independent, international organization that helps global supply chain managers responsibility for their impacts, by providing the global common language to report those impacts. It has noted that the CSRD would have a significantly extended scope than the current Non-Financial Reporting Directive, applying to all large or listed companies operating in the EU. With a stated aim of bringing sustainability reporting on a par with financial reporting, it would help ensure both have equal weight and rigor.

Since its inception more than 20 years ago, GRI has championed the move to mandatory sustainability reporting requirements, while freely providing the sustainability standards that are widely and increasingly used by organizations on a voluntary basis.

Notable components of the CSRD include:

• New EU sustainability reporting standards will be developed through a multi-stakeholder and transparent process led by EFRAG, taking account of the GRI Standards and other existing reporting frameworks
• Explicit adoption of ‘double materiality’ – requiring public reporting on both sustainability factors affecting the company (financial materiality) and how the company impacts on society and the environment (outward materiality)
• Reporting will be mandatory, with sustainability and financial information given ‘comparable status’, and a requirement for reported information to be audited and assured

“We are greatly encouraged that the European Commission is pressing ahead, at pace, with plans to significantly strengthen sustainability reporting in the EU. This legislation would introduce mandatory requirements for some 50,000 companies to disclose the full range of their impacts on people and planet, which is essential if the EU is to ensure meaningful progress in achieving the Green Deal,” observes Peter Paul van de Wijs, GRI Chief External Affairs Officer.

The CSRD – which embraces multi-stakeholder, impact-focused reporting, positioning sustainability and financial reporting on an equal footing – closely aligns with the approach and scope of the GRI Standards, which are already voluntarily used by most large companies in Europe.

“We look forward to working closely with EFRAG to co-design a sustainability reporting system that reflects the Commission’s ambitions for consistent and comparable reporting on corporate impacts, contributing to the next steps in the continued evolution of corporate reporting,” concludes van de Wijs.

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