Tag Archive for: Corporate Sustainability Reporting Directive

Want a deeper understanding of your business’ impacts and dependencies on nature? Wondering where to start with nature-related disclosures? Lost in a fog of TNFD / GRI / EFRAG / CRSD alphabet soup? Keen to develop a roadmap to Nature Positive for your business but don’t know where to start?

Business For Biodiversity Ireland is participating in the development of a new module with Trinity College Dublin’s Dr Catherine Farrell titled ‘The Business of Nature Positive’ and are inviting businesses who would be interested and willing to:

  • participate in Trinity Business School undergraduate / student-led research to trial the application of nature-related reporting frameworks and tools, and
  • explore ways to develop a roadmap to Nature Positive.

Businesses rely on many aspects of nature and climate to carry out day-to-day business. Recognising these dependencies, as well as the impacts of business on nature, new reporting requirements under the new EU Corporate Social and Responsibility Directive (CSRD), will fast become a reality for Irish businesses.

In response to the need to build capacity for present and future business needs, Trinity Business School is developing this module to be delivered to 4th year undergraduates in the 2024/2025 academic year and facilitate learning in how to apply and communicate relevant nature-related reporting and disclosure frameworks for businesses, helping to identify steps to nature positive and through these processes assist businesses to integrate nature into decision making.

We expect the input from the business to be by a nominated staff member / sustainability business champion working directly with the TCD students. We expect the work to involve at minimum approximately 8-10 hours in total over a period of 4 months (largely between December and mid-April 2025 – download a breakdown of time and commitment expected via the PDF at the end of the article.)

As a participating business, through engagement in this process, you will have opportunities to:

  • Benefit by receiving bespoke support in kickstarting scoping for a materiality assessment for your business
  • Assistance in taking the first steps in identifying data available / potential data needs for nature related reporting
  • Develop a deeper understanding of your business’ impacts and dependencies on nature,
  • Begin the thought process as to how to develop a roadmap for nature positive for your
    business, and
  • Trial approaches / identify opportunities for communicating nature related issues to
    stakeholders (internal and external).

Once we have an overview of interested businesses (small or large, of any sector), the module coordinator will follow up with a questionnaire to determine your suitability in terms of logistics and availability.

NB: Please submit an expression of interest form HERE.

This call for Expressions of Interest will close at the end of June and we will contact you in early July 2024 about participation.

Our Roadmap to Nature Positive will help you set the right foundations for reporting your nature-related impacts and dependencies under new regulations – it’s also useful if you are considering reporting these voluntarily.

Regardless of current legal obligations, there is a responsibility for all organisations, no matter their size, to understand their impacts and dependencies on nature and take measures to halt and reverse these. Business as usual is not an option, given the decline in global biodiversity and the interlinked climate crisis, the effects of which are already being felt on human health and society, as well as economically. 

First off, you need to know your obligations on nature disclosures. Within the Roadmap – available to BFBI members when you sign up and log in to the Members Area of our site – we look at reporting for different business types and scales. We also outline the relationship between EU Taxonomy and the Corporate Sustainability Reporting Directive (CSRD).

Goal 3 provides information on your legal obligations, in particular if your business falls under the scope of CSRD; and if/when your business needs to start reporting. There is a different timeline for companies of various scales, starting in 2024 for certain companies. For businesses that do not currently fall under the scope of CSRD, we outline how it may relate to your business down the line.

Considering the value chain

Many businesses that are not within the scope of CSRD are still part of the value chain (aka Scope 3) of larger organisations. These larger organisations may well request Environmental, Social and Governance (ESG) information from their value chain members – and organisations who are not ready for this may find that they lose out when it comes to larger organisations making supplier choices.

Once you know your obligations under the new regulations, the next step will be to explore the reporting standards to find the best fit for your business. Members can check out our Guidance A3.2 on Standardising Reports. Standardised reporting helps organisations increase transparency and communicate their sustainability initiatives.

We’ll give you an overview of the reporting standards that are internationally recognised and aligned with each other with explainers on how all the emerging different policies, frameworks and standards are linked.

Already feeling the overwhelm? Take a breath and have a look at our easy-to-read member guidance documents to give yourself a basic understanding. You’re not expected to be an expert right away and the Platform is here to help. If you have questions, all members are invited to our quarterly Member’s Forum, and you can upload your questions or comments to the online dashboard so that we can discuss them at our meet-ups.

Register here: https://businessforbiodiversity.ie/register-all/

Materiality is the quality of being relevant or significant, and in terms of business and finance, materiality applies to all items that must be recorded or reported in detail in a business’s financial statements as reasonably likely to impact investors’ decision-making. 

Double materiality: For corporate sustainability reporting, the concept of double materiality applies – it goes beyond that which affects the company and its investors, extending to information on how the firm is impacting society and the environment. 

The EU Corporate Sustainability Reporting Directive (CSRD) mandates a double materiality assessment for around 50,000 reporting companies from 2024 onwards. 

The European Sustainability Reporting Standards (ESRS) explains that a double materiality assessment takes two perspectives, sometimes referred to as an ‘outside in’ / ‘inside out’ approach: 

              (1) an impact perspective “when it pertains to the [entity’s] material actual or potential, positive or negative impacts on people or the environment over the short-, medium- and long-term”; and 

              (2) a financial perspective “if it triggers or could reasonably be expected to trigger material financial effects on the [entity].” 

A double materiality assessment must cover both a business’ own operations as well as upstream and downstream value chain. It must consider the topics and subtopics covered in the 10 ESRS topical standards. These include climate change, pollution, water, biodiversity, circular economy and topics relating to governance and the workforce. 

Detailed reporting on each is required only if the company decides, following a double materiality assessment involving all stakeholders, that it is ‘material’ or relevant under the reporting rules. Where a company determines a topic to not be material, it must explain its rationale in detail. It is still necessary to have a long-term strategy in place to address your organisation’s future impacts and dependencies on nature (and future risks resulting from) biodiversity loss and climate change. 

Read more: https://www.cisl.cam.ac.uk/news/blog/double-materiality-corporate-sustainability-reporting-encompass-societal-and-environmental-impacts 

https://www.charteredaccountants.ie/Accountancy-Ireland/Articles2/Technical/Latest-News/Article-item/the-corporate-sustainability-reporting-directive-getting-to-grips-with-double-materiality 

 

 

 

 

In the Corporate Sustainability Reporting Directive (CSRD), the European Sustainability Reporting Standards (ESRS) E4 standard specifically addresses corporate sustainability relating to biodiversity and ecosystems.

The aim of ESRS E4 is to help businesses understand how they affect nature, positively and negatively, actually and potentially and how to interpret the results of corporate biodiversity action. Lucy Gaffney explains more…

Key questions for your business

  • How does the business contribute to achieving the objectives of the European Green Deal, the Sustainable Development Goals (SDGs) and the Global Biodiversity Framework (GBF)?
  • Can the business evolve its operations so that it no longer contributes to ecological damage?
  • Does the business understand the operational risks posed by deteriorating ecosystems and the potential opportunities that could be associated with the protection and conservation of nature?
  • How is the business managing those risks?

ESRS E4 specifies the information that must be disclosed about biodiversity and ecosystems across all sectors. Specific sectoral disclosure will be defined by ESRS SEC 1 Sector Classification and the CSRD requirements are expected to be in place for financial years beginning on or after 1 January 2024 by large publicly traded entities that have more than 500 employees at the same time (i.e. entities already subject to the Non-Financial Reporting Directive) and by 2025 for other large companies. Small and medium-sized enterprises (SMEs) will also be subject to a reporting obligation starting in 2027.

Disclosure Requirements

  1. ESRS E4 requires that a business disclose its strategic plan to ensure that their business model will become compatible with the transition to achieve no net loss of biodiversity by 2030, net gain from 2030 and full recovery by 2050. This disclosure will need to include plans to address nature loss within the value chain as well as confirmation that the strategy has been approved by the relevant management boards. 
  2. Each business will be required to disclose all policies relating to biodiversity and ecosystems. This is to ensure that businesses actually have policies to protect nature and how these policies are monitored and managed.
  3. Businesses will have to disclose plans and methodology that will support their biodiversity policies.
  4. A disclosure on the social consequences of nature loss will also be required. This includes, for example, information related to fair and equitable benefit sharing arising from the utilisation of genetic resources and traditional knowledge.
  5. Disclosures will have to include information on how business policies are connected and aligned with global goals and agreements, such as the SDGs, the GBF and the European Green Deal.
  6. Targets will form part of the disclosure mandate. Businesses will be required to disclose the biodiversity and ecosystem-related targets that it has adopted, including timelines, milestones, respect to ecological thresholds and planetary boundaries. In addition, these targets must be supported by the business management board and in alignment with and informed by guidelines set out by the Convention on Biological Diversity (CBD) and Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES).
  7. Businesses must be transparent and disclose all biodiversity actions, action plans and allocation of resources that will enable the organisation to meet its policy objectives. 
  8. The standard requires the disclosure of pressure metrics. Does the business understand how its activities put additional pressure on the drivers of biodiversity loss? These include, but are not limited to pollution, invasive species, land use, climate change and exploitation of natural resources.
  9. Businesses must also disclose impact metrics related to geography or raw materials. This may include impacts on species and their extinction risk or impacts on ecosystems, reporting on extent, condition and function.
  10. Businesses will be required to disclose response metrics to understand how the business has tried to minimise, rehabilitate or restore nature in areas where it has had a significant negative impact.
  11. There is an optional disclosure on biodiversity-friendly consumption and production metrics which will provide insights into its consumption and production which may be considered biodiversity-friendly.
  12. The Taxonomy Regulation requires businesses to disclose information on the proportion of turnover, capital expenditure and operating expenditure that qualify as environmentally sustainable.
  13. Another voluntary disclosure is around biodiversity offsets, where the business may disclose actions, development and financing of biodiversity projects. 
  14. A disclosure on potential financial effects of nature-related risks and opportunities will be required.

This is an evolving space and many businesses will need to implement this as a first step. If a business cannot make these disclosures because strategies have not been developed or adopted, they will need to provide timeframes around when an appropriate strategy will be developed and adopted.

One of the chief aims of BFBI is to guide our businesses through upcoming policy changes around nature-related disclosures.

This article was also published in investESG Insight.