Advent of EU CSRD a game-changer
Designed to bring about more complete, consistent and transparent sustainability reporting across Europe, the EU CSRD will take effect in January 2024 for listed European companies. CSRD will be mandatory for all large European companies and companies listed on the EU-regulated markets, including EU subsidiaries of non-EU parent companies; in total, this will affect some 50,000 companies.
In order to ensure companies report relevant and decision-useful information for investors, stakeholders, and society at large, CSRD and the 12 related European Sustainability Reporting Standards (ESRS) prescribe rules for organizations to report sustainability disclosures across several topics: not only metrics related to environmental performance, but also addressing social impact (the ‘S’ in ESG), for instance treatment of employees, respect for human rights, anti-corruption and bribery, and diversity. Organizations will be required to detail how their business strategy will mitigate the risks associated with these environmental and social issues and publish these disclosures – with independent auditing mandatory.
Clearly, we at Philips share the sense of urgency when it comes to protecting human health, as well as halting climate change and reversing biodiversity loss, without which the planet has no path to net zero. Accordingly, we support the rationale of increased transparency, enhanced accountability and improved risk management behind CSRD and other (voluntary) ESG disclosure initiatives. At the same time, reporting requirements need to be proportional, so that companies can provide their stakeholders with information that is meaningful, comparable and actionable.