‍The EU’s new CSRD, also the Corporate Social Responsibility Reporting Directive, requires at least 50.000 large companies within the EU, to create a report on their social and environmental impact + actions from 2024 onwards. The new legislation aims to stimulate sustainable business strategies and provides transparent sustainability information for consumers, investors, and other stakeholders to evaluate. 

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The result: the necessary data collection for the CSRD starts now in 2023. Affecting both directly- and indirectly compliant companies throughout the entire value chain. 

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With this guide, you’ll be optimally prepared for the CSRD. Covering:

1. What is the CSRD exactly?

• What's the CSRD’s intercontinental reach?

2. When does the CSRD go into force?
3. What’s the CSRD’s impact on different kinds of packaging companies?
4. What information is required?
5. How can packaging companies prepare?
6. What are the CSRD's Business opportunities for packaging companies?

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Let’s dive in.

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1. What is the CSRD exactly?

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The CSRD - also Corporate Sustainability Reporting Directive (whole mouth full), is an impactful legislative directive created by the European Commission as part of the EU’s Sustainable Finance Package in 2021. The CSRD clearly enforces sustainability isn’t a “nice to have” anymore for companies. It makes financial and sustainable health of your business inseparable. 

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It’s main goal is to improve the quality, consistency, and comparability of environmental, social, and governance (ESG) disclosures made by EU companies. 

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Why? To make companies’ sustainability progress and actions accessible to consumers, investors, and other stakeholders. Steering investments toward sustainable business and technologies too! 

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The CSRD went into force on the 5th of January 2023. It’s a replacement for the EU’s previous NFRD (Non Financial Reporting Directive) and increases the scope of sustainability reporting requirements - as well as the direct scope of companies who have to report with +50.000. 

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The CSRD applies to all EU stock-listed companies with at least 2 out of these 3 requirements:

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• €40 million in net turnover;
• €20 million on the balance sheet;
• 250 or more employees.

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The CSRD’s intercontinental reach

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However, the CSRD’s requirements also affect companies outside the EU. Such as:

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• Foreign companies with EU listings securities (stock or bonds)
• Companies with an EU subsidiary that meets two out of the 3 abovementioned criteria

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The Wallstreet Journal estimates that at least 10,000 more companies outside the EU have to comply. Of these 31% are American, 13% are Canadian and 11% are British. Additionally, it affects non-EU suppliers delivering to CSRD-compliant companies.

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Quite a scope.

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2. When does the CSRD go into force?

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As previously mentioned - 2023 is thé year companies have to start collecting data already. 

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There are three CSRD reporting scenarios:

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1. Companies subject to the previous NFRD: 2024

Have to comply with the CSRD’s measuring & reporting requirements in their annual report over the financial year 2024. The report published in 2025.

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2. Companies not yet subject to the NFRD: 2025

Have to comply with the CSRD’s measuring & reporting requirements in their annual report over the financial year 2025. The report published in 2026.

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Setting up the data projects necessary for CSRD reporting requires a lot of time. That’s why many large companies already start collecting/requesting data and creating the necessary internal data flows now. 

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3. SMEs: 2026

Have to comply with the CSRD’s measuring & reporting requirements in their annual report over the financial year 2026. The report published in 2027.

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3. What’s the CSRD’s impact on packaging companies?

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1. CSRD-compliant companies with packaging suppliers. 

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E.g. large companies in cosmetics, food, pharmacy, etc. In their case, packaging makes up a big chunk of their supply chain.

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Consequence: To report on their supply chain impact, they have to request environmental impact information on their packaging purchases from packaging suppliers. 

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2. CSRD-compliant companies within the packaging industry.

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Just as any other CSRD-compliant company they have to report on the social and environmental impact of their complete value chain. 

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Consequence: Depending on their business (reseller, manufacturer, etc.), they have to request environmental impact information on the materials or packaging products they purchase.

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3. Non-compliant packaging product- or material manufacturers, distributors, resellers.

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Who indirectly fall under CSRD's influence - as they supply packaging to CSRD-compliant companies.

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Consequence: These parties have to deliver the required information in order to keep doing business with key customers. 

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4. What are the CSRD requirements? 

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The CSRD requires compliant companies to report on the NFRD’s requirements. As well as its new sets of reporting standards, released in 2023 and 2024.

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The NFRD’s Reporting Requirements

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You should report:

• policies
• outcome policies
• risks 
• KPIs

of the following 5 dimensions within your company:

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1. Environmental protection.
2. Social responsibility and treatment of employees.
3. Respect for human rights.
4. Anti-corruption and bribery.
5. Diversity on company boards (age, gender, education, professional background)

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Extra CSRD reporting requirements

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Additionally, you’re required to report on extra sets of standards from the CSRD. 

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Sustainability Reporting Standards Set 1 - in force 2023

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1. Double Materiality: 

a) This includes all the risks of social and environmental sustainability have on your company. Think of transitional risks (not hopping on sustainable societal and economic deveopments/needs for sustainable materials), liability risks (not adapting to new packaging legislation), or physical risks (e.g. loss of resources due to wildfires, changing ecosystems, etc.)

b)This includes measurement of the social and environmental impact of all your company’s activities, including your value chain. This requires assessment of your social considerations (working conditions, human rights, equal opportunities, etc.) in your value chain and culture. As well as a total company footprint calculation as well as in-depth insights into the footprint of your purchased materials/products. 

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*Note: For social and environmental impact measurements, the EFRAG requires CSRD-compliant companies to report on the following impact categories: 

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ESRS E1 Climate change

ESRS E2 Pollution

ESRS E3 Water and marine resources

ESRS E4 Biodiversity and ecosystems

ESRS E5 Resource use and circular economy

ESRS S1 Own workforce

ESRS S2 Workers in the value chain

ESRS S3 Affected communities

ESRS S4 Consumers and end-users

ESRS G1 Business conduct

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Pickler helps companies report on E1-E5 values on a product level.

In terms of environmental impact, these categories clearly show only carbon footprinting isn't enough anymore. Hence, why the EU recommends measuring the complete impact of your value chain using the scientific method Life Cycle Assessment (LCA).

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Find more information on these EFRAG standards here.

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Sustainability Reporting Standards Set 2 - in force 2024

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This set of standards is meant to help companies finetune their reporting itself. It covers:

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1. Forward looking information: This includes your sustainability strategy, targets - and progres on achieving them.
2. Information for the public good: Explaining how you align with public policy agreements, goals, frameworks, and regulations.

More information on this second set of standards will most likely follow at the end of 2023.

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Third party assurance

The CSRD requires third party assurance on your report.  This to ensure reliability, credibility and validity of your report.

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Alignment with EU Taxonomy

The CSRD requires you to report on your alignment with the EU Taxonomy in your CSRD report. The EU Taxonomy provides a classification system for sustainable economic activities. The CSRD requires companies to publish sustainability metrics about their economic activities according to the EU Taxonomy. This includes the EU Taxonomy-aligned share of your turnover, capital expenditures (CapEx), and operating expenditures (OpEx) generated by economic activities in their CSRD report.

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Reporting format

The report should be formatted in XHTML format. 

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Where to report

The report should be part of your management report, not a separate sustainability report. Your inancial and sustainability information are disclosed in the same report.

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5. How to prepare for the CSRD

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For compliant companies: 

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1. Start on time. (aka now!) Map out the information/data you need according to the CSRD’s requirements. Include an (internal) data analyst to create the necessary data flows and include sustainability & finance for your joint reporting. 
2. Start assessing your double materiality with internal and/or external professionals (consultant). 
3. Get in touch with a third party assurance provider for optimal assurance alignment. 
4. Measure your company’s baseline footprint. This includes your scope 1, 2, and 3 emissions. (complete value chain)

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If you sell or manufacture products:

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5. Measure the detailed footprints of all your packaging products (scope 3). As this is usually where your biggest impact chunk comes from. Having detailed footprint information on your packaging is a win-win for reporting as well as guiding your sustainable supply chain or product improvements. As the CSRD requires reporting on sustainable strategies and actions, showing improvements is essential.

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‍For suppliers: Prepare by calculating the environmental footprint of your packaging to keep your customers happy and serve new customers. You can easily do so using Pickler.

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6. CSRD's Business opportunities for packaging companies

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The CSRD requires compliant companies to purchase packaging with footprint data.

This means, offering footprint data of your packaging brings a lot of opportunities:

• Attract bigger customers by answering to their CSRD sustainability demands
• Be able to give CSRD compliant buyers the CO2 data they need for reporting
• Stand out with proof-based promotion and marketing

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Measure the impact of packaging with Pickler

Measure the required footprint of all your packaging, using Pickler. Pickler is easy footprint software for packaging. No matter the amount of products or lack of data from suppliers. Everyone can get started measuring their packaging's impact today and share it with their customers along invoices.

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With our bulk upload and packaging default values, companies can calculate the footprint of their packaging within minutes. And keep it up to date. Completely ready for the CSRD.

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Contact us to discover how Pickler can support you in driving more business.

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