On July 31^st 2023, the European Commission adopted the new European Sustainability Reporting Standards (ESRS) for use by all companies subject to the Corporate Sustainability Reporting Directive (CSRD).

These standards cover the full range of environmental, social and governance issues, including climate change, biodiversity and human rights.

The reporting requirements will be phased in from the 2024 financial year (publication in 2025) for around 50,000 companies operating on the European market.

To find out more

European CSRD legislation (European Directive 2022/2464 published at the end of 2022) will gradually (from the 2024 financial year) require all large European and non-European companies, as well as all listed companies (with the exception of micro-enterprises), to publish information on the risks and opportunities arising from social and environmental issues, as well as on the impact of their activities on people and the environment.  

 This will enable the various stakeholders (investors, civil society organisations, consumers, etc.) to assess the sustainable development performance of companies.

 This legislation is part of the green taxonomy and European “green deal”, in line with the international challenges of climate change (Paris Agreement) and biodiversity loss (Cop 15 – Global Biodiversity Framework).

 To ensure comparable and reliable reporting, on July 31th 2023 the Commission adopted common standards that will help companies communicate and manage their sustainability performance more effectively and, as a result, gain better access to sustainable finance.

 These 12 standards or ESRS (European Sustainability Reporting Standard) cover the 3 usual themes of sustainable development or ESG with 5 environmental standards (E1 climate change, E2 pollution, E3 freshwater and marine resources, E4 biodiversity and ecosystems and E5 land use and the circular economy).

 These ESRS, which are highly aligned with international standards (such as ISSB and GRI), refer to the concept of double materiality, which requires companies to report on both their impact on people and the environment, and the way in which social and environmental issues (or dependencies) generate financial risks and opportunities for the company.

 For each theme, the company must first carry out a robust materiality assessment (impacts and dependencies) across its entire value chain, and then describe its main risks and opportunities, as well as the financial impact on the business model, taking into account its stakeholders.

It must then define an action plan laying out the measures taken to prevent, mitigate, remedy or eliminate actual or potential impacts, and put in place its key performance indicators (KPIs) for final disclosure.

What about biodiversity and ecosystems?

Biodiversity and ecosystems are closely linked to other environmental issues and must be analysed alongside these. As a reminder, the 5 main causes of biodiversity loss are land use, use of resources (including water), climate change, environmental pollution and invasive species.

As part of this biodiversity reporting, the impact and dependency analysis requires a good understanding of its value chain and, in particular, of its supply chain and the origin of its raw materials. It is then necessary to assess the extent of negative impacts of its various sites/activities on sensitive or protected local areas in order to define the relevant risks. On this basis, actions will be implemented to avoid or reduce negative impacts or dependencies, as well as actions to restore degraded ecosystems.

• Ensuite, il y a les services de régulation, qui sont les avantages obtenus par le contrôle des phénomènes naturels. Ceux-ci sont très utiles pour diminuer certains risques naturels. Il y a par exemple l’atténuation du changement climatique par le stockage du carbone, le traitement des eaux, la pollinisation ou encore la régulation des inondations par les zones humides.