1. Introduction
The Corporate Sustainability Reporting Directive (CSRD) is a European regulation adopted in 2022 as part of the Green Deal, aimed at strengthening corporate transparency on their environmental, social and governance (ESG) impact. This directive replaces the NFRD (Non-Financial Reporting Directive), which was deemed insufficient to meet today’s sustainability challenges. By imposing more stringent non-financial reporting requirements, the CSRD improves the reliability of published information and encourages the ecological transition.
2. From NFRD to CSRD: why the change?
The NFRD, in place since 2014, mainly concerned large companies and imposed limited obligations. However, the quality and comparability of published information was often uneven, making it difficult to accurately assess companies’ ESG performance. The CSRD changes this by extending the scope of application to more companies and introducing harmonized standards for greater transparency. All too often forgotten, embodied carbon is now taken into account throughout the lifecycle of buildings, including their operation and deconstruction.
3. CSRD requirements
The CSRD now applies to all large European companies, including listed companies, as well as to certain SMEs and subsidiaries of international groups. These companies must provide more detailed and standardized information on :
- Their carbon footprint and emission reduction plans.
- The climatic and environmental risks to which they are exposed.
- Their commitments to human rights, equality, diversity and governance.
These reports must comply with European reporting standards, currently being developed by EFRAG, to ensure consistent and comparable assessment of sustainable performance.
4. Data verification and auditing
The CSRD introduces a new requirement: ESG data must be verified by an independent third party. This external audit, similar to that of financial data, is intended to guarantee the reliability of published information. This obliges companies to strengthen their data collection systems and internal documentation to comply with the audit requirements.
5. Implementation schedule
The directive will be phased in from 2024:
- 2024: Large companies already subject to NFRD (reporting for fiscal 2023).
- 2025: Large companies not affected by the NFRD (report for fiscal year 2024).
- 2026: listed SMEs and other large companies (report for fiscal year 2025).
It is essential that companies anticipate these deadlines in order to avoid potential sanctions.
6. Benefits and impacts for companies
Compliance with the CSRD brings several advantages to companies:
- Greater transparency for investors and other stakeholders, improving their confidence and attractiveness on the markets.
- A better-defined ESG strategy, making it easier to manage sustainability-related risks.
- Easier access to sustainable finance, meeting the growing expectations of investors and regulators for green investments.
For SMEs, despite what may appear to be onerous obligations, CSRD represents an opportunity to position themselves as responsible players in a context where ESG criteria are increasingly influencing purchasing and investment decisions.
7. CSRD in the building sector
The building sector is particularly concerned by the CSRD directive, as it consumes large quantities of resources and is a major source of greenhouse gas (GHG) emissions. The CSRD imposes strict sustainability requirements on players in the real estate and construction sectors.
How can CSRD be applied to the building sector?
- Reducing carbon emissions
Buildings account for around 40% of energy consumption and 36% of CO2 emissions in the EU. The CSRD requires companies in the sector to measure and reduce these emissions throughout the life cycle of buildings, from construction to demolition. Reporting must include decarbonization efforts such as the use of low-carbon materials (wood, recycled concrete) and renewable energy solutions.
- Optimizing resource management
CSRD promotes circular resource management. This means encouraging the reuse, recycling and transformation of building materials. All too often forgotten, the embodied carbon in materials needs to be taken into account, particularly during building operation and deconstruction. Platforms such as Upcyclea make it possible to trace the origin and use of materials, facilitating their reuse and reducing waste.
- Building energy performance
The CSRD imposes compliance with energy performance standards, at the heart of the sustainable transition. Companies must publish reports on improvements made to the energy performance of buildings, whether for new construction or renovation. This includes aspects such as insulation, heating system efficiency, and the integration of green technologies.
- Transparency and traceability
Transparent tracking of materials and resources consumed is essential to meeting CSRD criteria. Digital traceability of materials not only ensures compliance with reporting requirements, but also optimizes the inventory of resources for future reuse. This approach promotes the development of circular materials and responsible supply chain management.
8. Conclusion
The CSRD directive provides European companies with a new regulatory framework for greater transparency and more sustainable practices. In the construction sector, it represents an opportunity to reduce carbon emissions, improve the circular management of resources and increase the energy performance of buildings. Companies need to prepare for these new obligations now, and can go further by adopting solutions such as those offered by Upcyclea, in line with the growing demands for sustainability and the circular economy.
