Essential Information for CSRD Compliance
For companies, the CSRD will standardise how sustainability performance, risks, opportunities, and impacts are disclosed, making it easier to benchmark against industry peers and to align with investor expectations. Investors, in turn, will benefit from enhanced comparability and transparency, allowing them to assess companies' ESG profiles more effectively and make informed decisions. With a comprehensive view of each company’s sustainability data, investors can identify industry leaders, understand sector risks, and use these insights in their reporting and investment strategies.
The CSRD requires detailed reporting on greenhouse gas emissions and climate action plans, enabling investors to pinpoint companies at higher risk due to fossil fuel dependence and exposure to carbon policies. For companies, meeting these disclosures highlights their readiness for climate regulations and their strategies to reduce climate-related vulnerabilities.
CSRD compliance involves disclosures on investments in renewable energy and energy efficiency. Investors can use this data to identify companies positioned to benefit from the low-carbon economy, aligning investment decisions with long-term growth in sustainable sectors.
With the CSRD’s focus on human rights policies and employee relations, investors can identify companies demonstrating strong social responsibility—a quality increasingly valued by employees, customers, and stakeholders. Companies that align with these social criteria can strengthen their brand and appeal to conscientious consumers and employees alike.
Many financial institutions will fall under both SFDR and CSRD, including investment firms and fund managers. While CSRD requirements are currently designed with corporates as the primary focus, upcoming sector-specific standards (expected under a modified timetable) will include additional guidance for financial institutions. To prepare, financial entities should establish robust data management systems and build capacity to meet these expanded ESRS metrics upon release.
Ultimately, the CSRD will empower companies to enhance transparency and align with investor expectations, while offering investors critical insights to assess alignment with their own sustainability objectives and SFDR Article classifications. By aligning data, reporting processes, and sustainability goals, both companies and investors can build a more accountable and transparent ESG landscape.
As it stands, the penalties for non-compliance with the CSRD are still unclear in some places and will likely differ by jurisdiction. Each member state will be able to introduce its own penalties for non-compliance when implementing the CSRD into national law. So far, penalties introduced have varied from fines all the way to jail time. It is expected that these will be introduced and based on the penalties applied when member states implemented the NFRD. Currently, under the NFRD, penalties include fines of €25,000, imprisonment for individual directors, or fines charged to a company that could equal up to €10 million or 5% of the company’s global annual turnover. This highlights the importance of understanding whether a company is in scope of the CSRD and ensuring the relevant information is disclosed in line with the regulation.
Navigating CSRD compliance doesn’t have to be complicated. Novata offers a powerful solution that combines cutting-edge technology with expert advisory to guide you through every step of the process—from double materiality assessments to audit-ready reporting. With Novata, you can simplify your CSRD compliance journey and turn sustainability reporting into a strategic advantage, giving you the confidence to meet regulations and unlock new opportunities for growth.
Streamlined Double MaterialityIdentify ESG risks and opportunities, understand their impacts to your business and share results in an assurance-ready format.
Collaboration Made EasyAssign tasks, track progress, store all documentation, and collaborate effortlessly with stakeholders and advisors.
Effortless Data CollectionGather and manage all ESRS data points with automated processes and real-time tracking.
Audit-Ready ReportingAccess assurance-ready templates, document trails, and change histories.
Expert Advisory PracticeIn-house ESG experts guide you every step of the way.
Digital TaggingOur solution allows you to digitally tag your report, and send it to the European Single Point of Access, without moving between different solutions.
Flexible PackagesTailored solutions to fit your unique compliance needs.
Tiziana AntoniettiESG Manager, Advisory, Novata
Laura CallaghanAssociate Director, ESG Advisory, Novata
Waliur RahmanESG Metrics and Regulations Associate, Novata
Alex TuaiESG Metrics and Regulations Associate, Novata
Learn how Novata can support your company with CSRD reporting: Talk to a Novata Specialist
Novata is an ESG data management platform and advisory practice that empowers businesses to achieve their sustainability goals. We make it easy for private markets to navigate the evolving ESG landscape; collect, analyse, and report on the metrics that matter; and connect their sustainability strategy to meaningful outcomes—because it’s good for business and it’s good for the planet.
Backed by the Ford Foundation, Hamilton Lane, Microsoft, Motive Partners, Omidyar Network, and S&P Global, Novata is majority controlled by mission-driven organisations and its employees, and is a B-Corp-certified public benefit corporation. novata.com.
Copyright ©2024 NovataNovata’s guidance and opinions do not and are not intended to constitute legal advice, ensure compliance with any applicable regulations, or protect against liability; instead, all information, content, materials, and opinions are for general information purposes only. Novata does not guarantee results and hereby disclaims all liability and responsibility arising from any reliance by you or anyone else.
