The European Taxonomy and the CSRD (Corporate Sustainability Reporting Directive) play a central role in guiding companies towards more responsible practices. These two regulatory frameworks aim to standardize and improve the reporting of companies' environmental, social and governance (ESG) performance, thereby contributing to a more sustainable economy. This article explores these concepts, their impact on companies, and how they can effectively comply.
1. Qu'est-ce que la Taxonomie Européenne ?
2. The CSRD and its link with the European Taxonomy
3. Taxonomy eligibility and alignment
4. Implementing Taxonomy in Companies
5. Benefits of Taxonomy Alignment
The European Taxonomy is a classification system set up by the European Union to define sustainable economic activities. Its main objective is to provide investors, companies and policy-makers with a clear, standardized understanding of what constitutes an environmentally sustainable activity. This classification aims to direct capital flows towards environmentally-friendly investments, thus contributing to the transition to a green and resilient economy.
The six environmental objectives are :
1. Mitigating climate change
2. Adapting to climate change
3. Sustainable use and protection of aquatic and marine resources
4. Transition to a circular economy
5. Pollution prevention and control
6. Protecting and restoring biodiversity and ecosystems
The impact of the European Taxonomy on companies is significant, as it imposes new transparency and reporting requirements. Companies must now assess and disclose the extent to which their business activities are aligned with the sustainability criteria defined by the taxonomy. This involves a detailed analysis of their processes, investments and projects to determine their compliance with environmental objectives.
For companies, this means not only an increased effort to collect and analyze data on their environmental performance, but also an opportunity to demonstrate their commitment to sustainability. Companies aligned with the taxonomy can benefit from easier access to green financing and an improved brand image.
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The Corporate Sustainability Reporting Directive (CSRD) is a European directive designed to improve and standardize sustainability reporting by companies. It replaces the Non-Financial Reporting Directive (NFRD) and extends the scope of reporting obligations to a wider range of companies. The CSRD requires companies to disclose detailed information on their environmental, social and governance (ESG) impacts in a transparent and reliable manner.
Reporting obligations under the CSRD
The reporting obligations imposed by the CSRD include specific ESG disclosure requirements, aligned with the standards of the European taxonomy. The companies concerned must provide detailed information on :
- Sustainability policies
- Policy results
- Risks and opportunities
- ESG performance indicators
Eligibility criteria
The European taxonomy establishes specific criteria for determining which economic activities can be considered sustainable. To be eligible, an activity must meet the following criteria:
- Substantial contribution to one or more environmental objectives
- No significant detriment to other environmental objectives
- Compliance with minimum human and labor rights guarantees
- Compliance with specific technical criteria developed by the European Commission
Alignment measurement process
The process of measuring alignment with the European taxonomy involves several key steps for companies:
- Identification of eligible activities
- Assessment of alignment with technical criteria
- Documentation and reporting
- External verification by independent third-party organizations (ITOs) or auditors
Implementing the European taxonomy in companies requires a structured process. Here are the key steps:
- Initial assessment: Identification of economic activities and analysis of taxonomy criteria.
- Data collection: Gather data on environmental, social and governance impacts.
- Alignment assessment: Compare activities with the taxonomy's technical criteria and document evidence of compliance.
- Sustainability report: Produce a report detailing the alignment of the company's activities with the taxonomy's criteria.
- Submission and communication: Submit the report to the relevant authorities and communicate with stakeholders.
To help companies comply with the European taxonomy, several tools and resources are available:
Guides and manuals: Detailed guides published by the European Commission and sector-specific guides.
ESG management software: Specialized software tools for collecting and analyzing ESG data.
Consulting services: Specialized consulting firms to help companies implement the taxonomy.
Online resources: Information portals, webinars and conferences to keep abreast of the latest regulatory developments and best practices.
Aligning its activities with the European taxonomy helps to improve the company's sustainable performance, supporting the EU's environmental objectives and attracting responsible investors.
Alignment with the taxonomy also helps reduce climate risks by encouraging companies to adopt more sustainable practices, including reducing greenhouse gas emissions and improving energy efficiency.
Whether you're a company looking to comply with the new requirements of the CSRD directive, or a specialist sustainability consultant, FocusTribes is here to help. We support companies in preparing and implementing detailed extra-financial reports in line with European standards. In addition, we help sustainability consultants find assignments that match their skills.
Whether you need to recruit CSRD compliance experts or find freelance opportunities, FocusTribes is here to support you throughout your sustainability reporting project.
