On January 5, 2023, the Corporate Sustainability Reporting Directive (CSRD) (CSRD) came into effect, marking an update to regulations regarding the social and environmental data that companies must disclose. Under the CSRD, companies falling within its scope are mandated to adhere to the European Sustainability Reporting Standards (ESRS), developed by the EFRAG (European Financial Reporting Advisory Group ), now an independent entity comprising diverse stakeholders.
The ESRS adopts a "double materiality" approach, necessitating companies to report not only on their impacts on society and the environment but also on how these factors influence the company's financial risks and opportunities. ESRS 1 ("General Requirements") outlines overarching principles for ESRS reporting, without specifying particular disclosure criteria. Meanwhile, ESRS 2 ("General Disclosures") delineates fundamental information to be disclosed regardless of the specific sustainability issue under consideration. Other standards and their associated disclosure requirements undergo a materiality assessment. The materiality requirements of ESRS closely align with the focus and methodology of UNEP FI's impact management initiatives.
UNEP FI has established a fresh Working Group to capitalize on the strong alignment between the Corporate Sustainability Reporting Directive (CSRD) and the Principles for Responsible Banking (PRB). This initiative employs the UNEP FI Holistic Impact Methodology to assist signatory banks in fulfilling reporting obligations for both frameworks.
Interoperability Package for CSRD/ESRS Compliance
A suite of tools, known as the Interoperability package, has been created to facilitate the integration of the Principles for Responsible Banking (PRB) implementation and the comprehensive impact methodology of the United Nations Environment Programme Finance Initiative (UNEP FI) into compliance with the Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS):
- UNEP FI-ESRS Interoperability Guide: This guide offers insights into how PRB requirements and the UNEP FI Impact Methodology, specifically the Impact Analysis Tool for Banks, can aid in CSRD/ESRS implementation, particularly in conducting materiality assessments. Access the guide here.
- UNEP FI-ESRS Data Points Mappings: This resource elucidates the specific disclosure criteria and data points for which PRB/UNEP FI resources can assist with ESRS compliance. The mappings are directly derived from EFRAG Implementation Guidance 3 (IG3), which compiles all ESRS data points into an Excel format. Access the Data Points Mappings here.
- UNEP FI-ESRS Topics Mapping: This mapping tool illustrates how ESRS topics and subtopics correspond to the impact areas and issues outlined in the UNEP FI Impact Radar, and vice versa. Access the Topics Mappings here.
- UNEP FI-ESRS Conversion Tool: This tool automates the translation of outcomes from the UNEP FI Impact Analysis Tool into the relevant ESRS data points, specifically concerning impact materiality assessment. Access the Conversion Tool here (latest updates: April 9, 2024).
In conclusion, the implementation of the Corporate Sustainability Reporting Directive (CSRD) on January 5, 2023, ushered in a new era of regulatory standards for disclosing social and environmental data by companies. With the adoption of the European Sustainability Reporting Standards (ESRS), companies now operate under a "double materiality" approach, obliging them to report not only on their societal and environmental impacts but also on how these aspects affect their financial landscape. This alignment with the ESRS materiality requirements resonates closely with the focus and methodology of UNEP FI's impact management initiatives.