CSRD

Corporate Sustainability
Reporting Directive

What is it?
Opportunity for delivery of water technology services
 Corporate Sustainability

A Corporate Sustainability strategy helps businesses

thrive and become more resilient by focusing
on initiatives and operations that have a positive impact
on the environment, society, and the economy.

Corporate Sustainability is all about how your business is

going to achieve environmental, societal and
economic goals and remain viable for years to come.

By having a solid and focused sustainability corporate

strategy, companies strive to achieve a balance between
profitability and positive social and environmental
outcomes for a sustainable future.
 ▪ Paris Agreement
▪ EU wants to lead the way!
Context

▪ EU Green Deal: sustainable

European
green deal climate neutral economy by 2050

▪ EC has set policies to meet the Green Deal targets

▪ One of these is ‘investing in a green future’ aiming to make
sustainable considerations an integral part of financial policy to
3

support European green deal.

 European Green
Deal

Context Financing the

Green Deal

The universe
of EU ESG Facilitating Private Sector Investment
requirements
CSRD EU Taxonomy SFDR
Transparency of Classification System Transparancy of
Companies for defining activities financial markets

SFDR = Sustainable Financial disclosure Regulation

NFRD NFRD = Non-Financial Reporting directive
CSRD = Corporate sustainability Reporting Directive
 With the CSRD the EU aims to:

CSRD ▪ Decrease systemic risks in European

Economy due to e.g. climate change

Reasons for a
▪ Incentivize a change in capital flows
new standard
towards investments in sustainable
activities and businesses

▪ Accountability of companies with respect

5

to their environmental and social impact

 ▪ CSRD is more ambitious in scope:
▪ Extends beyond climate standards
CSRD ▪ Embraces double materiality
▪ Integrated into annual reports
▪ External audit is mandatory
What is new?
▪ Digitally tag reports to central database

▪ CSRD provides investors improved

insights into opportunities and risks

▪ CSRD provides a standard: the European

Sustainability Reporting Standards (the
so-called ESRS)
Key Features of the European legal regime

CSRD
Corporate Sustainability Reporting Directive

7
 A mandatory regime for all entities (250+ employees)
and listed SMEs with subsidiary exemption

Key Features
A progressive phase-in: 2024 reporting year for NFRD
reporters, 2025 for the other large entities, 2026 for
listed SMEs (with opt-out) option until 2028, 2028 for
Corporate Non-EU companies with branches/subsidiaries in EU.
Sustainability
Reporting
Directive Other SMEs are encouraged to adopt a simplified
voluntary reporting

A comprehensive coverage of sustainability matters:

Environment, Social & Governance, under standards
EFRAG and adopted by the EC via delegated acts
EFRAG = European Financial Reporting Advisory Group
 A key concept: double materiality (impacts and
financial opportunities)

Key Features
Location and timing of reporting: in the
management report, i.e. at the same time as
Corporate financial statements.
Sustainability
Reporting
Directive Mandatory audit: limited assurance to start with,
moving to reasonable assurance

Digital taxonomy available from the beginning

Key Features of the European legal regime

ESRS
European Sustainability
Reporting Standards
How to comply

European
Sustainability
Reporting
Standards
(ESRS)
Download draft
ESRS (~430 pages)
from www.efrag.org
 4 pillars
-Governance
How to comply - Strategy
-Impact, Risk and
Opportunity
Management
European - Metrics & Targets
Sustainability
84 Disclosure
Reporting Requirements
Standards - Qualitative and
(ESRS) - Quantitative

Disclaimer: the content of this To be complemented by

slide is based on the draft sector specific standards
ESRS published by the EU
+ SME standards
 • ESRS Definition Value Chain: “The full
range of activities, resources and
relationships related to the undertaking’s
How to comply business model and the external
environment in which it operates.”
Value Chain Risk based approach helps manage scale and
complexity: identify general areas where impacts, risks
and opportunities are most significant.

agriculture transport manufacture distribute retail consume waste recycle

upstream downstream
 ESRS Definition: “Stakeholders are those who can effect
or be affected by the undertaking.”
How to comply
▪ Affected stakeholders in value chain: individuals or
groups whose interests are affected or could be affected
Stakeholders
▪ Users of sustainability statements such as investors,
lenders, business partners, trade unions, social partners,
non-governmental organizations, governments

agriculture transport manufacture distribute retail consume waste recycle

upstream downstream
How to comply

Example
Upstream
Value Chain
of HEMA

Source:
www.opensupplychain
hub.org
 A sustainability matter is Outside-in: financial materiality
material, if it is material from the
impact perspective or from the
financial perspective or from
How to comply
both of these perspectives

Double
Financial materiality:
materiality Captures the outside-in impact of a
business, considering the positive
matrix and negative impact of environment
and society on your business.

Impact materiality:
Captures the inside-out impact of
your business, considering both
positive and negative impacts on
people, planet and society over the
long, medium and short term.
Inside-out: impact materiality
How to comply

Example of a
Double
materiality
matrix

Source: Philips, Annual

Report 2022
 Double Materiality Assessment Next step: Gap Assessment

▪ “Text” Gaps associated with

external communication. These can
How to comply
be addressed through new/revised:
▪ Policies, targets, actions

Example of • plans, methodologies

Double ▪ Changes to the annual report,
materiality including potential appendices
assessment
▪ “Metrics” Gaps associated with
• missing data, including targets
▪ Is data missing or needed?
Source: PPT Nationaal
▪ Source systems
Sustainability Congres,
23 November 2023 ▪ Baseline setting
Simon Braaksma of Philips
 Impact CSRD for companies that have to report
▪ Improved transparancy and trust
CSRD
▪ Decreased costs
▪ Stronger competitive advantage
How does it
▪ Better risk management
impact you?
 What does CSRD mean for suppliers of water technology?
▪ Reporting might be mandatory for you company
CSRD ▪ Otherwise, it is a reason to start thinking about your own
impact; your partners might ask for this as well!
How does it ▪ CSRD will increase awareness with your clients on
impact you? sustainability including water topics
▪ On the longer term: CSRD will increase investments in water
technology as businesses need to implement actions

20
Key Features of ESRS
on Pollution

ESRS E2

European Sustainability Reporting Standards

2
1
ESRS E2 - Pollution

Assuming ESRS
E2 pollution is
material

2
2

For water technology sector

audience
 Sustainability matters related to water part of materiality assessment:
Climate Adaptation (E1), Water Quality (E2), Water Quantity (E3)

ESRS E2 Pollution

E2 = “Anticipated financial
Water-Related effects from pollution related
impacts, risks and opportunities”
ESRS E1-E2-E3
Note: E2-E6 are phased & may be
omitted in 1st year; only qualitative in
first 3 years, except info on capex
and opex in reporting period or with
major incidents.
2
3

Zoom into pollution &

water for water audience
 How the undertaking affects pollution of air, water and soil, in
terms of positive and negative actual and potential impacts.

ESRS E2 Pollution Actions taken, and the result of such actions, to prevent,
mitigate or remediate actual or potential material negative
impacts.

Objective of The plans and capacity of the undertaking to adapt its

ESRS E2 strategy and business model in line with the transition to a
sustainable economy

The nature, type and extent of the undertaking’s material risks

and opportunities related to pollution related impacts and
dependencies, and how the undertaking manages them.
2
4

The financial effects on the undertaking over the short-,

medium- and long-term time horizons of material risks and
opportunities
 IMPACT, RISK AND OPPORTUNITY (IRO) MANAGEMENT METRICS AND TARGETS

ESRS 2 General Disclosures Policies, Actions & Resources

Disclosure Requirements related E2-1 Policies Disclosure Requirement E2-3:

ESRS E2 Pollution to ESRS 2 IRO-1 - Minimise and substitute Targets related to pollution, and (if
Description of processes to identify substance of concern, phase out identified) ecological thresholds
and assess material pollution related substance of very high concern,
impacts, risks and opportunities that especially for non-essential items Disclosure Requirement E2-4:
include - Avoiding incidents and Metrics related to pollution into air,
Content of emergencies
- Mitigate negative impacts
water and soil (SFDR PAI)

ESRS E2 Methodologies, assumptions

E2-2 Actions and resources
Disclosure Requirement E2-5:
and tools used to screen its Metrics related to substances of
site locations and business - Avoiding pollution, inc. phase-out concern and substance of very high
activities - Reduce pollution, incl. phase-out concern
and BAT (Best Available
Techniques) requirements Disclosure Requirement E2-6:
Identify transitions risks and - Restore, regenerate, and Potential financial effects from
opportunities, physical risks, transform ecosystem pollution-related impacts, risks and
opportunities related to opportunities.
pollution prevention and 2
5
control

Process for conducting

consultations and in SFDR PAI = Principle Adverse Impact
particular with affected under the Sustainable Financial Disclosure
communities Regulation
 ESRS refers to existing regulation on pollutants

How to comply

ESRS E1
Pollution

2
6
How to get ready for CSRD
Step by step

Stakeholder Materiality Gap Sustainability Reporting

Data collection Reporting
mapping assessment assessment statements structure

Define
Value chain Assess impact Reporting strategies, Data Mining Create Write the
assessment materiality gap goals and reporting report
Data
Stakeholder Asses assessment KPI’s structure Fill in the
collection
mapping financial Data gap Define ESG Reporting CSRD tool
materiality impacts Monitoring processes
Stakeholder assessment protocols Dash
engagement Define Operational EU taxonomy boarding
priorities assessment Data
readiness
management
assessment Define
reduction
plans