Cefic Sustainability Lab helps members navigate requirements of Corporate Sustainability Reporting Directive
Cefic has kicked off its series of webinars as part of its Learning Network within the Sustainability Lab aiming to help companies understand and interpret disclosure requirements related European Sustainability Reporting Standards (ESRS), a mandatory reporting framework introduced by EU the Corporate Sustainability Reporting Directive (CSRD). The CSRD requires large and listed companies to disclose information on environmental, social, and governance (ESG) issues, with a specific focus on the impact of their activities on people and the environment.
The inaugural session focused on “Double Materiality,” an essential aspect of the ESRS that looks at how a company’s activities affect people and the environment, impact materiality, as well as how sustainability-related developments impact the value of the company itself, financial materiality.
The first webinar highlighted several key takeaways:
- CSRD Timeline: Companies that previously fell under the NFRD will have to start reporting in line with the CSRD in 2025 on the data of 2024. Other large EU companies will need to start reporting in 2026 on the data of 2025. Non-EU companies with branches or EU subsidiaries will have the first mandatory reporting in 2029 (data 2028).
- Double Materiality Assessment: The ESRS mandates double materiality assessments for all disclosures, including material impacts, risks, and opportunities. An objective approach with defined thresholds is required. The standards are aligned as much as possible with the Global Reporting Initiative (GRI) and International Sustainability Standards Board (ISSB) guidelines for impact and financial materiality respectively.
- Strategic Importance: Double materiality serves as the foundation for a company’s ESG strategy and action plans. It should not be treated as a mere compliance requirement for the CSRD, but rather an opportunity to define a roadmap for improving key sustainability areas with actionable steps.
- Assessing Material Topics: A step-wise approach involving a long list, medium list, and key topic list can help companies assess material topics. Both impact and financial materiality considerations should be employed to identify the most relevant topics.
- Sectoral Sustainable Development Indicators: Cefic identified a list of material indicators representing the performance of the chemical sector on Sustainability/ESG related topics. Materiality on sector level might be used by individual companies to help identify the material topics on company level. In addition, a company might also use the sector performance as an instrument to benchmark its own performance.
- Stakeholder Engagement: Companies can engage both internal and external stakeholders through surveys and workshops and use big data analytics to gain diverse perspectives on the company’s impact on sustainability topics and vice versa.
- Flexibility in Visualizing Double Materiality: There is no prescribed way to visualise double materiality. Companies can explore various methodologies and draw inspiration from best practices within and beyond their sector.
- Emerging Standards: GRI is developing a Biodiversity standard set to be published in the coming year. Additionally, a sector specific standard specifically focused on the chemical sector is in the pipeline of GRI as well as of EFRAG.
- With the CSRD deadline set for 2025, it is important for companies to prepare well in advance, enabling a step-by-step progression towards compliance. By gaining a thorough understanding of the CSRD and the concept of double materiality, European companies can effectively navigate the reporting requirements and work towards transparent and comprehensive sustainability reporting.
- More Learning Networks guidance sessions on the ESRS by Cefic are planned for the upcoming months, with a focus on climate change (ESRS-E1), pollution (ESRS-E2), water and marine resources (ESRS-E3), biodiversity and ecosystems (ESRS-E4), resource use and the circular economy (ESRS-E5), and the own workforce (ESRS-S1). These sessions will be open to: Cefic members, members of national associations, members of the International Association of Oil & Gas Producers (IOGP), and the American Chemistry Council (ACC). Stay tuned!
For any questions, contact Cefic Sustainability team at Lucie Sabatova.
Why Sustainability Lab?
The Sustainability Lab is a series of events organized by Cefic’s Sustainability Team, open to both members and non-members, depending on the scope of the event.
The goal is to advance sustainability practices and knowledge. Through workshops, webinars, trainings, talks, and conferences, we aim to highlight the importance and impact of safe, sustainable, and environmentally friendly practices. It serves as our platform for generating new ideas, sharing knowledge, and exploring solutions to sustainability challenges. The chemical industry is a key driver of sustainable development, shaping a low-carbon economy, enhancing resource efficiency, and championing circular economy principles. With our “Sustainability Lab,” we strive to bring together diverse stakeholders to collaborate, experiment, and discuss trends, studies, proposals, and best practices.
Stay tuned!