The travel industry, like many others, is facing increasing pressure to operate sustainably and transparently. The upcoming EU Corporate Sustainability Reporting Directive (CSRD) represents a pivotal step in this direction, mandating comprehensive ESG (environmental, social, and governance) disclosures. But what does this mean for your travel business? Are you prepared to meet these new requirements?
Understanding the Scope of CSRD
The CSRD is designed to enhance the existing EU Non-Financial Reporting Directive (NFRD) by broadening the scope and depth of sustainability reporting. It aims to ensure that companies provide consistent, reliable, and comparable ESG information, which is crucial for stakeholders, investors, and regulators.
Who Needs to Disclose?
The CSRD applies to a wider range of companies compared to the NFRD. Specifically, the directive includes:
- Large Companies: All large companies that meet two out of the following three criteria must comply: a balance sheet total of more than €20 million, net turnover of more than €40 million, and more than 250 employees.
- Listed Small and Medium-sized Enterprises (SMEs): SMEs listed on regulated markets are also required to disclose, though they will have more time to adapt to the requirements.
- Non-European Companies: Certain non-European companies with significant operations in the EU—specifically those generating a net turnover of over €150 million in the EU and having at least one subsidiary or branch in the EU—must also comply.
What Needs to Be Disclosed?
The CSRD mandates detailed reporting on a broad range of sustainability topics, including:
- Environmental Impact: Information on greenhouse gas emissions, energy usage, water consumption, and waste management.
- Social and Employee Matters: Disclosures related to workforce diversity, employee health and safety, and labour practices.
- Human Rights: Policies and practices regarding human rights, including measures to prevent human trafficking and child labour.
- Anti-Corruption and Bribery: Information on anti-corruption policies, procedures, and incidents.
Disclosure Deadlines
For many businesses, the timeline for compliance is pressing:
- 2024: Companies already subject to the NFRD will need to start reporting in compliance with the CSRD for the 2024 financial year, with reports due in 2025.
- 2025: Large companies not previously covered by the NFRD will begin reporting in 2025, for the financial year 2025.
- 2026: Listed SMEs will have until 2026 to start their reporting, for the financial year 2026, giving them additional time to prepare.
Preparing Your Travel Business
Getting ready for CSRD disclosure involves several critical steps:
- Assess Current Reporting Practices: Evaluate your current ESG reporting processes and identify gaps relative to the new CSRD requirements.
- Develop a Comprehensive Reporting Framework: Create a robust framework that includes all necessary sustainability metrics, ensuring they align with CSRD standards.
- Engage Stakeholders: Communicate with key stakeholders, including employees, investors, and customers, to understand their expectations and priorities regarding sustainability reporting.
- Invest in Technology and Expertise: Implement data collection systems and engage with sustainability experts to ensure accurate and efficient reporting.
- Plan for Assurance: Prepare for the requirement of limited assurance on your sustainability reports, potentially working with external auditors to validate your disclosures.
Conclusion
The CSRD marks a significant shift towards greater transparency and accountability in sustainability reporting. For travel businesses, this represents both a challenge and an opportunity to demonstrate commitment to sustainable practices. By understanding the requirements, preparing early, and investing in the necessary resources, your travel business can not only comply with the CSRD but also strengthen its reputation and competitive edge in a market increasingly driven by sustainability considerations.
Is your travel business ready for CSRD disclosure? The time to act is now.
The english CSRD requirements are available here