Navigating the Corporate Sustainability Reporting Directive (CSRD)

During a lunch roundtable sponsored by Sweep, the sustainability data management platform, the implications of Corporate Sustainability Reporting Directive (CSRD) for EU portfolio companies were discussed alongside strategic approaches organisations can take to ensure compliance and bolster transparency across investment portfolios. The lunch was fully attended with a range of different GPs and a good amount of participation and conversation.

What is the CSRD? As a reminder, the Corporate Sustainability Reporting Directive (CSRD) is a European Union regulation that mandates comprehensive sustainability reporting for large companies and all listed SMEs, including financial organisations. This directive emphasises double materiality, which considers both the impact on financial performance and the environment. It requires detailed disclosures on climate change, social rights, and governance, aligning with the European Sustainability Reporting Standards (ESRS).

Unsurprisingly, none of the investors have portfolio companies in scope for the first wave of CSRD, reporting in 2025 for 2024 data. That said, investors are already thinking about the impact of the disclosure, with many portfolio companies in scope to report in early 2026 for 2025.

Key learnings from the session of actions being taken by GPs:

• Organising CSRD workshops to build awareness.
• Asking portfolio companies to report back on their eligibility and status.
• Prioritising which ones need help and providing a more hands-on approach — even helping to address double materiality — in order to build momentum across the portfolio.
• Organising networking opportunities, sharing insights and other cross portfolio collaboration initiatives so that investments feel supported and are not tempted to push CSRD to a later date.

Sweep emphasised the importance of having a data tool to handle the size of the task in hand, with up to 1100 indicators to be gathered cross-functionally across a business.

Slightly more pressing today, we also discussed the overall importance of portfolio companies having a robust climate policy and data process in order to meet the growing environmental, social, and governance (ESG) demands in RFPs to become a supplier in client tenders, and why it makes sense to modernise the tech and data stack accordingly.

Find out more:

• Schedule a demo to see how Sweep can streamline your portfolio’s CSRD compliance.
• Contact Josh at jberman@sweep.net to discuss tailored solutions for your organisation.

Authored by Joshua Berman
Finance Senior Account Executive, Sweep

*This article was originally published on the BVCA website on 19/07/2024