On 5 January this year, the Corporate Sustainability Reporting Directive (CSRD) came into force in the European Union. It is now mandatory for almost 50,000 companies. They must now prepare to meet all the requirements and try to use them to their advantage. However, small and medium-sized companies should not hesitate to put it into practice too. Given the high demand and the shortage of ESG specialists, the delay could make it much more expensive for businesses.
The new directive will enable companies to standardize both the format and content of sustainability reports. This harmonization will simplify the work of responsible investors and those managing procurement processes. It represents a significant step not only towards achieving the goals of the Green Deal but also in modernizing the European (and Czech) economy, offering competitive advantages to those who effectively meet the directive's requirements.
Large Companies as Pioneers
The directive currently applies to 50,000 companies, representing around 75% of the economy in the European Economic Area (EEA). The Corporate Sustainability Reporting Directive (CSRD) classifies large companies as those meeting at least two of the following criteria:
Total assets exceeding €25 million, and/or
Net revenue over €50 million, and/or
250 or more employees.
The directive also extends to publicly listed companies, international companies, and non-EU companies with annual revenues in the EU exceeding €150 million.
Clear Implementation Timeline
As of this year, the framework is in effect. However, by January 1, 2026, small and medium-sized enterprises (SMEs) will also need to comply. One year earlier, the directive will apply to other large companies not yet subject to reporting requirements. By January 1, 2028, companies from third countries will be required to comply.
The European Financial Reporting Advisory Group (EFRAG) has prepared sustainability reporting standards (ESRS), which have already been approved by the European Commission and are in force.
Why Implement CSRD Now?
Even if your company falls under the SME category, you have just over a year to prepare for the directive’s implementation.
Due to the complexity of mapping the necessary data and developing systems for data collection, preparations should already be in full swing.
The good news is that this is not just another layer of bureaucracy. The directive offers numerous benefits to businesses, such as improving transparency and efficiency in sustainability reporting, reducing the risk of greenwashing, and providing investors, customers, and other stakeholders with clearer information. A comprehensive view of a company’s carbon footprint can also highlight areas where sustainable solutions can be implemented, reducing both environmental impact and operational costs.
Immediate Impact on Supply Chains
The most visible effects are already seen in supply chains. Winning a tender often requires Czech suppliers to calculate their carbon footprint or that of their products. Large multinational companies are currently setting these standards, and the pool of such companies is expected to grow.
Companies that adopt ESG reporting early and outperform their competitors in specific areas may see an increase in business and revenue. These companies will be ahead of the competition, who may wait until the last moment to implement the directive—though they cannot avoid it indefinitely.
Get Professional Guidance
It is crucial that Czech businesses recognize the opportunities provided by the transition to a green economy. ESG reporting requires coordinated collaboration and data exchange, which must be processed according to the relevant standards.
Fortunately, entrepreneurs are not left to navigate this all alone.
Advanced software solutions are available to simplify the process and automate much of the work, while also revealing further opportunities for competitive advantage.
One example is the Green0meter platform, which collects and prepares the required reports while automatically recommending ways to reduce a company’s carbon footprint, save on production costs, or improve employee satisfaction and retention. This is technology designed to make the Green Deal a practical reality for the 21st century, transforming it from a concept into real, actionable innovation for the development of the Czech economy. An iDeal.