Industry voice: The CSRD and why it matters to the channel by Steve Finnegan

Steve Finnegan, managing director of Arete Zero Carbon explains why the CSRD is going to impact every single channel firm from next year onwards

The EU’s Corporate Sustainability Reporting Directive (CSRD) is something that channel firms of all sizes need to be aware of.

An environmental, social and governance (ESG) strategy is no longer going to be a nice to have, it is going to have to be a fundamental part of every business plan for every firm in the channel. Why?

From next year (2025), the European Union will require large and listed companies to disclose information around their ESG practices, with a particular slant on the impact of their activities on people and the environment.

It will cover categories beyond carbon emissions to include pollution, water, waste and biodiversity for example. Disclosures on these topics will need to be present in annual reports alongside financial information and will also be subject to audit assurance.

In 2024, CSRD is required for all FCA regulated businesses, ie; large listed companies, banks and insurance companies. However the next couple of years will see the directive expanded to include all large corporate companies and SMEs. There is no escape.

Don’t let it catch you out

It is recommended that all businesses assess their CSRD obligations now and prepare accordingly. Forewarned is forearmed. The directive significantly expands reporting requirements, with more companies needing to disclose comprehensive sustainability information.

Businesses should evaluate their data collection and management processes, and current sustainability practices to assess their readiness. They should also consider their capacity to comply; human capital development may be necessary, and external sustainability experts could be invaluable in helping to cut through the jargon and help you to cover all bases.

Producing high-quality disclosures is crucial, due to them becoming part of the auditing process, and non-compliance can result in financial penalties, litigation, and reputational damage.

It will ultimately boost your business

The channel will benefit from the introduction of CSRD, as enhanced sustainability reporting expectations will drive improved supply chain transparency, as companies delve deeper into their supply chains to identify and mitigate environmental and social risks.

Stakeholder engagement will also increase as businesses must understand and respond to stakeholder sustainability expectations.

All companies should capitalise on this opportunity to enhance their sustainability practices and proudly disclose their strong sustainability performance. This can bring associated benefits such as attracting investors or making long-term cost savings from investment in sustainability measures.

Ultimately, CSRD presents a significant challenge but also a substantial opportunity for firms to demonstrate their leadership in sustainability and create long-term value.

Don’t go it alone

We are here every step of the way to help. Our recently redesigned website reflects our commitment to delivering exceptional sustainability solutions. We have a strong track record of supporting numerous IT channel businesses, and our website now showcases our expertise and highlights how we can help companies navigate increasing industry pressure and sustainability reporting requirements.

The website has a clear overview of our services through our four pillars: Carbon, Sustainability, Knowledge, and Compliance - a structure that simplifies the process for businesses to identify their specific needs.

Our overarching aim is to empower businesses to achieve their sustainability objectives. Our redesigned website is a testament to our dedication to providing the tools, knowledge and support needed to navigate the complexities of sustainability.

AZC Website

Q: What is new, why has it been redesigned and what sort of companies can you help?

A: Our newly redesigned website reflects our commitment to delivering exceptional sustainability solutions. By aligning our brand with the quality of our work, we aim to better connect with key sectors like the IT channel. With a strong track record of supporting numerous IT channel businesses, we wanted to showcase our expertise and highlight how we can help companies navigate increasing industry pressure and sustainability reporting requirements, such as CSRD.

Our new website offers a clear overview of our services through our four pillars: Carbon, Sustainability, Knowledge, and Compliance. This structure simplifies the process for businesses to identify their specific needs. We've also enhanced our online presence to make it easier for companies to find us and learn how we can support their sustainability journeys.

In addition to showcasing our work, we're committed to providing valuable insights and resources. Our website will feature educational content on the latest sustainability and compliance updates – look out for this in our ‘News & Views’ page.

Our overarching aim is to empower businesses to achieve their sustainability objectives. Our redesigned website is a testament to our dedication to providing the tools, knowledge, and support needed to navigate the complexities of sustainability.

Q: Why is CSRD reporting going to become so prevalent in our industry in the coming years and why do channel firms need to be aware of it now?

A: CSRD will become a widespread requirement for most IT channel businesses.

Large EU firms, both listed and unlisted, will be the first affected, with some reporting as early as 2025.

Listed SMEs, including non-EU SMEs listed on EU-regulated markets, must comply from 2027.

Large non-EU businesses with significant EU activity will follow in 2029.

This means the entire channel will be impacted, with EU businesses leading the way, followed by their international counterparts supplying the EU or with EU-based operations.

It is recommended that all businesses assess their CSRD obligations now and prepare accordingly. The directive significantly expands reporting requirements, with more companies needing to disclose comprehensive sustainability information. Businesses should evaluate their data collection and management processes, and current sustainability practices to assess their readiness. They should also consider their capacity to comply; human capital development may be necessary, and external sustainability experts could be invaluable. Producing high-quality disclosures is crucial, as these will be audited, and non-compliance can result in financial penalties, litigation, and reputational damage.

The channel will benefit from the introduction of CSRD, as enhanced sustainability reporting expectations will drive improved supply chain transparency, as companies delve deeper into their supply chains to identify and mitigate environmental and social risks. Stakeholder engagement will also increase as businesses must understand and respond to stakeholder sustainability expectations.

Companies should capitalise on this opportunity to enhance their sustainability practices and thereby disclose their strong sustainability performance. This can bring associated benefits such as attracting investors or making long-term cost savings from investment in sustainability measures. Ultimately, CSRD presents a significant challenge but also a substantial opportunity for firms to demonstrate their leadership in sustainability and create long-term value.

This article is sponsored by Arete Zero Carbone.