Overview
The Corporate Sustainability Reporting Directive (CSRD) is a new regulatory framework introduced by the European Union aimed at enhancing and standardizing sustainability reporting across industries, including fashion. The CSRD extends the scope of the previous Non-Financial Reporting Directive (NFRD), requiring more detailed disclosures on environmental, social, and governance (ESG) impacts. Fashion businesses, particularly those with a significant environmental footprint, must report their sustainability efforts transparently and align with the EU’s goals for climate neutrality by 2050.
How the CSRD Differs from the NFRD
The CSRD strengthens and enlarges the applicability of the NFRD, with new rules for companies and increased transparency. Key differences include:
- Broader Scope: Whereas the NFRD applies to around 11,000 companies, the CSRD will apply to approximately 50,000 including large companies and listed SMEs.
- Double Materiality: While the NFRD was concerned with identifying financial risks, the CSRD entails a reporting of both how sustainability concerns influence their performance and how their business affects society and the ecological systems.
- European Sustainability Reporting Standards (ESRS): The CSRD prescribes the filing of ESRS to have standard, accurate, and comprehensive disclosures.
- Digital Reporting: This requires companies to submit their sustainability data in a digital form that can be easily integrated into the EU sustainability data environment.
Key requirements
The CSRD imposes specific sustainability reporting obligations on fashion brands, including:
Environmental Impact
- The CSRD imposes specific sustainability reporting obligations on fashion brands, including:
Social Responsibility
- Labor practices, working conditions in supply chains, and human rights due diligence.
Governance
- Internal policies related to sustainability, corporate ethics, and risk management.
Double Materiality
- Companies must report not only how sustainability factors affect their financial performance but also how their operations impact society and the environment.
These disclosures must comply with the European Sustainability Reporting Standards (ESRS), ensuring consistency and comparability.
Who’s affected by CSRD
The CSRD applies to all large companies, including fashion and textile retailers, that meet two of the following three criteria:
More than 250 employees.
More than €40 million in turnover.
More than €20 million in assets.
Starting in 2026, even smaller businesses listed on EU regulated markets will need to comply with the CSRD, including those in fashion retail.
Timeline for compliance
2024
Large companies (subject to NFRD) must start reporting.
2025
Other large companies must comply.
2026
Listed SMEs (including those in fashion) must start complying with CSRD.
How can Carbon Trail help?
- At Carbon Trail, we assist fashion brands in achieving CSRD compliance by providing end-to-end support for sustainability reporting. From data collection to creating comprehensive sustainability reports, our services help fashion companies meet CSRD requirements efficiently.
Services for sustainability reporting
- Carbon Accounting: Track and report on your carbon footprint.
- Product Life Cycle Assessment (LCA): Conduct life cycle assessments of your products.
- Digital Product Passports: Ensure traceability and transparency.
- Decarbonization: Develop strategies to reduce emissions.
FAQs
What is the purpose of the CSRD in fashion?
The CSRD ensures that fashion businesses provide transparent sustainability disclosures, focusing on environmental impact, ethical practices, and governance.
When does my fashion business need to start complying with the CSRD?
Large fashion companies need to comply by 2025, while smaller listed companies must start reporting by 2026.
What information must fashion brands report under the CSRD?
Fashion brands must disclose environmental impacts, social responsibility efforts, governance practices, and how these factors impact both the company and society.
How can Carbon Trail assist with CSRD reporting?
Carbon Trail provides data collection, carbon accounting, lifecycle assessments, and compliance reporting to help fashion brands navigate CSRD regulations.
