Is your company prepared for 'CSRD' carbon reporting regulation?

Apr 14, 2023
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Reporting for scope 3 transport and logistics greenhouse gas emissions is set to become mandatory for many organizations operating within Europe

More detailed reporting for climate and environmental impact will soon be required for around 50,000 companies across the EU, and in some cases beyond, with the aim being to help consumers and investors make more sustainable choices.

The Corporate Sustainability Reporting Directive (CSRD) is a new EU regulation that aims to increase corporate transparency and accountability on environmental, social, and governance (ESG) matters. It was adopted by the European Commission in November 2022 and is set to replace and build on the Non-Financial Reporting Directive (NFRD).

Who does it impact?

Companies that meet two out of three of the conditions below will need to comply with the CSRD:

  • €40 million in net turnover
  • €20 million in assets
  • 250 or more employees

Plus, any non-EU companies with a turnover of more than €150 million within the EU must also comply.

What are the key things to know?

The CSRD will feature more detailed reporting requirements and increase the number of companies that must comply. The new legislation aims to make it easier for consumers and investors to know a business’s sustainability impact, and overcomes some of the shortcomings of previous legislation, where important information was frequently omitted.

“Reports often omit information that investors and other stakeholders think is important. Reported information can be hard to compare from company to company, and users of the information are often unsure whether they can trust it.” – The European Commission

Scope 3 emissions

Among other things, the CSRD will require companies to report on their Scope 3 emissions, which are emissions that occur in the value chain of the company but are not directly controlled by the company.

Global impact

Despite being EU regulation, the CSRD is also applicable to foreign-based companies with a presence in the EU. So if a US-based company has a subsidiary in the EU, then it, along with its other subsidiaries around the world, must also abide by it.

Encouraged introspection

It also forces organizations to no longer only outline the risks climate change poses to them in reporting, but also to disclose the potential impacts they could cause to society and the climate.

Standardized data

The new reporting requires a standardized data format for all organizations to adhere to, making it easier to draw comparisons between companies than it is today.

What happens if you don’t comply?

Companies that aren’t able to provide certified reports on Scope 3 emissions under the CSRD may face several consequences:

Reduced customer trust

Companies’ transparency about their environmental impact is increasingly influencing consumers' purchase decisions as they become more conscious of environmental impact. Organizations that are unable to  provide certified Scope 3 emissions reports may be perceived to be less trustworthy and could lose customers as a consequence.

Lower investor confidence

Environmental, Social and Governance (ESG) is becoming an increasingly important consideration for Investors when making investment decisions. Being unable to provide certified Scope 3 emissions reports may mean companies are seen as less transparent and trustworthy, which negatively impacts investor confidence and, in turn, company stock prices.


Failure to comply with the CSRD means companies could face legal penalties, including fines and sanctions. In addition to financial implications, there’s also the risk of harm to a company’s reputation.

Regulator and stakeholder scrutiny

A lack of Scope 3 emissions reporting may lead to increased scrutiny from regulators and other stakeholders, such as NGOs and civil society groups, potentially leading to negative publicity and damage to a company’s reputation.

When will CSRD take effect?

The CSRD was adopted by the European Commission in late 2022, and will be applied between 2024 and 2028.

  • 1 January 2024: Large public-interest companies (with 500+ employees) who are already subject to the non-financial reporting directive, with reports due in 2025
  • 1 January 2025: Large companies not presently subject to the non-financial reporting directive (with 250 employees and/or €40 million turnover and/or €20 million in total assets), with reports due in 2026
  • 1 January 2026: Listed SMEs and other undertakings, with reports due in 2027. SMEs can opt-out until 2028.

Companies must prepare now

The need to reduce our carbon footprint has never been greater and many companies have already started including carbon reporting within their sustainability or CSR reporting.

Given the significance of emissions from transport and distribution activities as part of an organization’s overall carbon footprint, compulsory reporting on these is set to become increasingly commonplace, due to regulations like CSRD coming into effect.

Companies that don’t should act now to prepare for the introduction of the CSRD, or risk not having the proper systems and protocols in place in time to comply. And it’s not just happening in Europe. Mandatory sustainability reporting is being considered in many regions of the world. Implementing an emissions reporting solution now will help you ensure your company stays ahead of the pack.

Calculating Scope 3 transport and logistics emissions

The good news is that reliable solutions already exist to calculate your Scope 3 emissions, which make up 75% of a supply chain’s GHG emissions on average. Shippeo’s Carbon Visibility solution offers an accurate, comprehensive and accredited tool to make carbon emissions calculations simple and convenient. This is made possible thanks to a relentless focus on data quality, the incorporation of sophisticated data modeling, and a frictionless user experience.

To learn more about carbon emissions reporting for transportation and logistics activities, download our Carbon Visibility Guide or get in touch with one of our carbon visibility experts today.

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Is your company prepared for 'CSRD' carbon reporting regulation?
Is your company prepared for 'CSRD' carbon reporting regulation?
Is your company prepared for 'CSRD' carbon reporting regulation?