What You Need to Know

Under the Corporate Sustainability Reporting Directive (CSRD), companies are required to integrate sustainability considerations directly into their business strategy.

Here are the key aspects related to strategy that companies need to address:

Disclosure of Business Strategy

Companies must disclose their business strategy, particularly how it relates to sustainability risks and opportunities. This includes detailing the resilience of their business model in relation to these risks.

Compatibility with Sustainability Goals

Companies are required to outline plans ensuring that their business model and strategy align with the transition to a sustainable economy. This includes compatibility with the objectives of limiting global warming to 1.5°C, in line with the Paris Agreement, and achieving climate neutrality by 2050.

Stakeholder Interests and Impacts

Companies must disclose how their business model and strategy take into account the interests of stakeholders and the impacts on sustainability matters. This includes describing how sustainability considerations are integrated into their strategic planning and decision-making processes.

Implementation and Monitoring

Details on the implementation of the business strategy concerning sustainability matters are required. This involves specifying actions taken, related financial and investment plans, and how progress towards sustainability targets is monitored and reported.

Setting and Reporting on Targets

Companies must set time-bound sustainability targets, including greenhouse gas emission reduction targets for 2030 and 2050. They need to report on the progress made towards achieving these targets and ensure that the targets are based on scientific evidence where relevant.

By addressing these aspects, companies can ensure that their strategies are not only transparent but also aligned with broader sustainability goals, thereby contributing to the EU's overarching objective of a sustainable economy.

If you like other investors would like to know more about how to use companies' strategies for sustainability in your investing - let us know by filling out the contact form here

By Eva Grønbjerg Christensen

June 2024