Before CSRD: Growing trend towards green data

Over the past few decades, there has been a noticeable shift in how businesses approach environmental and social responsibility.

This journey began back in 1989 when large multinational corporations decided to publish reports on their environmental impacts. In 1997, the establishment of Global Reporting Initiative (GRI), an organization that provides standards for sustainability reporting, further propelled the movement towards corporate accountability in environmental practices. Since the introduction of GRI in 1997, various new sustainability reporting frameworks have emerged, both in US and Europe, such as the Dow Jones Sustainability Index (DJSI) in 1999, the Carbon Disclosure Project (CDP) in 2000, the Task Force on Climate-related Financial Disclosure (TCFD) in 2015. However, sustainability reporting was still a voluntary endeavor.

In Europe, there was a leap towards sustainability reporting in 2014 when the European Union introduced the Non-Financial Reporting Directive (NFRD), the first legally binding obligation mandating some companies to disclose non-financial information, including environmental and social considerations.

Beginning of the CSRD Era

Further, on 21 April 2021, EU proposed a significant amendment to NFRD known as the Corporate Sustainability Reporting Directive (CSRD) as a part of the European Green Deal’s goal to cut greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels.

Implemented on 5 January 2023, CSRD is a directive that requires companies to report on the social and environmental performance of the activities across their value chain. With the introduction of CSRD, more firms will be bound to report more data in a more detailed and digital format. As CSRD is the only reporting directive mandating the disclosure of Scope 3 emissions (which includes emissions from business travel), it will significantly impact the travel managers and buyers.

What makes CSRD specifically different from NFRD?

Figure 1 below offers a comparative analysis of the Non-Financial Reporting Directive (NFRD) and the CSRD. It outlines the scope, coverage, reporting requirements, delivery formats, and implementation timelines of each directive, emphasizing the differences introduced by the CSRD.

Figure 1: NFRD vs CSRD features

When will CSRD be implemented?

Figure 2 is a brief overview of the CSRD timeline, from its proposal in 2021 to future reporting requirements, illustrating key milestones and phased implementation details.

Figure 2: CSRD implementation timeline

How can Travel Managers prepare for CSRD rollout?

Scope 3 emissions (including business travel emissions) are now mandatory to be reported to ensure compliance with CSRD. As a result, travel managers and buyers are expected to contribute accurate travel data, and hence they need to be well-prepared.

The next course of actions can be divided into two major phases: Build and Execute

Phase 1: Build

• Assess the current situation: Evaluate data availability from various suppliers and sources, map current travel data flows to determine if the available data can provide CO2 information, and identify any potential gaps and leakage.
• Make tradeoffs: Make tradeoffs and settle on target sources to be utilized for data processing and create a prototype.
• Validate: Validate the prototype by having a discussion with the CSR team and possibly with the 3^rd parties (auditors).
• Establish a process: Post the validation, establish a data collection and calculation process to ensure consistent and accurate reporting.

 

Phase 2: Execute

• Analyze: Conduct a thorough analysis of the collected data and build the reports.
• Verify and Publish: Verify the reports and share it with the CSR department to be published in a digital format.

As improving sustainability performance is an ongoing journey, companies should conduct a detailed assessment of the reports to set targets, implement corrective action plans and focus on continuous improvements to contribute to the overall company sustainability goals.

However, in doing so, they might encounter certain challenges, stemming from external factors like inaccurate, inconsistent, and incomplete data due to lack of standardized norms, reliable tools, and the influence of trends like bleisure (blending business and leisure travel).

To address these challenges, companies should collaborate with suppliers to enhance data quality and improve reporting accuracy by adopting advanced data reporting tools and conducting regular audits.

Fostering Sustainability through CSRD

The Corporate Sustainability Reporting Directive (CSRD) marks the beginning of a new era for sustainability reporting in Europe, introducing significant changes that will shape the future of corporate transparency and accountability.

All told, the CSRD directive brings four major changes:

1. Inclusion of more firms under its scope
2. Requirement for more detailed reporting
3. Reporting in a digital format
4. Necessity for third-party audits

However, as with any major disruption, these changes come with their own set of challenges. This is particularly evident in the debate in the US, where the SEC’s initial proposition to include Scope 3 emissions in the reporting sparked discussions amongst all stakeholders (legislators, investors, environmentalists, and the business community). This eventually, in March 2024, led to the decision to postpone the inclusion of Scope 3 emissions from reporting requirements for the time being.

Indeed, the quest for green data is still an open story! 

Download the PDF Version: Navigating CSRD – What It Means for Travel Managers in 2024 and Beyond