CSRD Compliance: A Guide for Retailers & Suppliers on EU Sustainability Reporting

In today’s business landscape, sustainability is no longer a trend—it’s a necessity. With increasing pressure on companies to align with sustainable practices and transparent supply chains, Europe is spearheading a regulatory shift to ensure businesses adhere to stricter sustainability standards. The Corporate Sustainability Reporting Directive (CSRD) is a pivotal regulation aimed at fostering greater transparency in corporate sustainability practices. As part of the EU’s broader sustainability compliance agenda, the CSRD mandates businesses to disclose a comprehensive set of data on their environmental, social, and governance (ESG) practices.

In this blog post, we’ll break down everything you need to know about the CSRD, who needs to be compliant, and how it impacts retailers, suppliers, and brands in the fashion industry. We’ll also discuss key CSRD timelines, practical steps to ensure compliance, and examples of brands already meeting these requirements.

What is the CSRD (Corporate Sustainability Reporting Directive)?

The Corporate Sustainability Reporting Directive (CSRD), effective from January 5, 2023, strengthens corporate sustainability reporting requirements. It expands obligations to a broader range of large companies, listed SMEs, and non-EU companies generating over EUR 150 million in the EU. The directive ensures investors and stakeholders access consistent data on companies' social and environmental impacts while harmonizing reporting to reduce costs over time. Companies must comply with European Sustainability Reporting Standards (ESRS), with the first reports due in 2025. The CSRD also introduces assurance requirements and a digital taxonomy for sustainability data, with the European Commission working to ease implementation for businesses.

The CSRD requires businesses to disclose specific information about its impacts on sustainability matters, and on how these sustainability matters affect the business development, performance and position.

Who Needs to Be Compliant with the CSRD?

The CSRD targets a broad spectrum of businesses, but its requirements are more stringent for certain companies. EU-based companies with over 500 employees, or those that meet specific thresholds in terms of revenue or total assets, are required to comply with the directive. Additionally, the regulation extends to non-EU companies that have a significant market presence in the EU—those with a net turnover of over €150 million within the EU.

For fashion and retail businesses, this means that major brands and retailers are already within the scope of the CSRD. But it’s not just large enterprises that must comply. Smaller businesses that meet certain criteria (such as exceeding the threshold for net turnover or employing over a specified number of individuals) must also integrate sustainability reporting into their operations. The CSRD aims to create a more sustainable supply chain by pushing companies at all levels to engage with traceability and disclose their environmental and social impacts.

Should Retailers Be Compliant with the CSRD?

Yes, retailers must be compliant with the CSRD, especially if they fall within the directive’s size thresholds or operate in the EU market. As key players in supply chain transparency, they are required to report more detailed sustainability data. 

Software solutions like Renoon help retailers streamline compliance by collecting, assessing, and calculating ESG impacts, risks, and opportunities. These tools integrate seamlessly with existing internal systems, making sustainability reporting more efficient.

Should Suppliers Be Compliant with the CSRD?

While retailers are the ones directly impacted by the CSRD, suppliers also play a crucial role in achieving compliance. Under the CSRD, suppliers need to provide detailed reports on their sustainability practices, especially in terms of:

• Environmental management systems.
• Waste management and recycling processes.
• Labor practices and ethical sourcing.
• Energy consumption and carbon emissions.

Suppliers must work closely with retailers to ensure that all aspects of the supply chain meet CSRD requirements. Failure to comply with CSRD regulations can result in reputational damage and the potential loss of business opportunities with companies that prioritize sustainability compliance. Therefore, it is in the best interest of suppliers to understand and implement the necessary measures to meet CSRD’s stringent requirements.

CSRD Timeline: Key Dates and Deadlines

To ensure smooth adoption, businesses need to be aware of the CSRD timeline and associated deadlines. Here are the key dates based on company size:

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The early adoption of the CSRD allows companies to prepare for its requirements and align their sustainability efforts with EU regulations. Businesses that wait until the last minute may find it more challenging to meet deadlines, particularly when it comes to establishing data management and reporting systems.

How to Comply with the CSRD

Compliance with the CSRD requires businesses to take several practical steps. Here are the key actions to take:

1. Map Your Supply Chain: Understanding where and how materials are sourced, produced, and delivered is essential for compliance. Tools like textile supply chain mapping software can help companies track their products from origin to end-of-life, ensuring transparency and traceability.
2. Implement Sustainability Reporting: Businesses must develop a system for collecting data related to ESG performance. This can include tracking carbon emissions, water usage, and waste disposal. For instance, the ESPR Digital Product Passport enables standardized reporting by organizing product-specific sustainability information.
3. Adopt Technology Solutions: Leveraging compliance software, automated sustainability reporting tools, and QR code integrations will streamline data collection and ensure that your company stays up to date with the evolving regulatory landscape.
4. Provide Training and Education: Ensure your teams are educated about the CSRD and its implications. This will help embed sustainability into your company’s culture and daily operations, ensuring that compliance is met at every level.
5. Engage Stakeholders: Involve your suppliers, retailers, and other key stakeholders in the compliance process, as it is crucial to gather information from one end of the process to the other.

Conclusion

The CSRD represents a significant step toward creating a more transparent, sustainable future for businesses in Europe and beyond. Whether you are a retailer, supplier, or a brand in the fashion industry, ensuring compliance with the CSRD is essential. By understanding the regulations, and implementing the necessary tools and systems, you can be accountable for your company, and showcase progress towards a more traceable industry. 

Renoon offers robust solutions to help companies manage their compliance efforts, integrate digital product passports, and streamline sustainability reporting. Embracing these tools not only helps with compliance but also positions your brand as a leader in sustainability.

Book a Demo with the Renoon team to evaluate your data collection practices today and explore innovative solutions to ensure your brand is prepared for the future of sustainable fashion.