For the moment, this is only a voluntary approach for most SMEs, but the European CSRD (Corporate Sustainable Reporting Directive) will oblige companies with more than 250 employees and sales in excess of 40 million to disclose the impact of their activities on the environment in extra-financial sustainability reporting, progressively from January 1, 2024. It is therefore urgent for some companies to adopt a CSR (corporate social and environmental responsibility) approach.
CSR challenges for SMEs
Society now expects companies to play their part in protecting the planet by implementing concrete, environmentally-friendly practices. This growing trend has prompted the European Commission to legislate. This concerns both large companies and SMEs that meet at least two of the following criteria:
- More than 250 employees,
- Over 40 million in annual sales,
- Over 20 million in total assets.
But companies of all sizes can commit to a CSR approach. They are often reluctant to do so because of the administrative constraints involved. Yet they have everything to gain.
CSR measures have a positive impact on a company's competitiveness. Improved working conditions (bright premises, pleasant surroundings, serene atmosphere, relaxation areas, adapted equipment, etc.) and flexible working hours with the possibility of telecommuting boost productivity. Employees feel more involved and are more motivated. It's easier for a company committed to CSR to retain its employees and attract new talent.
What's more, adopting this approach enhances the company's brand image, showing that it is committed to societal and environmental values that go beyond profit. The company can also use this argument in the face of competition, and take advantage of this positive image with its customers.
Finally, saving energy or using less paper preserves the planet's resources while saving money.
What is the CSRD directive?
At present, it is the NFRD (Non Financial Reporting Directive) that provides the framework for non-financial performance declarations by European companies. As of January 1, 2024, it will be replaced by this new, more ambitious directive.
The aim of the CSRD directive is toharmonize sustainability reporting and improve data quality. A larger number of companies will be concerned, including SMEs listed on European regulated markets.
Companies publish detailed information on how they operate and respond to social and environmental issues. Until now, these extra-financial reports have not been comprehensive enough to meet today's challenges. It was also difficult to compare one company with another. To remedy these shortcomings, the European Commission has adopted a new directive.
Reporting must comply with European standards and contain information on :
- Environmental protection,
- Human rights,
- The fight against corruption,
- Diversity,
- Social responsibility,
- Managing the risks associated with climate change.
According to the French Minister of the Economy, Bruno Lemaire,"this means greater transparency for citizens, consumers and investors, so that companies can play their full role in society."