The issue of sustainability has garnered increasing attention across the globe, with particular emphasis on small and medium-sized enterprises (SME). These companies, typically characterised by employee counts ranging from 250 to 1,000, are integral to the economic fabric and play a crucial role in environmental stewardship. According to the Environmental Social Governance (ESG) study by the Smarter Service Institute, in 2022, sustainability responsibilities were primarily shouldered by the management or CEO in 64 percent of surveyed companies. This indicates a top-down approach, emphasising the critical importance of sustainability at the highest levels of corporate governance.
In this evolving landscape, the European Union’s introduction of the Corporate Sustainability Reporting Directive (CSRD) represents a significant milestone. The CSRD mandates enhanced and standardised sustainability reporting for companies within the EU, aiming to rectify deficiencies in the existing Non-Financial Reporting Directive (NFRD). It is set to impact an estimated 50,000 companies, a substantial increase from the 11,000 previously covered under the NFRD. The directive is a comprehensive framework designed to enhance transparency and accountability in corporate sustainability practices, ensuring that companies provide consistent, comparable, and reliable sustainability information.
For SMEs in Europe, the CSRD presents both a challenge and an opportunity: The directive necessitates a comprehensive reporting framework with detailed information on environmental, social, and governance factors. This enhanced reporting requirement means that SMEs will need to dedicate significant resources to gather, verify, and present sustainability data. As pharma companies are working with strict routines and precise documentation, a reliable reporting can be expected in this sector.
The implementation of the CSRD will undoubtedly increase the workload for any enterprise. These companies will need to invest in new systems and processes to capture relevant data accurately. Furthermore, they must ensure their sustainability reports comply with the European Sustainability Reporting Standards, which are being developed to provide clear guidelines on what needs to be reported.
