Four Critical ESG Challenges to Think About Now!

Does your organisation have to comply with the CSRD?

The CSRD (Corporate Sustainability Reporting Directive)  is a crucial regulatory framework that demands the attention of the CFO. It significantly elevates sustainability reporting to the same level of scrutiny as financial reporting, impacting over 42,500 companies across the European Union (EU).

EU law, transposed into member state national law, requires all large companies and all listed companies (except listed micro-enterprises) to disclose what they see as the risks and opportunities arising from social and environmental issues and the impact of their activities on people and the environment. This helps investors, civil society organisations, consumers, and other stakeholders evaluate companies’ sustainability performance as part of the European Green Deal.

Companies will have to start reporting under ESRS according to the following timetable:

2024 Data Reporting in 2025

Large listed companies with:

• an average number of 500 employees and
• balance sheet total: €25m and/or
• net turnover: €50m

2025 Data Reporting in 2026

Large companies with:

• an average number of 250 employees and
• balance sheet total: €25m and/or
• net turnover: €50m

Later

SMEs can begin data collection in January 2026, although they can opt out of reporting for two years.

Non-EU parent companies must begin data collection for reporting in 2029.

The EU Omnibus Impacts

In early 2025, the EU Omnibus proposed key changes that include the following:

• Postponing the application of reporting requirements for ‘wave 2’ and ‘wave 3’ companies by two years. The EU Council and EU Parliament have supported this. The deadline for transposition into Member State local legislation is December 2025.
• Reducing the CSRD scope to large undertakings and parent undertakings of a large group with 1000 employees on average, and either exceeding €25m total on a balance sheet or €50m turnover
• Changing thresholds applicable to a third country to €450m net turnover generated in the EU, and having a large subsidiary or a branch generating €50m turnover

The proposals could very well change throughout 2025, and the timing and process remain unclear.

While the CSRD compliance deadlines for 2025 reporters will be delayed by two years from the initial proposals with the “stop-the-clock” measures, it’s crucial to note that the schedule remains tight. Until transposition, existing legislation will apply, and monitoring developments per Member State will be crucial.

For organisations with more than 1000 employees, making a ‘no-regret’ plan is not just advised; it’s crucial. Even for those with fewer employees, reviewing the value chain and determining what will likely be important for their customers is a proactive step towards preparedness.

So, what does a no-regret plan look like?

These four ESG challenges are not something you can afford to put off. It’s crucial to start considering them now, if you haven’t already done so, to ensure your organisation is prepared for the future.

Is your organisation ready to meet these ESG challenges?

At Loughridge Transformations, we understand you don’t want to invest time and effort in meeting compliance requirements that may never be needed…

But also, you can likely not afford to wait before making a start.

That’s why we offer a cost-effective Diagnostic and Scoping Package. This package minimises the regret work and ensures you get usable, value-accretive outcomes, whatever happens with the regulations.

Why not set up a complimentary ESG briefing with Loughridge Transformations‘ Principal Consultant?

This briefing will help you understand the ESG challenges your organisation is facing and how our diagnostic package can help you.

Our consultants have years of experience working across locations and time zones. They are also experts in delivering all services remotely or onsite in SOx (SEC), EU, UK and other regulatory environments.

We welcome any discussion on the above and more, so please get in touch!

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