CSRD: Why Indian Companies Need to Pay Attention Now
Sustainability is evolving from a corporate buzzword to a critical business imperative. The European Union’s Corporate Sustainability Reporting Directive (CSRD) represents a comprehensive framework aimed at standardizing sustainability reporting, with significant implications for global businesses, particularly those in India. This is particularly relevant for Indian companies that have a presence in the EU, focusing on those that navigate both Indian and European regulatory landscapes.
What is CSRD and ESRS?
The CSRD is the EU’s directive to enhance transparency and comparability in sustainability reporting. It expands reporting requirements for large public-interest entities operating in EU member states. Under the CSRD, companies must disclose detailed environmental, social, and governance (ESG) data, ensuring a consistent and standardized approach. This directive builds upon and replaces the Non-Financial Reporting Directive (NFRD) framework, meaning that all companies previously covered under the NFRD are now automatically subject to the CSRD.
The European Sustainability Reporting Standards (ESRS) reporting developed as part of CSRD, provides specific guidelines for companies to report their ESG impacts. These align with the EU’s broader Green Deal, which aims for climate neutrality by 2050, and the Sustainable Finance Disclosure Regulation (SFDR), ensuring investments align with sustainable goals.
CSRD for Indian Companies with market presence in EU:
Although Indian companies, like all non-EU companies, aren’t automatically subject to CSRD, any non-EU company trading with the EU may fall under its scope. The directive applicable if:
Business Advantage of CSRD Compliance
Indian companies with a presence in the EU or those supplying to EU-based firms should closely evaluate their exposure to CSRD requirements. Aligning with these standards not only ensures regulatory compliance but also opens doors to sustainable investments, as investors globally prioritize ESG factors in their decision-making. Suppliers compliant with CSRD gain a competitive upper hand. By adhering to the framework, they can demonstrate their ability to manage risks effectively and maintain transparency. This positions them as preferred partners for EU companies, showcasing their resilience and reliability in the global market.
Not adhering to the CSRD can result in significant legal actions, including fines and restrictions on business operations. Each EU member state determines its penalties, which may include public denunciations, cease-and-desist orders, or administrative fines. For example, fines can go as high as €10 million or 5% of total annual turnover, depending on the severity of the infraction. This underscores the importance of compliance for Indian companies with EU operations or supply chain linkages.
Conclusion
If you are an Indian company, you may not be directly regulated by CSRD, but having EU connections or supply chain linkages makes it essential to proactively align with its requirements. This approach ensures readiness for evolving global standards and strengthens competitiveness in a sustainability-focused marketplace. As investor expectations and regulatory landscapes continue to transform, preparing now is not just a strategic choice—it’s a necessity for future-proofing business success.
Bevolve can help you strategize and get EU-ready. To learn more, connect with us at catalyst@bevolve.ai.
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