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  • Gordon Tveito-Duncan

Everything Investors Need to Know About the CSRD Framework

If you are an investor or asset manager, mark your calendar for July 6th, when the Corporate Sustainability Reporting Directive (CSRD) framework comes into effect.

Introduced back in January 2023, this framework represents a critical step in advancing corporate transparency and accountability regarding social and environmental impacts. By modernising and strengthening the rules governing the disclosure of sustainability-related information, the CSRD aims to foster greater corporate responsibility and contribute to sustainable development goals.

In today's article, we will discuss the CSRD framework in detail and its many benefits for investors.

What is the CSRD Framework, and what is included? 

On April 21st 2021, the EU Commission announced it would introduce the Corporate Sustainability Reporting Directive, in accordance with the commitment made under the European Green Deal.

One of the key aspects of the CSRD is its expanded scope, which now encompasses a broader range of companies. Not only will large corporations be subject to these reporting requirements, but listed SMEs will also be obligated to disclose their sustainability practices. Under the NFRD, there are approximately 11,700 companies and groups across the EU. The CSRD is expected to increase the number of firms subject to EU sustainability reporting requirements to approximately 49,000. This broadening of the mandate means a more comprehensive set of businesses are held accountable for their environmental and social performance.

The directive sets a deadline for EU Member States to incorporate its provisions into national legislation and regulation by July 6th 2024. This legal requirement underscores the EU's commitment to enforcing sustainable business practices across its member nations.

What does the introduction of the CSRD Framework mean for investors?

Investors should be celebrating from the rooftops. The introduction of the CSRD Framework brings a new era of opportunity and empowerment for investors with this profound shift towards comprehensive and standardised reporting on ESG factors. This mandate means companies are held accountable for their impacts across these critical dimensions, providing investors with a wealth of previously unavailable or inconsistently reported data. With access to a higher-quality and more readily available pool of ESG data, investors can now navigate the complex landscape of sustainable investing with newfound clarity and confidence.

With these ESG insights, investors are empowered to make better-informed decisions. They can better assess the risks and opportunities posed by environmental and social factors, steering their portfolios towards assets that promise financial returns and align with values of sustainability and responsibility.

Ultimately, the CSRD's impact extends beyond regulatory compliance; it catalyses positive change in corporate behaviour, promotes sustainability, and facilitates the transition towards a more resilient and equitable economy. As investors increasingly prioritise ESG considerations, the CSRD provides a framework for improving transparency and accountability, ultimately contributing to a more sustainable future for European businesses and society as a whole.

GaiaLens' commitment to sustainable investing and technological innovation 

GaiaLens wholeheartedly supports this new measure, which perfectly aligns with our core values. We firmly believe that economic value creation can and should be combined with environmental stewardship, social inclusion, and sound governance. Our mission is to empower investors with the tools necessary to translate this vision into tangible outcomes.

Our cutting-edge sustainability platform, driven by artificial intelligence, is designed for institutional investors and financial services firms. We recognise and champion the transformative potential of technology in facilitating informed decision-making for the benefit of investors, corporations, and the billions of people around the world.

If you are interested in learning more about GaiaLens, visit our website or request a demo.

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