How CSRD is Changing Industries: What Businesses Need to Know

Sustainable Materials & Chemical Management: A Key Focus

Under CSRD, companies must report on their use of recycled materials, sustainable sourcing practices, and hazardous chemicals. This means businesses will need to provide transparent data on:

• The origin and sustainability of raw materials
• Compliance with environmental standards such as ZDHC (Zero Discharge of Hazardous Chemicals) and other industry-specific initiatives
• Efforts to reduce hazardous substances in manufacturing and operations

By proactively adopting sustainable material sourcing and improved chemical management practices, businesses can strengthen their relationships with partners and stakeholders seeking responsible and traceable supply chains.

Financial & Legal Consequences of Non-Compliance

Failing to meet CSRD requirements can have serious consequences, including:

• Fines and regulatory penalties for companies failing to disclose accurate sustainability data
• Loss of business opportunities as clients and partners seek companies that align with sustainability goals
• Restricted access to investors and markets, as stakeholders increasingly demand reliable ESG data

To remain competitive, businesses must align their operations with CSRD standards, ensuring they provide credible, verifiable sustainability data to stakeholders.

How CSRD Affects SMEs & Global Supply Chains

Even small and medium-sized enterprises (SMEs) working within global supply chains will feel the impact of CSRD. Many large corporations will prioritize working with partners who comply with the directive, pushing sustainability expectations further across industries. This could mean:

• Increased requirements for ESG transparency and reporting
• Preference for businesses that have clear sustainability commitments
• The need for collaborative sustainability efforts between companies and suppliers

CSRD Implementation Timeline

The CSRD is being phased in over several years, with different timelines depending on company size and status:

1. 2024 (Reports Due in 2025)
   • Applies to large EU-listed companies (already subject to the Non-Financial Reporting Directive – NFRD).
   • Companies must report sustainability data for the 2024 financial year in 2025.
2. 2025 (Reports Due in 2026)
   • Extends to large companies that meet two out of three criteria:
     • €40 million+ in net turnover
     • €20 million+ in total assets
     • 250+ employees
   • These companies must start reporting sustainability data for 2025 in 2026.
3. 2026 (Reports Due in 2027)
   • Listed SMEs, small credit institutions, and captive insurance companies must begin reporting for 2026 in 2027.
   • SMEs can opt out until 2028 if needed.
4. 2028 (Reports Due in 2029)
   • Non-EU companies generating €150 million+ in EU revenue must comply if they have an EU branch or subsidiary.

How Businesses Can Stay Ahead

To navigate these changes, companies should:

• Adopt digital tools like CleanChain to track and report on sustainability metrics
• Engage with industry-specific sustainability initiatives to align with global environmental standards
• Strengthen partnerships with stakeholders by demonstrating a commitment to compliance and transparency

By preparing now, businesses can turn CSRD compliance into a competitive advantage, securing long-term growth and industry leadership in sustainability.

Is your business ready for CSRD? CleanChain helps organizations simplify compliance, track sustainability data, and drive impactful improvements. Get in touch cleanchaininfo@adec-innovations.com

CleanChain

CleanChain is a digital platform designed to help companies manage and improve their environmental and chemical compliance across global supply chains. It provides tools and modules that support brands, suppliers, and certification bodies in achieving transparency, regulatory compliance, and sustainable practices.