CSRD in the European Union: Significant Implications for the Textile Industry in Portugal
CSRD (Corporate Sustainability Reporting Directive) or Corporate Sustainability Reporting, is a new European Union directive that came into force in January 2023 and aims to increase transparency and trust in companies’ sustainability practices.
1.PROMOTING A GREENER ECONOMY
The CSRD is part of the European Green Deal and the Sustainable Finance Agenda of the European Union, which aim to promote a greener, more inclusive and resilient economy and intend to create public and transparent access to reliable data on companies’ sustainability information, protecting different stakeholders from greenwashing practices.
Applies to a wide range of companies operating in the European Union, including:
- Large Companies;
- SMEs listed on regulated markets;
- Companies from third countries with subsidiaries or branches in the EU.
These companies will have to publish regular reports on their environmental and social impacts, in accordance with the European Sustainability Reporting Standards (ESRS), developed by the European Financial Reporting Advisory Group (EFRAG), which is expected to be in public consultation by 7 July 2023.
It is worth noting that Microenterprises and SMEs not listed on regulated markets are not directly affected by the proposed rules, however, the proposal provides support measures for these companies that may be indirectly affected, as they can, for example, act as suppliers in more complex supply chains.
The ESRS are a set of twelve standards covering cross-cutting, environmental, social and governance issues. Companies will have to disclose information that allows them to understand and assess the impact of their current and future ESG policies, as well as the risks and opportunities associated with sustainability. The information and data communicated will be reported electronically according to a specific taxonomy to allow for simpler comparison.
Third-party assurance of independence of sustainability reports published in accordance with the CSRD will be mandatory in Member States. This guarantee aims to ensure the quality, reliability and comparability of the information disclosed by companies.
2. HOW WILL IT AFFECT THE TEXTILE INDUSTRY?
ENVIRONMENT: The textile industry is responsible for a high ecological footprint, consuming large amounts of water, energy and natural resources, generating greenhouse gas emissions and textile waste.
The CSRD will require textile companies to disclose information about their environmental performance, including indicators such as consumption of water, energy and raw materials, carbon emissions, waste generated and recycled, the use of hazardous chemicals and the impact on biodiversity.
SOCIAL RESPONSIBILITY: The textile industry is faced with issues such as respect for human rights, working conditions, health and safety of workers, gender equality and social inclusion.
The CSRD will require textile companies to disclose information about their social performance, including indicators such as the number and diversity of workers, remuneration and social benefits, training and professional development, social dialogue, prevention of occupational accidents and illnesses, combating child and forced labor and engagement with local communities.
GOVERNANCE: The textile industry is called upon to adopt responsible and ethical management of its business, aligned with the principles of sustainability.
The CSRD will require textile companies to disclose information about their governance performance, including indicators such as the structure and composition of management and supervisory bodies, directors’ remuneration policy, risk and opportunity management, sustainability strategy and objectives, organizational culture and values, legal and tax compliance and the prevention of corruption and money laundering.
This new Directive therefore represents an opportunity for the textile industry to improve its transparency and credibility, to demonstrate its commitment to sustainability, to identify and mitigate its risks and to take advantage of opportunities for innovation and differentiation.
It also poses a challenge for the textile industry to adapt to new regulatory requirements, to invest in data collection and processing, to integrate sustainability issues into its strategic and operational management and to communicate effectively with its stakeholders.
Nitextile can offer comprehensive support to the textile industry, from supporting businesses to adapt to CSRD requirements, improve their transparency and credibility, identify opportunities for innovation and differentiation, and become sustainable leaders in their sector.
Nitextile is a strategic partner for the industry on the CSRD journey. We offer specialized consultancy on sustainability, helping companies comply with regulatory requirements, improve transparency and credibility, as well as identify opportunities for innovation. Through training, we develop skills to deal with the needs of CSRD.
Join us and stand out as a leader in sustainability innovation in the textile industry.
3. Useful Links:
Directive (EU) 2022/2464: EUR-Lex – 32022L2464 – EN – EUR-Lex (europa.eu)
EFRAG drafts: First Set of draft ESRS – EFRAG
Public Consultation European Sustainability Reporting Standards (ESRS): https://shorturl.at/gjkrB