Corporate Sustainability Reporting Directive in Focus

The Corporate Sustainability Reporting Directive (CSRD), introduced by the European Union in 2023, aims to modernize social and environmental reporting for large companies and listed SMEs. Exploring the implications of this new law was the topic of a recent British Chamber of Commerce event, featuring keynote speaker Heather Prosser, Managing Director and Head of Sustainability at consultancy Sodali Japan.

Prosser emphasized the importance of Japanese companies aligning with the CSRD, especially those with EU operations. She noted that compliance is required between 2026 and 2029, but businesses should start preparing now. "This regulatory change is going to change the way we look at sustainability. These changes have happened in Europe but are impacting the whole world," she said.

The CSRD will affect nearly 50,000 companies, expanding reporting requirements to include over 1,000 potential disclosure points. Prosser highlighted that this shift from voluntary to mandatory sustainability reporting will enhance transparency and consistency.

She advised Japanese companies to conduct a "gap analysis" and engage stakeholders to meet the EU's requirements. Starting the reporting process early is crucial, as it could take two to three years to implement effectively. "Your opportunity is not only to meet those disclosure requirements but to tell your sustainability story in a compelling way," she added.

Finally, Prosser urged companies to treat CSRD compliance as a collective effort involving multiple departments. "This is a big compliance issue: it can’t stay in a silo. You’re going to need to include procurement, R&D, and legal—this is a team sport," she said.

Click here to view the recording.