The Corporate Sustainability Reporting Directive represents one of the biggest ever shifts in reporting requirements for organizations. (For most companies, the first reporting will be on the financial year which starts after January 1, 2025.)
It requires most large organizations to comply with mandatory, detailed sustainability reporting standards, including extensive employment related disclosures. We are already advising a number of organizations in their sustainability journey and employment-related implications of the CSRD and, if it is not something you are already looking it, it will likely be on your radar very soon.
tl;dr
The employment-related implications of the CSRD mean that organizations will have to provide detailed descriptions of workforce policies; provide information on how the company engages with workers and workers representatives; and provide specific metric and target data relating to diversity, wages, compensation, health and safety and incidents and complaints (e.g., harassment and discrimination complaints), amongst others. There are also further disclosures required relating to workers in the supply chain. What is clear is that reporting will cover some potentially very sensitive topics, requiring sufficient preparation and careful consideration.
This represents a material step change in sustainability reporting which will require significant input from employment legal and HR professionals to ensure that the vast reporting obligations are strategically and properly complied with. As employers begin to think about how they can start preparing, Baker McKenzie can assist with advising on gathering the relevant data in a legally compliant way, advising on consultation obligations with workers representatives in respect of the data collection and materiality assessment, considering the scope of disclosure obligations, drafting relevant disclosures, and any remediation work identified as a result of data gathered.
The link below shares a brief overview of the employment focus of CSRD, who it applies to, and some considerations for HR and employment legal functions. Please get in touch with one of us, or your usual Baker McKenzie contact if you have any questions or would like to set up a discussion on this topic.
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