Understanding the links between CSRD & CSDDD


Alberto Bailin Co-founder of Lienzo

Image by Pawel Czerwinksi

Corporate Social Responsibility (CSR) and Sustainable Development (SD) have become integral components of modern business practices. Companies worldwide are increasingly recognizing the importance of integrating CSR and SD principles into their operations. Two key frameworks that guide organizations in this endeavor are the Corporate Social Responsibility Directive (CSRD) and the Corporate Sustainable Development Disclosure Directive (CSDDD). In this article, we will explore the links between these two directives and how they work together to promote responsible and sustainable business practices.

CSRD: a brief overview

If you have read our previous articles you probably already know what the CSRD means for fashion companies. If not, no problem, here we give you a brief overview of this European directive. The Corporate Social Responsibility Directive (CSRD) is a European Union regulation aimed at fostering greater transparency and accountability among companies concerning their environmental, social, and governance (ESG) practices. The CSRD mandates that all companies with more than 250 employees or more than 40M EUR turnover, disclose detailed information about their CSR activities in their annual reports. This information includes how they manage and integrate ESG risks and opportunities into their business strategies, as well as the impact of their activities on stakeholders and the environment. 

CSDDD: a brief overview

On the other hand, the Corporate Sustainable Development Disclosure Directive (CSDDD) is another EU directive designed to promote sustainability reporting by companies. While the CSRD primarily focuses on CSR matters, the CSDDD places a more significant emphasis on disclosing information related to the environmental and social aspects of a company's operations. It requires companies to disclose data about their policies, risks, and performance in areas such as climate change, human rights, and diversity.

The links between the CSRD and the CSDDD 

One of the fundamental links between the CSRD and CSDDD is the shared goal of enhancing sustainability reporting. While CSRD focuses on CSR aspects, the CSDDD complements it by requiring companies to disclose information on a broader range of sustainability-related topics. Together, these directives encourage companies to provide a more comprehensive and transparent view of their sustainability efforts.

The integration of CSR and sustainability reporting is another critical link between the two directives. Companies are encouraged to combine their CSR and sustainability information into a single, integrated report. This approach helps stakeholders, including investors, customers, and regulators, gain a holistic understanding of a company's environmental, social, and governance performance. Integrated reporting fosters a more comprehensive view of a company's commitment to responsible and sustainable business practices.

Both the CSRD and CSDDD align with global sustainability goals and initiatives, such as the United Nations Sustainable Development Goals (SDGs) and the Paris Agreement. By requiring companies to report on their sustainability efforts, these directives help ensure that businesses contribute to broader societal and environmental objectives, such as reducing greenhouse gas emissions, promoting gender equality, and eradicating poverty.

Both directives emphasize the importance of engaging with stakeholders in the reporting process. This includes soliciting feedback from stakeholders and considering their perspectives in shaping a company's CSR and sustainability strategies. By involving stakeholders, companies can better identify and address ESG issues that matter most to their investors, customers, employees, and the communities in which they operate.

In conclusion, the links between the Corporate Social Responsibility Directive (CSRD) and the Corporate Sustainable Development Disclosure Directive (CSDDD) are evident in their shared objectives of promoting transparency, accountability, and sustainability reporting among companies. While the CSRD focuses on CSR aspects, the CSDDD complements it by emphasizing environmental and social dimensions. Together, these directives encourage integrated reporting and alignment with global sustainability goals, ultimately fostering responsible and sustainable business practices. Companies that embrace both directives not only meet regulatory requirements but also contribute to a more sustainable and equitable future.