The EU’s Corporate Sustainability Reporting Directive for Cosmetics (CSRD)
The Corporate Sustainability Reporting Directive (CSRD) mandates detailed sustainability reporting for businesses operating within the European Union (EU). It standardizes reporting metrics and broadens the scope of companies required to report on environmental, social, and governance (ESG). By 2028, approximately 50,000 companies will be subject to this expansive sustainability reporting. If a company satisfies any of the following criteria, they are subject to the new law:
Large EU Companies
Companies with 250 or more employees, €40M net turnover, or €20M total assets
Non-EU companies
Companies with significant EU operations, EU net turnover of €150M+, and an EU-based subsidiary or branch.
SME’s
Businesses with listings on EU stock exchanges will be under CSRD, with simplified reporting requirements.
The CSRD considerably standardizes non-financial indicators and expands the reach of companies subject to sustainability reporting and auditing.
Listed companies with public shares and 500+ employees, already subject to reporting, will have to adapt to new, expanded sustainability reporting criteria, such as enhanced data granularity and third-party verification.
Entities new to mandated sustainability reporting face a steep learning curve. They must develop frameworks, establish data collection mechanisms, and align with the European Sustainability Reporting Standards (ESRS).
Non-compliance consequences will vary across EU Member States and are still in development as countries decide their penalties. In Germany and Italy, potential fines are as high as €10M or 5% of total revenue. In France, corporate directors could face judge-imposed penalties, with fines of up to €75,000 for repeated infringement and even possible imprisonment.
Sustainability phased rollout spans several years but is just around the corner.
Health and beauty businesses must act swiftly to comply with CSRD requirements. This will require serious work, as companies must collect data and publicly disclose a large volume of information. Don’t worry—Fairglow can help!
Companies should ask themselves if they have the right tools and partnerships to collect and process this complex data. Meeting the CSRD will involve many stakeholders beyond dedicated sustainability leads or teams. For example, companies will likely need to implement IT procedures to ensure the integrity and traceability of this data, which requires IT Departments to be involved early for success.
Fairglow customer success teams and environmental experts provide ongoing support for data collection.