The Corporate Sustainability Reporting Directive (CSRD) focuses on supporting companies and projects that are transitioning towards more sustainable and environmentally friendly practices. This regulation becomes mandatory for large EU companies starting with reports for the fiscal year 2024, due in 2025. In this blog, we dive deeper into CSRD and its impact on the PPE textiles industry.
What is CSRD?
The CSRD is a new European Union regulation that was adopted in April 2021. It has put into place several requirements for sustainability reporting:
- Comprehensive sustainability reporting: companies must report on a broader range of sustainability topics, including environmental, social, and governance (ESG) aspects. CSRD mandates the use of European Sustainability Reporting Standards (ESRS) to ensure consistency and comparability across reports. Furthermore, companies are required to obtain limited assurance from an independent auditor or assurance provider to ensure the accuracy and reliability of their sustainability reports.
- Double materiality: companies must consider both financial materiality (how sustainability issues impact their financial performance) and environmental/social materiality (how their activities impact the environment and society).
- Digital reporting: reports must be digitally accessible and machine-readable to improve transparency and facilitate data analysis.
- Stakeholder involvement: companies must consider stakeholder interests when preparing their sustainability reports, emphasising transparency and engagement.
Significance of CSRD for the textile industry
For large textile companies, there are several reasons why the CSRD is significant:
- Environmental impact: the textile industry is one of the most resource-intensive industries, known for high water usage, chemical pollution, and carbon emissions. The CSRD compels companies to disclose their environmental impact and encourages them to adopt more sustainable practices towards a circular economy.
- Supply chain transparency: textile companies often have complex global supply chains involving multiple stakeholders. The CSRD requires them to report on the social and environmental conditions within these supply chains (upstream and downstream), fostering greater accountability and ethical sourcing.
- Social responsibility: the textile industry has faced scrutiny for labour issues, such as low wages and poor working conditions. CSRD mandates reporting on social responsibility, labour rights, and employee wellbeing, promoting better treatment of workers.
- Governance and ethical practices: the CSRD's focus on governance ensures that textile companies maintain high ethical standards, comply with regulations, and implement effective management practices. This leads to increased trust among stakeholders and customers.
Application of CSRD and EU taxonomy
CSRD & EU taxonomy is an obligation for:
- Large Companies: defined as those that meet at least two of the following three criteria:
- Over 250 employees
- Over €50 million in turnover
- Over €25 million in total assets - Listed Companies: all companies listed on EU-regulated markets, regardless of size.
- Non-EU Companies: companies with substantial business in the EU, meeting a certain threshold of revenue within the EU (expected to be around €150 million). This inclusion aims to ensure that non-EU companies operating in the EU also adhere to sustainability reporting standards.
Even for those not directly subject to the CSRD, its influence extends throughout the supply chain. Larger companies will require detailed sustainability information from their smaller suppliers and partners to fulfill their own reporting obligations, resulting in a greater need for transparency and data-sharing across the industry.
Our path to CSRD compliance: preparing for 2026 requirements
As a textile manufacturing company, TenCate Protective Fabrics is actively preparing to meet the requirements of the CSRD. We have already completed key steps towards compliance, including a Double Materiality Assessment (DMA) and a comprehensive gap analysis. Currently, we are in Phase 2 of our CSRD readiness journey, focused on gathering data in accordance with the European Sustainability Reporting Standards (ESRS). This ensures we align with the upcoming reporting obligations and continue to prioritize transparency and sustainability in our practices.
Keen to find out more?
If you'd like to learn more about CSRD and its impact on the PPE textile industry, please feel free to get in touch — one our friendly advisers will be happy to talk further with you:
