CSRD: Navigating Sustainability Regulations and Risks for Asian Firms
CSRD Overview and Asian Companies
The Corporate Sustainability Reporting Directive (CSRD) introduces stringent reporting guidelines affecting Asian firms, especially in China. As EU sustainability regulations intensify, companies must proactively address their sustainability metrics to stay competitive.
Implications for Supply Chain and Scope 3 Emissions
- Scope 3 emissions reporting becomes mandatory, compelling firms to disclose emissions from their entire supply chain.
- Compliance deadlines start in 2024 for large firms and extend to smaller entities by 2028.
- Many Asian companies lack the systems to collect necessary sustainability data, risking their reputation.
Strategic Adaptation for Competitive Advantage
Ryan Foo from TUV Rheinland highlights that companies that understand the link between sustainability and value creation can leverage CSRD compliance for competitive leverage. Chinese firms targeting battery and solar panel production in the EU face immediate challenges.
Hong Kong and Mainland China Regulations
- By 2026, over 400 firms in mainland China must publish sustainability reports focusing on emissions.
- Hong Kong’s Hang Seng Composite Index firms face similar requirements, adding complexity to disclosures.
With the CSRD's emphasis on detailed disclosures, companies must prioritize transparency in their sustainability efforts. Seeking compliance can pave the way for enhanced market reputation and operational sustainability over time.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.