Game-changing EU directive puts sustainability at the heart of companies’ businesses


A recently implemented EU directive represents a significant stride towards aligning business practices with global sustainability goals, says FIDIC’s Basma Eissa.

The introduction of the EU’s Corporate Sustainability Reporting Directive (CSRD) marks a critical advancement in our ongoing efforts to enhance transparency and accountability within the global infrastructure sector. This directive, which came into force earlier this year, not only revises but significantly broadens the scope of the previous EU rules concerning environmental, social and governance (ESG) information that corporate entities must report.

The CSRD is being celebrated as a game-changer, primarily because of its rigorous reporting requirements and the adoption of a ‘double materiality’ framework. This approach requires companies to disclose not only how sustainability issues affect their business but also how their operations impact the environment and society. This dual focus helps companies and stakeholders understand both the financial implications of sustainability issues and the societal consequences of their business activities.

What sets the CSRD apart is its expansive reach, extending obligations to a wide array of firms, including many non-EU entities. This inclusivity ensures that the directive covers a significant portion of the market, thereby setting a new global benchmark for sustainability reporting. For engineering consultancy firms, this means adapting to a landscape where transparency in reporting is not just encouraged but mandated.

The directive’s requirements for the audit of reported sustainability information is another notable feature that enhances reliability. The move towards mandatory audits guarantees that the sustainability data provided by companies is as rigorously scrutinised as their financial data. This step is crucial for building stakeholder trust and for ensuring that the reported information accurately reflects the companies’ actual sustainability practices.

Moreover, the phased implementation of the CSRD, which began in January 2023, allows organisations time to adapt to these new standards. However, with the full effect kicking in by 2025 for large companies and expanding further in subsequent years, the timeline for compliance is tight. This staged approach, coupled with the directive’s comprehensive coverage across various business verticals – from infrastructure planning to energy and data management – means that companies need to be proactive in their compliance strategies.

For engineering consultancy firms, implementing the CSRD will likely necessitate enhancements to internal systems for data collection and reporting. It may also drive the need for increased collaboration across departments to ensure that the double materiality assessment is thoroughly integrated into corporate decision-making processes. As companies begin to adapt to the directive, they will find themselves at the forefront of a shift towards more sustainable and responsible business practices globally.

The CSRD represents a significant stride towards aligning business practices with global sustainability goals. As we integrate these new reporting standards, it is crucial for engineering consultancy companies to view these changes not just as compliance obligations but as opportunities to lead in sustainability.

By embracing these rigorous standards, organisations can enhance their operational transparency and contribute positively to the global agenda of sustainable development. This proactive approach will not only benefit their businesses by aligning with investor and consumer expectations but also set a standard for responsible business practices worldwide.

Basma Eissa is the head of policy, ESG and sustainability at FIDIC, the International Federation of Consulting Engineers.