Solutions

What is the CSRD?

The Corporate Sustainability Reporting Directive (CSRD) is a European Union legislation that requires companies to disclose detailed information about their environmental, social, and governance (ESG) impacts.

Know more about CSRD

The European Sustainability Reporting Standards (ESRS) provide specific requirements on what information must be disclosed and how it should be reported under the CSRD framework.

Double materiality in the CSRD Directive refers to the obligation of companies to report not only on the impacts of their activities on the environment and society but also on how environmental, social, and governance (ESG) factors affect their financial performance.

In the environmental domain, five key standards are defined:

ESRS E1: Climate
ESRS E2: Pollution
ESRS E3: Water and Marine Resources
ESRS E4: Biodiversity and Ecosystems
ESRS E5: Resource Use and Circular Economy

Materiality of Environmental Impacts

Reads supports the 'double materiality' process by quantifying the impact that an organization generates on natural capital in a transparent and systematic manner.

Identification and Quantification of Material Impacts

Calculates the current and potential impact, both negative and positive, taking into account the metrics required by the ESRS.
Allows for a temporal projection of impacts based on operational parameters, incorporating various environmental and management scenarios.
Analyzes materiality through natural capital valuation and accounting techniques, including local context parameters to obtain more precise and relevant results, enabling an improved action plan proposal.

Establishment of Metrics, Goals and Action Plans

Reads employs environmental economics techniques to guide decision-making in the CSRD domain, facilitating the establishment of achievable goals under different investment scenarios.

Establishment of Metrics and Goals

Reads complements the metrics proposed by the various ESRS by using economic values, such as market prices or shadow prices, which reflect the social cost of an environmental impact. These monetary metrics complement traditional intensity indicators expressed in hectares, tons, or cubic meters.
These new natural capital metrics allow for the generation of intensity indicators that take into account the productive and economic factors of any company or economic activity.
Both types of prices are valuable tools that, when used together, can significantly improve the valuation and management of natural capital associated with any project, promoting more sustainable and responsible decisions within the CSRD directive framework.

Definition and Monitoring of Action Plans

Reads supports the definition of Action Plans for managing IROs (Impacts, Risks, and Opportunities) by calculating the Net Environmental Benefit and the Cost-Benefit of each plan. It combines the effectiveness and efficiency of various action plans with the economic resources needed to implement them in the short, medium, and long term, understood as capital investment needs (CAPEX) and operational expenses (OPEX).
This dual approach to environmental investments in the context of the CSRD focuses on evaluating the impacts and costs of proposed actions against the long-term environmental benefits. This analysis quantifies the initial, maintenance, and investment costs needed to mitigate negative impacts and compares these with the benefits derived from improved ecosystem services, emission reductions, and other positive environmental impacts.
In the context of the CSRD, this approach allows companies to justify and prioritize their environmental investments, aligning their decisions with global climate goals and investor sustainability expectations. Additionally, it helps measure the environmental return on investments, facilitating the integration of sustainability into long-term business strategy.