Good morning, Peter Vanham here in Geneva, filling in for Alan.
Feedback here at CEO Daily is always welcome, but especially when it contains a challenge. So, Alan and I were particularly intrigued when we got this reply: “Dear Alan, I always enjoy your e-newsletter but you are missing one big challenge for CEOs.”
The challenge we missed, in this case, was the European Union’s Corporate Sustainable Reporting Directive, or CSRD. The binding, EU-wide directive came into effect on Jan. 5 of this year. As of 2025 (financial year 2024), it will force large, listed companies with headquarters or subsidiaries in the EU to disclose a broad set of ESG metrics and have those disclosures assured by a third party.
What will its impact be?
First, the CSRD could be a “game changer” that ends investors’ skepticism of corporate greenwashing, Nadja Picard, global reporting leader at PwC, and lead author of the Global Investor Survey, told us. That would be a good thing: in PwC’s last survey, conducted in 2022, 87% of investors polled still “suspected that corporate disclosures contain some greenwashing.”
How would the CSRD help? Until the EU directive came into force, “companies were making claims on net-zero, and...what they needed to get there [wasn't] fully fitted out,” Picard said. With the new directive, by contrast, companies will face a “requirement to assure their sustainability report as a whole, just like [they] do with financial information.”
Second, the CSRD will require international companies to release “social” metrics as well as “environmental” ones. A company’s gender pay gap, executive-to-worker pay ratios, unionization rates, reported incidents of discrimination, and employee turnover are all included. The CSRD may thus force some companies to share information that wasn't previously measured or available to the public.
And third, like with EVs or A.I., the EU CSRD may become a de facto global trendsetter, coming before similar rules elsewhere. In the U.S., the SEC is expected to reveal its climate disclosures this spring, with implementation a few years down the road. Internationally, the International Sustainability Standards Board (ISSB) is similarly planning to reveal its disclosure standards by end of June.
It made our reader’s final feedback worth sharing here too: “You might want to check this out and ask CEOs if they know about this and are ready for it.”
Are you? We’d love to hear it.
***
And an additional note below from Alan:
Dow, the materials science company, is announcing this morning another step in its path to net zero. The company said it will install a next generation nuclear plant to deliver safe, reliable, zero-carbon power at its manufacturing facility in Seadrift, Texas. Working with X-Energy Reactor Company, the company plans to build what’s called a “small modular reactor,” with support from the U.S. Department of Energy. Said CEO Jim Fitterling: “Advanced nuclear has attractive advantages over other sources of clean power, including a compact footprint, competitive cost, and enhanced power and steam reliability.” Dow announced plans last month to build a low-carbon ethylene cracker in Saskatchewan that relies on carbon capture and clean hydrogen.
***
More news below.
Peter Vanham
peter.vanham@fortune.com
@petervanham
