The Corporate Sustainability Reporting Directive (CSRD) marks a transformative shift towards enhanced transparency and accountability in sustainability reporting within the European Union. This directive aims to standardize the reporting of comprehensive sustainability metrics crucial to the animal protein value chain, including greenhouse gas emissions, water and energy use, biodiversity impacts, and adherence to animal welfare standards. By fostering uniform reporting standards, the CSRD enables stakeholders in the animal protein industry—ranging from investors to regulators and consumers—to make informed decisions based on reliable and comparable data.
Transitioning from the Non-Financial Reporting Directive (NFRD), the CSRD significantly broadens the scope of mandatory sustainability reporting. It will eventually apply to all EU-based large companies and groups and all companies listed in the EU (with a staggered entry into force in the period 2025 through 2027) as well as non-EU companies with significant presence or activities in the EU (as of 2029), particularly impacting sectors like the animal protein industry, which involves major meat processors and large-scale dairy firms. This shift reflects a commitment to more accountable and transparent corporate behaviors, particularly in sectors with profound environmental and social impacts.
The CSRD, proposed by the European Commission in April 2021, is set to replace the existing NFRD. The European Parliament and Council adopted it in 2022, and the first reports under the new directive are expected in 2025 (covering financial year 2024).
The CSRD will apply to a wider range of companies than the NFRD, encompassing over 50,000 companies in the EU compared to around 11,000 under the NFRD. Specifically, the companies affected by the CSRD include:
Under the CSRD, companies in the animal protein industry are mandated to disclose extensive information across several sustainability fronts:
Feed production represents a significant portion of the environmental footprint in the animal protein value chain. Studies show that feed production can account for up to 70% of the total greenhouse gas emissions in the livestock sector. This includes emissions from fertilizer production, land-use changes, and energy consumption. Moreover, feed production is a major driver of deforestation and biodiversity loss due to the conversion of natural habitats into agricultural land.
Feed producers, therefore, have the greatest opportunity to reduce environmental impact. Strategies include:
Livestock production is directly associated with methane emissions from enteric fermentation, manure management, and land use. It contributes significantly to water consumption and land degradation. Livestock producers can mitigate their environmental impact through:
Processing and retailing stages of the animal protein value chain also contribute to environmental impacts through energy consumption, waste generation, and transportation emissions. Processors and retailers can implement several measures to enhance sustainability:
Sustell™ is an an ISO assured, innovative end to end LCA platform designed to assist businesses in the animal protein value chain in achieving CSRD compliance through:
Large feed producers are directly subject to CSRD reporting requirements, while smaller producers might feel indirect pressure if larger companies in the supply chain demand compliance to ensure their own reports are comprehensive and accurate. For example, a large dairy company might require detailed sustainability data from its feed suppliers to complete its CSRD reports.
Large livestock producers are directly affected by the CSRD. However, small to medium-sized producers may also need to start aligning their practices with CSRD standards, especially if they are part of the supply chain of a large company that is under the purview of the CSRD. This trickle-down effect ensures that even those not directly under the CSRD’s current scope begin adopting sustainable practices, driven by requirements set by their business partners.
Larger processors and retailers directly covered by the CSRD will require detailed sustainability data from all parts of their supply chain, affecting even the smaller suppliers.
For entities mandated to comply with the CSRD, leveraging their position to influence sustainability practices across their supply chain is crucial. This not only aids in smoother integration of CSRD compliance but also fosters broader environmental and social benefits.
The CSRD sets a new standard for sustainability reporting within the animal protein value chain. It compels detailed and standardized disclosures, facilitating a deeper understanding and management of sustainability impacts in this sector. For businesses, aligning with CSRD standards is not merely about regulatory compliance—it's a strategic approach that enhances transparency, fosters investor confidence, and supports sustainable growth. As the directive evolves, staying informed and adaptable will be key to leveraging its challenges into opportunities for sustainability leadership.
15 July 2024