Companies in the EU must disclose their ESG performance soon. Are CEOs ready?

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.

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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

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 Fort Saskatchewan, Alberta, that relies on carbon capture and clean hydrogen.

That relies on carbon capture and clean hydrogen.

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More news below.

Peter Vanham
[email protected]
@petervanham

TOP NEWS

China audits

The U.S.’s auditing watchdog said Wednesday that it found an “unacceptable” number of deficiencies in audits of U.S.-listed Chinese companies. The Public Company Accounting Oversight Board reviewed the documents in Hong Kong as part of a deal that would keep Chinese companies on U.S. Markets. The watchdog specifically called out shortcomings in audits from KPMG’s mainland China office and PwC’s office in Hong Kong. Reuters

Disney earnings

The Walt Disney Company revealed better performance in streaming last quarter, reporting a $659 million loss for the division compared to a $1.5 billion loss six months ago. The entertainment company said it would offer content from Hulu on its flagship Disney+ service as it tries to make streaming profitable. Disney shares fell 4% in after-hours trading. The Wall Street Journal

Pay freeze

Coins2Day’s Kylie Robison reports that Microsoft is pausing pay raises for full-time salaried employees. In an email to staff, CEO Satya Nadella blamed both the company’s ongoing shift to A.I. And “macroeconomic uncertainties” for the pay freeze. The company reported $18.3 billion in net income last quarter, a 9% year-on-year increase.

AROUND THE WATERCOOLER

Google accused of breaking European privacy law by hoarding personal data of potential job candidates for years by David Meyer 

Robinhood’s crypto revenue nearly matches last quarter’s, with plan to buy back $500 million in stock from Sam Bankman-Fried ‘ongoing’ by Ben Weiss

Brazil’s unlikely bid to become a global crypto hub by Leo Schwartz

What to expect next from the housing market by Lance Lambert

Microsoft says A.I. Can fix 3 big problems with ‘the drudgery of work,’ from ending burnout to clearing out companies’ ‘digital debt’ by Tristan Bove

‘Quiet luxury’ has long been a tactic of the ultra rich—but there’s something everyone can learn from the stealth wealth trend by Eleanor Pringle

This edition of CEO Daily was curated by Nicholas Gordon.