LA TRIBUNE – Does the publication of the European Commission’s frequently asked questions confirm the complexity of the new CSRD extra-financial reporting?
Pierre BARET – Like any European directive, the CSRD standard is quite complex. Above all, it applies to a wider scope than the previous one, because the thresholds have been lowered. In fact, nearly 50,000 European companies are affected by the obligation, compared to 11,000 previously. The exercise can therefore prove confusing for SMEs, which are not necessarily structured to carry out extra-financial reporting but will have to apply the standard on January 1, 2026. Additional reporting necessarily involves additional administrative work and complexity. varies depending on the organization. But companies motivated to respond to the CSRD will do so, just as they already produce financial reporting for their shareholders without difficulty.
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Who will be the recipients of this extra-financial reporting?
It must theoretically be presented to all the company’s stakeholders, but in practice few people will read it… Funders, particularly institutional ones, will undoubtedly be interested in it but more in the logic of knowing how the social and environmental issues facing the company can impact its activity. It is to be hoped that NGOs, citizen associations or curious individuals will look into this to encourage companies to really look into the consequences of their activities.
How will the CSRD help businesses evolve?
Even if this is not written in the text, at the origin of the CSRD, the hoped-for objective is to allow companies to report on their social impact and on the natural environment of their activity in order to make it evolve. . We are conducting research to find out how organizations structure themselves to meet this obligation, and whether this promotes learning that is beneficial to taking human and environmental issues into consideration. The results are not yet known, but the initial assumptions are that when extra-financial reporting is outsourced, the dissemination of this learning will be minimal. If it remains the prerogative of CSR departments, dissemination will remain limited to a perimeter of knowledgeable people. When such a department does not exist, extra-financial reporting will be managed by the administrative and financial department, whose teams were until now not necessarily sensitive to these issues and will do so.
In SMEs, it is possible that carried out internally by general management, the impact of reporting could be stronger, and influence company strategy. My fear, however, is that the subject will be heavily outsourced, with the consequence, since few firms are trained in it, of a concentration of this market in the hands of the “Big Four”.
How do you decipher the current struggle for influence between the CSRD standard and the American ISSB standard?
This is a political fight in the broad sense which will distinguish strong sustainability from weak sustainability. The CSRD is based on the concept of double materiality. That is to say, companies must account for the impact of their activity on their natural environment and its social dimension, in addition to evaluating to what extent attacks on the environment and social aspects impact their results. This is part of a strong sustainability approach.
Simple materiality, defended by the ISSB (International Sustainability Standards Board, at the origin of the international IFRS accounting standards which were imposed in Europe in 2002), only retains the second approach. We are talking about low sustainability, in the sense that, indirectly, a company has an interest in acting responsibly to guarantee its profitability. In this case, the impact is very small and the logic is purely financial. The argument of ISSB President Emmanuel Faber is that simple materiality is more realistic.
A priori, the Anglo-Saxon world positions itself rather in favor of simple materiality and Europe has chosen double materiality, by imposing the CSRD on European companies, while the ISSB remains an association. The standard applied in China, which I do not know, is also based on double materiality.
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Could CSRD be a gateway to socio-environmental accounting?
The CSRD could be a first step. There socio-environmental accounting [ndlr : qui propose d’intégrer les capitaux naturels et humains au sein de la comptabilité financière]indeed constitutes an aid in carrying out extra-financial reporting. This is a question that arises during interventions that I carry out as part of action research. Companies are starting to experiment with the CARE (Comprehensive Accounting in Respect of Ecology) model, the most widespread socio-environmental accounting. This is the case of the Port of La Rochelle or my establishment, Excelia Business School, which is launching its own approach as part of a thesis co-financed with the University of La Rochelle, and is to my knowledge the first school of management.
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What changes are expected from such accounting?
At Fleury Michon, which is testing the CARE method on one of its sites, we are observing an awareness among the employees involved of what is essential to preserve, in particular thanks to a focus on “water capital” which has made it possible to better understand what was the “good state” of the “water capital” in particular through a dialogue with the Water Agency, scientists and the watercourse users’ association… At Excelia Business School where the approach has just begun, the general management and the members of the executive committee were able to understand that the responsible approach aspired to by the school was only sustainable if it could be evaluated and managed, which implies having a model accounting integrating social and environmental capital.
This concerns companies meeting two of the following three criteria: more than 250 employees, more than 50 million euros in turnover, more than 25 million euros in balance sheet total as well as SMEs listed on the stock exchange (except micro -businesses).
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