Addressing climate change is among the biggest challenges of our time. The United Nations has warned that unless sufficient action is taken in the next two years, then patterns of extreme weather conditions will become inevitable and unrelenting.
The European Parliament elections in June showed that there has been a backlash against green policies across the EU. This was perhaps inevitable given the campaign by populist politicians against “net zero”, which was depicted as a pushback against the elites for imposing financially punitive measures on ordinary people to pay for problems they had not caused. It was a message that gained a lot of traction over the past few years amid a cost-of-living crisis.
Addressing inequality should be central to tackling climate change. That is why the move this week to sign into Irish law the Corporate Sustainability Reporting Directive (CSRD) is welcome.
The CSRD is a comprehensive update to the EU’s Non-Financial Reporting Directive (NFRD). It is estimated that 50,000 companies across the EU will be required to comply with CSRD rules, compared to 12,000 under NFRD. These new rules are much more granular and data-driven, which means that companies have to supply evidence they are complying with their climate change and sustainability targets.
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The rationale behind the CSRD is to confront a growing level of corporate greenwashing. Many companies have laudable sustainability objectives, but far too often when there is an audit of these companies, there is a yawning chasm between what they claim and what they achieve.
For example, some carbon offsetting schemes, in which companies purchase “credits” to offset their polluting activities, have been shown to be essentially useless in reducing emissions.
CSRD rules demand full transparency, which will limit the scope for abuse offered by carbon credit schemes. The CSRD regime is still incomplete, but it is a positive step towards ensuring companies take seriously their responsibility to address climate change.