xFarm as a reporting tool for the Corporate Sustainability Reporting Directive (CSRD)
Chiara Micali
Sustainability Specialist
Recently, the CSRD has become an increasingly hot topic for companies operating in various sectors, including the agri-food sector. But what is it all about? How can it help companies become more sustainable? And what role can the xFarm platform play in this context?
CSRD: the European regulation
The Corporate Sustainability Reporting Directive (Directive 2022/2464 CSRD) is a European Union Directive dated December 14th 2022, and represents a fundamental step towards promoting transparency, accountability and sustainability in the corporate sector. It requires companies to disclose comprehensive sustainability information in a sustainability report to provide stakeholders with reliable, comparable and relevant information on environmental, social and governance (ESG) performance.
By standardising reporting requirements, the CSRD enables:
Stakeholders to assess and compare the sustainability performance of companies across various sectors and regions. This increases transparency and facilitates informed decision-making by investors, consumers, and policymakers.
Companies to identify, assess, and effectively manage sustainability risks and opportunities. By integrating sustainability considerations into corporate strategy, companies can enhance long-term value creation, mitigate risks, and seize opportunities for innovation and growth.
Strengthening corporate accountability by requiring companies to disclose their social and environmental impacts. This will encourage companies to align their business practices with sustainable development goals and societal expectations.
Timeline for implementation: When will CSRD take effect?
In terms of reporting timelines, the CSRD introduces a phased approach to implementation, with larger companies required to comply first.
Specifically, starting from January 1, 2024, the following entities are obligated to comply with CSRD requirements:
Listed companies: all companies listed on EU regulated markets, regardless of size, will have to comply with the CSRD.
Large companies i.e. companies that, at the balance sheet date, exceed the numerical thresholds of at least two of the following three criteria:
Total balance sheet exceeding EUR 20,000,000
Net sales and performance revenue exceeding EUR 40,000,000
Number of employees exceeding 250
Small and medium-sized enterprises (SMEs), will be required to comply with the regulation starting from January 1, 2026.
Sanctions for non-compliance will be determined by each Member State.
Standards underpinning the CSRD: ESRS
On July 31, 2023, the Commission adopted the European Sustainability Reporting Standards (ESRS) to be used by all companies subject to the Corporate Sustainability Reporting Directive (CSRD).
There are 12 ESRS covering a wide range of environmental, social, and governance issues, including climate change, biodiversity, and human rights. These ESRS are mandatory for companies required to report certain sustainability information under the CSRD.
CSRD in agri-food supply chains: Improving sustainability and resilience
The agricultural sector is particularly vulnerable to the effects of climate change, and farmers are first-hand witnesses to its effects on their crops. On the other hand, agriculture also contributes to global greenhouse gas emissions, accounting for approximately 24% of total emissions (IPCC (2014) & Global Carbon Project (2019)).
In this context, CSRD has a critical role to play in promoting sustainability and resilience within agri-food supply chains. By requiring comprehensive reporting of environmental impacts, CSRD encourages farmers and agri-food businesses to monitor and mitigate their contribution to climate change. The xFarm platform is a valuable tool in this regard, providing farmers and food companies with the support they need to monitor their activities, minimise environmental impacts, and build more resilient agricultural systems.
By 2026, CSRD aims to publish a specific reporting standard for the agricultural sector, which will define how agri-food companies should account for and report their emissions.
xFarm in the context of the CSRD
xFarm is a unique tool for tracking all the information required for CSRD reporting.
xFarm provides a solution for calculating and monitoring emissions, offering real-time impact assessments for each agricultural activity. The platform aggregates impact data, including carbon footprint, net water use, acidification, and eutrophication, facilitating the creation of comprehensive reports for industry leaders. By digitising the supply chain, xFarm ensures accurate data collection and traceability, making calculations more precise and accessible to third parties.
xFarm provides an integrated solution to effectively address E2, E3, and E5 standards through its modules and artificial intelligence-based decision support systems (DSS).
With regard to biodiversity, xFarm is developing a dedicated sub-module within its Sustainability module. The forthcoming Biodiversity sub-module will enable agribusinesses to quantify biodiversity levels using advanced technologies such as bio-acoustic sensors and satellite imagery.
Towards a more transparent and sustainable future
The Corporate Sustainability Reporting Directive (CSRD) represents a step forward in sustainability reporting standards, transparency, and accountability in the corporate sector. By requiring comprehensive sustainability reporting, the CSRD aims to provide stakeholders with reliable, comparable, and relevant information on environmental, social, and economic performance.
In the agricultural sector, monitoring key sustainability parameters is essential to mitigate environmental impacts, ensure social responsibility, and promote economic profitability. As agriculture plays a critical role in global food production and environmental management, the need for robust sustainability reporting is critical.
https://eur-lex.europa.eu/legal-content/ IT/TXT/PDF/?uri=CELEX:32013L0034 DIRECTIVE 2013/34/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of June 26, 2013 - Annual financial statements
Food and Agriculture Organization of the United Nations (FAO). " Building resilience for adaptation to climate change in the agriculture sector." https://www.fao.org/3/i3084e/i3084e.pdf
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