CSRD in force from 5 January 2023: sustainability reporting also for energy companies

Directive (EU) 2022/2464 on corporate sustainability reporting (CSRD) entered into force on 5 January 2023. It replaces the previous rules on non-financial reporting and extends the circle of obliged companies to many more firms: ultimately all large companies and listed companies, including small and medium-sized listed ones (excluding micro-enterprises). Reports are to comply with the European ESRS standards and be subject to external assurance. For the biogas and energy sector this means new expectations regarding data on emissions, feedstocks and environmental impact.

What is changing

The CSRD introduces a timetable of gradual application:

• from financial year 2024, companies already covered by the non-financial reporting directive (large public-interest entities),
• from 2025, other large companies,
• from 2026, listed companies that are small and medium-sized enterprises (with the possibility of deferral),
• from 2028, companies from third countries with significant turnover in the EU.

The scope of the report covers, among other things, greenhouse gas emissions, energy consumption, impact on water resources, biodiversity, the circular economy, as well as social and governance issues. Companies are to assess "double materiality": the company's impact on the environment and the impact of environmental factors on the company.

Significance for the industry in Poland

Agricultural biogas plants themselves are usually small entities that will not be directly subject to the directive. Their customers and financiers, however, will: banks, energy companies, large retail chains and food producers. That is why data on emissions, the feedstock balance, the origin of biomass and digestate management will increasingly be required in contracts and loan applications. Good data collection systems will become a competitive advantage.

For biomethane producers selling gas to industrial customers, guarantees of origin and sustainability certificates, which allow the customer to account for the emission reduction in its report, will be important. This is an additional argument for introducing a full biomethane certification system in Poland.

How to prepare in the supply chain

Companies that will report will collect data from suppliers and customers, including on Scope 3 emissions. For a biogas or biomethane producer the simplest steps are: a register of feedstocks broken down by type and origin, the mass and energy balance of the installation, measurement of methane emissions from stores and systems, and documentation of digestate management. It is also worth checking whether the installation has a sustainability certificate (e.g. ISCC), which makes it easier to pass credible data to customers.

What next

The European Commission will adopt the ESRS standards through a delegated act, and Member States are to transpose the directive into national law within 18 months. Polish companies in the renewable energy value chain should already check what data they collect and in what system, so as to meet counterparties' requirements.