For public municipal utility companies, it is crucial to start becoming familiar with the requirements of the Corporate Sustainability Reporting Directive (CSRD) and EU Taxonomy
By Hannah Graf-Edinger, First Climate Consultant for Corporate Climate Strategies
Across all sectors, sustainable operations, products, and investments are quickly becoming an expectation, rather than the exception for companies. Now new EU-wide legislation has made transparency around sustainability also mandatory. Effective immediately, the CSRD and the EU Taxonomy will gradually require around 50,000 companies across the EU to regularly disclose their environmental, social, and financial impact. Such an undertaking requires a lot of preparation time for data collection and effective implementation for a thorough and accurate report. What does the CSRD and EU Taxonomy mean for municipal utilities and energy suppliers and how can the industry best prepare for this?
The scale and scope of the mandatory report under the CSRD presents a challenge in and of itself. Most companies, depending on sector and business activities, will not have to report on all the CSRD’s European Sustainability Reporting Standards (ESRS). However, most municipal utility companies and energy providers are often resource-intensive, release high carbon emissions from energy production, and have a large overall impact on the climate, meaning they will at least be required to report across all environment-related ESRS topics. Municipal utility companies and energy providers could be facing a massive data collection task of up to 1,100 data points. To accurately report on all data points requires expertise, training for personnel, effective stakeholder engagement, and enhanced data collection and reporting processes. In order to achieve all this before the reporting deadline, it is essential that municipal utilities and energy suppliers familiarize themselves with the requirements now. Ideally, this would also include consulting a specialist partner to develop a roadmap for implementation.
The EU Taxonomy, which classifies which economic activities are sustainable, is yet another potential challenge. Many municipal utility companies are also asset-heavy, consequently increasing the complexity when meeting financial reporting requirements. This could mean that companies need to adapt reporting processes, and possibly even consider integrating digital reporting solutions to simplify this. The cloud-based EU Taxonomy software from First Climate’s exclusive partner VIRIDAD makes the reporting process for companies significantly more efficient.
Public municipal utility companies and energy providers find themselves at the forefront of these changes. If anything, their importance in public life puts them in a position where they are often held to an even higher ESG standard than for many other companies or branches
Proactive rather than reactive
2025 is the first deadline for most public municipal utility companies to report under the CRSD. Extensive and tedious preparation is needed for this reporting process, and public municipal utility companies should start now to understand the regulatory requirements, engage with relevant stakeholders, gather data, and create an overall reporting action plan. By proactively integrating high ESG standards into their operations and ensuring that sustainability matters are a priority with relevant stakeholders, companies can be better prepared for the report and also do their part to mitigate climate change.
The complexity of the EU's new sustainability reporting landscape can be overwhelming, but starting now to take on these new challenges will give you an edge over those that view it as tomorrow’s problem.
And with an experienced sustainability reporting partner at your side, you can focus more on the opportunities than the challenges. As a long-standing partner for many public municipal companies and energy providers over its 25 years in business, First Climate is familiar with the specific needs of the sector and can help you understand how the new legislation affects you. First Climate Consulting can support and advise you through all phases of the CSRD reporting process, starting with a double materiality assessment and your CSRD reporting action plan.
Contact: impact@firstclimate.com
About the author:
Hannah Graf-Edinger is a corporate climate strategy consultant specializing in carbon accounting and sustainability reporting. With a background in environmental and energy law, she excels at applying national and international legislation and analyzing complex issues in a structured manner. Before joining First Climate in 2023, she worked as a research associate on various environmental and climate law research projects.
