In January, the Corporate Sustainability Reporting Directive (CSRD) entered into force within the European Union, and many seafood companies will soon be required to increase the scope of their environmental, social, and governance disclosures.
The new directive introduced reporting requirements on what the E.U. called “large undertakings,” which is any E.U. company exceeding at least two of three criteria: A balance sheet greater than EUR 20 million (USD 21.7 million), net turnover of EUR 40 million (USD 43.4 million), or an average number of employees reaching 250. The specific information the companies will be required to report will be described over the coming years, but included among many of the proposals are value-chain reporting requirements that may end up having knock-on effects with smaller companies also being required to disclose information within the CSRD to do business with larger companies.
Those requirements, PwC Norway Director of Strategy and Sustainability Inki Brown and PwC Partner Hanne Johansen said, are something many seafood companies need to start planning for now to avoid future problems.
Those requirements, Brown said, mean that any company dealing with a larger company needs to start taking stock of a lot of key climate-related data, including greenhouse gas emissions. While the CSRD is mainly E.U.-focused, the global seafood industry will be impacted due to value-chain reporting requirements, Brown said.
“Even if your company is not large enough to have to report to the CSRD, you will probably notice it,” Brown said during the presentation. “If any of your customers have to report, they may come to you asking for the climate footprint of what you have bought, or what they bought from you, or ask what you do to ensure the safety of your workers.”
That means, for example, a company in Norway that sends seafood to a larger company in the E.U. that has reporting requirements may end up being asked to disclose an array of sustainability data. And if that company can’t provide that data, it might be left behind by competitors who could.
“The CSRD will set a new standard for how to communicate about sustainability for all companies. And by the way, if you are now feeling overwhelmed, that is nothing to be ashamed of,” Brown said to the audience. “We would go so far as to say that no Norwegian companies are at this level of sustainability reporting.”
The good news, Johansen said, is that most of the requirements have been built on a framework that matches a lot of what is best practice in the seafood industry when it comes to sustainability reporting.
“Many companies that have already started organizing their reporting according to these standards, will be better prepared for the new requirements,” she said. She said companies should consider making sustainability an integrated part of their business strategy in the coming months if they do any business with E.U. companies that will soon fall under the CSRD requirements.
Still, according to a PwC survey, companies need to be doing more. Brown said that of the companies surveyed, 29 percent considered sustainability to be an integral part of the business.
“As the CSRD will require transparency about strategy, and management, it does seem there’s still a number of companies within the seafood industry that will need to get their ducks in a row,” she said.
While a lot of the CSRD requirements, Brown said, do not have screening criteria for things like aquaculture yet, seafood companies should still be aware of how the implementation of requirements for companies in real estate or construction will have a ripple effect across all industries.
“Construction and real estate, energy, and transport, are all areas where a number of different criteria are ready,” she said.
There is a silver lining to the additional burden of CSRD. Brown pointed out that the new reporting requirements will give seafood a chance to prove definitively that it has a lower environmental impact as it eliminates the ability for a company to “greenwash” using subjective data. That will mean all industries will be benchmarked similarly, allowing more sustainable industries to promote their low environmental impact.
“The seafood industry often talks about their sustainable production compared to other protein producers,” Brown said. “With the E.U. taxonomy, subjective assessment will no longer be possible. In this way, the existence of the taxonomy, with pre-defined, scientifically based, strict criteria defining what counts as ‘green,’ may give the seafood industry an opportunity to prove that they are involved in sustainable activities.”
Photo by Chris Chase/SeafoodSource
