The Story Behind Whispli

The Corporate Sustainability Reporting Directive (CSRD) is an EU regulation that aims to improve the quality and transparency of sustainability reporting by companies operating in Europe. The CSRD introduces new standards for sustainability reporting that are in line with international best practices and require companies to report on a wide range of environmental, social and governance (ESG) topics. The CSRD came into force on January 1, 2024, and covers a wide range of companies, including listed companies, large companies, and EU subsidiaries of non-EU companies.

In this article, we’ll take a closer look at the CSRD and the relationship between the CSRD, whistleblowing, and the EU Whistleblowing Directive. We’ll also explore how companies can incorporate whistleblowing into their CSRD reporting.

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What is the CSRD?

The CSRD aims to provide comprehensive sustainability information so that investors and stakeholders can make well-informed decisions. The CSRD requires companies to report on a wide range of sustainability topics, including climate change, natural resources, circular economy, environmental compliance, biodiversity, and social topics such as workforce diversity, health and safety, human rights and supply chain management.

Organisations are required to report against the European Sustainability Reporting Standards (ESRS), which have been developed by the European Financial Reporting Advisory Group (EFRAG). The ESRS have been designed to be in line with the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), and the Task Force on Climate-related Financial Disclosures (TCFD). In this way, the CSRD aims to align European sustainability reporting with international standards.

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The CSRD and Whistleblowing

The CSRD requires companies to report on their whistleblowing policies, systems, and outcomes. This reporting obligation is part of the broader requirement to report on governance topics under the CSRD. Companies must report on the existence and effectiveness of whistleblowing systems, including information on the number and nature of reports received and the outcomes of investigations. In addition, companies must report on the policies and procedures they have in place to ensure that whistleblowers are protected from retaliation.

This reporting obligation is closely linked to the EU Whistleblowing Directive, which requires companies to implement internal reporting channels and to protect whistleblowers from retaliation. The EU Whistleblowing Directive requires companies with more than 50 employees to have an internal reporting channel in place. The directive sets out minimum standards for the protection of whistleblowers, including protection from retaliation and the right to report anonymously.

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How organisations can incorporate whistleblowing into CSRD reporting

There are a number of practical steps that organisations can take to align whistleblowing with CSRD reporting requirements. These include:

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Developing a whistleblowing policy

The first step is for companies to develop or review their whistleblowing policy to ensure that it is aligned with both the EU Whistleblowing Directive and the CSRD reporting requirements. This policy should be reviewed and updated regularly to ensure that it remains effective and fit for purpose, and that it is aligned with the latest legal and regulatory requirements.

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Implementing and maintaining an effective whistleblowing system

Organisations should implement and maintain an effective internal reporting channel, as required by the EU Whistleblowing Directive, to ensure that employees and other stakeholders have a safe and confidential way to report concerns. Implementing a purpose-built whistleblowing platform can provide a secure channel for employees to report concerns, while also providing compliance teams with the data and analytics they need to manage reports effectively.

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Collecting data for CSRD reporting

In order to meet the CSRD reporting requirements, organisations need to collect data on the number and nature of whistleblowing reports received and the outcomes of investigations. A purpose-built whistleblowing platform can provide compliance teams with the data and analytics they need to meet the CSRD reporting requirements.

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Incorporating whistleblowing data into CSRD reporting

Once organisations have collected the necessary data, they need to incorporate this data into their CSRD reporting. This could include reporting on the number of reports received, the nature of the reports, and the outcomes of investigations. Organisations should also report on any changes to their whistleblowing policies and systems and any improvements they have made to address any issues identified through whistleblowing reports.

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CSRD whistleblowing reporting: the practical aspects

Under the ESRS Social Standards (S1), companies are required to report information on the following aspects of whistleblowing:

1. The company’s policies in relation to whistleblowing, describing the scope and the applicable standards.
2. Information on the dedicated communication channels (platforms, hotlines, email, other mechanisms) for reporting concerns, and how these channels ensure confidentiality and anonymity.
3. The processes for investigation, including timeframes for acknowledgment, investigation timelines and resolution.
4. Access to legal support, psychological support and other support mechanisms for the person submitting the report.
5. Training programs related to whistleblowing for employees and management.

This kind of reporting should be easy for organisations that have a purpose-built whistleblowing system in place, as these platforms are designed to capture this kind of data.

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Summary

In summary, the CSRD requires companies to report on their whistleblowing policies, systems, and outcomes. This reporting obligation is closely linked to the EU Whistleblowing Directive. To meet the CSRD reporting requirements, organisations should develop a whistleblowing policy, implement an effective whistleblowing system, and collect data on the number and nature of whistleblowing reports received and the outcomes of investigations. A purpose-built whistleblowing platform can provide compliance teams with the data and analytics they need to meet the CSRD reporting requirements.