Most large companies are already reporting on their carbon footprint as part of their commitment to sustainability but a new law for large EU companies and EU market-listed businesses, Corporate Sustainability Reporting Directive (CSRD), is changing all that.

The new legislation goes beyond carbon emission reporting, tasking companies to annually report their social and environmental risks and their impact on people and the environment, with greater granularity. Grappling with the Double Materiality Assessment requirement for example, means assessing your travel programme’s impact on the world. 

The first reports are due this year based on companies’ financial results last year.

While CSRD targets large enterprises with more than 250 employees and a turnover of over €40 milion, it still affects companies based outside the EU, specifically those with a significant presence in the EU market and a turnover of over €150 million.

The legislation will cascade down to SMEs in 2026 and to non-EU SMEs in 2028 so it’s best to start preparing now.

The purpose of the legislation is to increase transparency and accountability, “enabling investors, stakeholders and customers to make more informed and lower carbon choice destinations,” explains Dr Wendy Buckley, Client Director at Carbon Footprint.

“It will promote sustainable practices and investments and while it’s too early to tell definitively, the increased reporting requirements and third-party assurance should help achieve these goals.”

Key to its success is enforcement. 

CSRD covers emission Scope 1 (direct emissions) and Scope 2 (indirect emissions from energy), while reporting on Scope 3 (other indirect emissions in the value chain) is encouraged but not mandatory. However, most industry observers believe that Scope 3 emissions reporting will soon follow together with stricter enforcement mechanisms and a global consistency in sustainability reporting standards.

The EU has already proposed Omnibus legislation to harmonise reporting requirements across member states.

It wants to remove reporting requirements for 80% of companies, restricting the mandate to EU-based companies with more than 1,000 employees, and with either a balance sheet of more than €25 million or turnover above €50 million.

If the proposals are approved by the European Parliament and the Council, organisations with less than 1,000 employees, which were due to begin annual reporting either in 2025 or 2026, as well as SMEs, due to report in 2027, would be exempt from annual reporting obligations.

Instead there will be a simplified voluntary reporting standard.

This will help level the playing field says Roger Peters, buyer and independent consultant. “Each company measures in a different way and each EU country has different rules and targets. This potentially could give a competitive advantage to a company that applies a calculation that looks more beneficial to them than a company applying a more realistic calculation.” 

“The actual requirements are not as onerous as you might think and will not affect as many companies as you think”

Ami Taylor, CEO of Goodwork Sustainability UK and Festive Road’s Associate Consultant, said the proposed changes could create uncertainty.

“Although in the short term not much will change, I think for buyers this evolution [with Omnibus] will create uncertainty on what they will have to do to be compliant in future, and it also reinforces the need to remain connected with internal sustainability teams,” she says.

It will be much easier for large blue-chip companies to meet the new reporting requirements under CSRD as they already have processes and resources in place.

“Most companies I have worked with do this as a day-to-day activity anyway,” says Peters. “And I believe, as with a lot of things, the actual requirements are not as onerous as you might think and will not affect as many companies as you think as well.” 

For the SME though it might feel like what Festive Road’s Sally Higgs, Travel & Events Sustainability Manager, calls, “unintentional scaremongering”.

“Don’t let perfection get in the way of good. Don’t be fearful and not get out of the gate”

Sustainability questions in RFPs go well beyond a box-ticking exercise today, to the extent that sustainability has become a competitive advantage and opens the doors to win more business. That’s key if companies plan to grow profits, reduce carbon and absorb the extra headcount and workload. 

“If done well, you can reduce cost by identifying low-value travel and by driving a purpose-led travel programme,” says Adam Braun, CEO and co-founder of Clarasight. Carbon is now a metric that matters and Braun claims that two thirds of business leaders are investing in IT for emissions management.

However, there are small businesses out there with tenders who still don’t understand how to respond to questions on sustainability. Very often the people given responsibility for sustainability are not from sustainability backgrounds, but HR, finance or operations. 

There is undoubtedly complexity in complying with CSRD and a need for technical expertise so challenges lie ahead for the SME. “I really feel for travel managers having this added to their workload as the legal obligations are very confusing and overwhelming,” says Festive Road’s Higgs.

“The main task is data integrity so buyers will put pressure on their TMCs to aggregate not just TMC data but expense data and invoice data.”

Data cleansing has long been an issue and now resource constraints on top of that could hamper progress. Carbon counting has done a great job to date on backwards reporting but this new legislation needs forward-looking target setting and that presents other challenges.

Clarasight’s Braun advises giving targets to business unit leaders to let them choose how to spend ”as IT departments travel differently to sales and marketing department employees for example. Give people autonomy and let them manage allocations. It may include modal shifts or supplier shifts”.

He also believes company culture around risk will be a factor in how much confidence people have in forward-looking targets. ”It’s the unknown so expect some pushback.” 

Internal training is one way of tackling the challenges head on. Sam Cande, Consultancy Directory for 360 Consultancy by Greengage, believes there is a significant knowledge gap and delivers weekly training to educate on what Scope 1, 2 and 3 actually means. “It’s challenging to work out your carbon footprint when you get to a company with 300-400 people and particularly if you do not employ a TMC,” she says. 

“All you have is your spend figure and you have to go into every single line so it takes time and there is a cost to that but if you’re responding to an RFP for £60 million worth of business and the cost of doing the work is £5,000 then it’s worth doing.” 

“Data cleansing has long been an issue and now resource constraints on top of that could hamper progress”

Cande believes CSRD is a game changer despite the challenges around the complexity of supply chains and the cost of gathering data, particularly for SMEs. 

If there is budget, it makes sense to use a third-party sustainability expert but first collaborate inside the business for support and start the journey.

“Don’t let perfection get in the way of good,” advises Goodwork’s Taylor.

”Don’t be fearful and not get out of the gate. One company I know has business across 50 markets plus local programmes. The key is transparency. Apply footnotes assumptions that inform people of the limitations of the data, for example, this data represents x% of our travel spend. Don’t worry about the methodologies and for the first year stick with DEFRA.”

Companies cannot afford to ignore CSRD. Nor can companies make claims they cannot support with data. Offsetting carbon usage from flights by planting trees (rather than avoiding/reducing travel) has been discredited and supporting nature and biodiversity is the gold standard today. It doesn’t require a sustainability expert to switch to a different flight, or different carrier.

The top three long-term business risks identified in the World Economic Forum’s Global Risk Report are all related to environmental risks.

”Investors are looking long-term at risk mitigation so this raises the priority of sustainability at board level, and buyers companies need to think about how their travel programmes connect with the broader business priorities,” says Taylor. 

Companies are working closely with their supply chain to give them the tools to green their operations. They are providing webinars – an internet search flags up a plethora of choice – while industry associations do the same.  

“Work with your suppliers and share information,” says Greengage’s Cande. “Help educate them and partner with them and take them on the journey with you. Be empathetic, understanding and supportive.” 

It’s not all doom and gloom as there could be upsides, for the travel manager to grab this opportunity and fill a more strategic role in the organisation, for buyers to work with more responsible suppliers in the long run, to create  stronger business pipeline and for an end to greenwash.