New EU Rules: Sustainability Reporting

How sustainable are companies today? The EU’s Corporate Sustainability Reporting Directive (CSRD) will play a crucial role in the answer to this question. The CSRD is replacing the CSR Guideline and, as of reporting year 2025, obligates Freudenberg to annually publish information on environmental, social and governance (ESG) topics in the audit-related management report of the Annual Report. We pose the most important questions and provide the answers below.

What are the main components of CSRD?

Companies have to report on their strategy, activities, and KPIs relating to ESG issues that are identified as important with a double materiality assessment.  “Double” because it relates to the impact of sustainability issues on the company’s financial results on the one hand, and the impact of the business activity on society and the environment on the other.
One building block of the EU Green Deal is the EU Taxonomy Regulation. Based on very detailed criteria, it defines the degree to which a company helps with the attainment of EU environmental goals with its products. Revenue, investment expenditures and operating costs must be disclosed in connection with the products.

How do the Freudenberg and EU conceptions of sustainability differ?

The EU’s understanding of sustainability includes environmental, social and governance issues. Freudenberg‘s understanding of sustainability is very focused: It involves resource efficiency, especially efficiency in the use of energy and materials. But the other issues are just as important to Freudenberg: Along with “sustainability,” the five elements of “Freudenberg’s responsibility for the environment are “occupational safety, health and environmental protection,” “social commitment,” “compliance,” and “human rights and labor standards.”

How is Freudenberg responding to the changes resulting from the CSRD?

Early on, Freudenberg set up a Group-wide ESG reporting project – with the primary goal of meeting the reporting requirements mandated by the CSRD. ESG reporting is also due to be integrated into existing reporting processes.

What role do reporting tools play?

Especially for the collection of quantitative KPIs, reporting tools are indispensable. They include the Group-wide HR IT system Workday and the sustainability reporting system Enablon, which is being rolled out this year. All Freudenberg facilities worldwide will be expected to input their energy use into the reporting system each month. This makes it possible to verifiably document energy consumption and CO2 emissions, along with the amount of waste generated.