SMEs: here is what you should know about new EU social & environmental regulations

The facts

New sustainability-focused regulations are continuously being introduced at a rapid pace, demanding immediate attention from EU companies. The European Commission recently issued a new law, the Corporate Sustainability Reporting Directive (CSRD), which enhances and modernizes rules regarding companies' social and environmental reporting obligations. A broader set of companies will now be required to report on sustainability.

The introduction of the new regulations aims to provide investors and stakeholders with essential information to evaluate investment risks associated with climate change and sustainability concerns. Additionally, these regulations foster a culture of transparency, enabling a clearer understanding of companies' impact on society and the environment. Over the medium to long term, reporting costs for companies will be streamlined through harmonized information requirements.

The implementation of these regulations will commence in the 2024 financial year, with the first reports published in 2025.

Pressure is mounting on companies throughout the European Union, and Portuguese companies are no exception.

The reality

A study conducted by the Center for Responsible Business and Leadership in Portugal revealed that Portuguese companies are already inclined toward sustainability and aspire to implement more sustainable strategies. However, this alone is insufficient, and while larger companies possess greater resources and awareness of their obligations, small and medium-sized enterprises (SMEs) are the ones struggling the most. SMEs often lack awareness of forthcoming reporting requirements and struggle with limited knowledge, tools, and support to tackle sustainability issues, relegating them to a lower priority. In fact, SMEs may be missing one of the greatest opportunities to unlock value by not taking action today.

According to a study recently published by the World Economic Forum, embracing sustainability strategies is, in fact, the most effective way to unlock greater profitability in the future, rather than being a costly commitment.

Taking action

By seeking assistance in addressing sustainability challenges, Portuguese companies can align themselves with EU regulations, identify cost-saving opportunities, enhance their brand reputation, and explore exciting new prospects. It is crucial for businesses to take action now, leveraging sustainability to build a competitive advantage and resilience in today's global landscape.

About Vivid Earth

Vivid Earth specializes in assisting SMEs, transforming sustainability cost centers into comprehensive business strategies that benefit both the environment and the bottom line. Vivid Earth meets companies where they are, creating a strategic execution roadmap that maximizes benefits for all stakeholders and recognizing that each organization's needs and opportunities for sustainability vary greatly.

Eager to learn more? Feel free to contact Vivid Earth through info@vividearth.one or by filling out the form on the website.