How does CSRD redefine companies' low-carbon strategies?

New European requirements are forcing organizations to rethink their energy model and publish detailed reports on their carbon footprint. Carbon footprints help companies to understand their dependence on fossil fuels, an essential first step in meeting the transparency obligations imposed by current regulations.

Drawing up a BEGES is much more than just a measurement exercise. In the future, it will become a legal obligation that companies will have to comply with, within the framework of new European directives and imposed environmental standards.

These directives, such as the CSRD (Corporate Sustainability Reporting Directive), require companies to publish detailed reports on their carbon emissions, encouraging them to better structure and adapt their sustainability strategy while strengthening their carbon competitiveness.

This approach helps organizations understand the extent of their dependence on fossil fuels. By identifying the sources of direct and indirect emissions, the BEGES highlights the activities of a company that rely most heavily on fossil fuels, thus encouraging global awareness of the decarbonization levers to be activated, particularly in view of the emissions reduction standards to be met in the coming years.

In addition to measuring their carbon footprint, the companies concerned by these publications must also comply with the new transparency rules, which require the implementation of long-term emissions reduction plans.

For many companies, the results are revealing: according to the International Energy Agency (IEA), the share of fossil fuels (oil, coal, gas) in the global energy mix has remained at around 80% for decades, and is only just beginning to decline.

This percentage remains high in sectors such as heavy industry, transportation and manufacturing, where the rate of greenhouse gas (GHG) emissions is significant. Companies in these sectors are therefore particularly concerned by the directives in force, and must not only publish reports, but also demonstrate their compliance through concrete, verifiable actions.

With increased obligations in terms of sustainable publication and reporting, companies must present reliable and verifiable data to attest to their environmental commitment and compliance. These reports enrich the company by adding an ethical dimension that meets the growing expectations of the market and investors.

In addition, they enable organizations to structure their climate strategy in a precise way, adopting a long-term vision to achieve their environmental objectives and comply with the standards imposed by new regulations.

On the other hand, a negative effect would be the inevitable increase in fossil fuel costs for the company. The Paris Agreement treaty, which came into force in 2016, is already encouraging us to rethink our consumption of fossil fuels, setting the goal of carbon neutrality by 2050.

This transition is reinforced by regulatory and fiscal obligations to reduce emissions. Available information indicates that the expected drop in oil production, all oil combined, around 2035, for example, will exacerbate this trend.

For organizations heavily dependent on these resources, this means increasingly costly inputs and reduced economic leeway. These companies are obliged to review their business models in order to adapt to a more restrictive energy context.

➡️Coûts increasing fossil fuel consumption

According to the French Ministry of Energy Transition, oil and natural gas prices were extremely volatile in the 1st half of 2022, linked to the geopolitical tension generated by the war in Ukraine.

"The price of Brent crude oil stands at 95.8 euros a barrel ($100.8), up 60% on 2021".

"Spot gas prices on European markets are highly volatile: they surged after the invasion of Ukraine in late February 2022 and peaked in August after Gazprom's announcement to halt gas deliveries. The spot price in France (PEG) averages €98.6/MWh in 2022."

➡️Risque for dependent companies

In Europe, the EU Emissions Trading Scheme (EU-ETS) has seen carbon prices exceed 90 euros per tonne by 2022. With projections of a steady rise, this could mean a significant additional cost for carbon-intensive industries, particularly energy and manufacturing organizations.

➡️Baisse investment in fossil fuels

In its "Net Zero by 2050" report, the IEA forecasts a 2% annual reduction in oil and gas demand by 2050. Coal demand is expected to fall by 50% over the decade.

♾️Cette reduction leads directly to lower investment in fossil fuels. This is all the more encouraged in the EU, according to an IAE report, by "the accelerated deployment of renewable energies and improvements in energy performance."

This will lead to massive investment in renewable energies (more than $2,000 billion annually by 2030, according to the IEA) and will make fossil fuels more expensive for companies still heavily dependent on them.

The transition could reduce the capital available for fossil fuel projects, further increasing costs for industries that have not yet diversified their energy sources.

These data underline the urgency for companies to prepare for a structural rise in fossil fuel costs, which could rapidly reduce their margins and limit their competitiveness if they do not diversify their energy sources.

♻️Ainsi To strengthen economic resilience in the face of these transformations, companies need to adopt an integrated, systematic approach:

• Reliable data and in-depth analysis of environmental indicators help identify the threats posed by dependence on fossil fuels.
• Managing climate issues must be an integral part of corporate strategy.

📄In addition, the integration of sustainability objectives and specific indicators promotes better preparation in the face of anticipated cost increases. Reporting this information, in line with standards such as CSRD, enhances transparency and helps consolidate stakeholder confidence in efforts to transition to a more resilient and responsible model.

Regular monitoring through reporting of greenhouse gas emissions is therefore becoming an essential lever for anticipating these economic risks.

Effective from 2024, the CSRD requires large companies to publish regular and transparent sustainability reports. This directive extends its scope to SMEs, which will also have to comply with these new reporting standards.

To help them comply with the CSRD, SMEs can benefit from resources and support programs.

This reporting must be aligned with ESG (Environment, Social, Governance) principles and aims to increase the transparency of companies with regard to their practices in these areas.

The CSRD replaces the previous NFRD (Non-Financial Reporting Directive), broadening its scope of application: the number of European companies concerned has risen from 11,700 to over 50,000. From now on, these companies must provide information on their environmental and social impacts, and on how they manage their sustainability-related risks, among other things by producing a BEGES.

This publication of data is essential to guarantee the responsibility of European companies and their commitment to a sustainable transition, while ensuring a clear report on their practices.

The aim of the CSRD is also to make it easier to compare greenhouse gas emissions, thereby helping investors to make better decisions and organizations to be more accountable. This information will be public and standardized, facilitating analysis by stakeholders. Reports will include greenhouse gas emissions, including scopes 1, 2 and 3, as well as impacts on biodiversity and natural resources.

This directive also enables companies to comply with common standards, such as ISO 14064 for GHG reporting, thus increasing their credibility in the eyes of stakeholders.

Finally, analysis of these indicators enables organizations to take effective action by targeting areas for improvement, enabling the implementation of sustainable solutions.

The SFDR directive specifically targets financial institutions by imposing transparency requirements on the ESG impact of their investments. Since March 2021, funds have had to classify their products according to their level of sustainability (Articles 6, 8, or 9, depending on their degree of commitment to sustainability). 

This classification enables investors to better understand the sustainable commitment of investment products and to align their choices with their personal and institutional environmental, social and governance objectives.

In 2023, these rules were tightened, with a focus on reducing greenwashing, to ensure that investments declared "green" actually meet strict ecological standards.

This increased transparency can turn into a strategic advantage for companies. A study conducted by BPI France on the challenges of ESG criteria shows that companies aligned with rigorous ESG standards generally see an increase in customer retention and attract more investment.

Indeed, according to an ESG survey conducted in 2023 by BNP Paribas: "76% of investors believe that climate change and decarbonization are important enough to influence their investment strategy."

In other words, companies that are proactive in this area benefit from greater customer loyalty and higher valuations on the financial markets.

By choosing low-carbon strategies, organizations not only limit their exposure to rising energy costs, but also strengthen their competitiveness by positioning themselves as leaders in the environmental transition.

To facilitate this transition, GCI helps you transform these climate challenges into concrete opportunities for sustainable growth through our Decarbo'Supply® and Decarbo'Tenders® solutions.

➡️ Decarbo'Supply® offers your suppliers the opportunity to calculate their Product Carbon Footprint (PCF) free of charge, thereby considerably improving the quality of your Scope 3 data. This approach enables a complete assessment of GHG emissions while facilitating more sustainable and responsible purchasing management, and supporting the publication of environmental reports.

➡️ Decarbo'Tenders® integrates decarbonization objectives directly into your calls for tender, enabling you to select the least carbon-intensive suppliers. This approach strengthens your Carbon Competitiveness® and helps you meet new environmental and regulatory requirements.

The transition to a low-carbon world is more than an environmental necessity; it has become an unavoidable economic and regulatory requirement. Companies must now anticipate the structural rise in fossil fuel costs and meet the transparency requirements imposed by European directives such as the CSRD and SFDR.

The BEGES enables organizations to become aware of their dependence on fossil fuels, identify the levers for decarbonization and adopt a sustainable energy strategy.

By integrating these aspects into their business model, companies can not only reduce their exposure to fluctuations in energy prices, but also position themselves as leaders in environmental transition, thereby strengthening their competitiveness. Alignment with ESG principles increases their attractiveness to investors and fosters customer loyalty.

With tools such as Decarbo'Supply® and Decarbo'Tenders®, GCI supports companies in this transition, helping them to reduce their carbon footprint and improve the quality of their Scope 3, particularly purchasing. Transforming these challenges into concrete opportunities is now essential to ensure organizations' economic viability, competitiveness and long-term sustainability.

Carbon is no longer just a compliance factor, but a genuine strategic lever for sustainable development.