Louis Rouffaud
With CSRD going into effect in the EU, more businesses will have ESG reporting requirements. Read below to learn how this will impact the music industry.
CSRD: What is it?
CSRD stands for the Corporate Sustainability Reporting Directive which was adopted by the European Commission in 2022. If you’ve been keeping up with other directives passed in recent years, CSRD expands the requirements set forth by the NFRD or the Non-Financial Reporting Directive. Expanding both the number of companies which the directive applies to and standardizing the information being reported, making it more reliable and accessible.
In layman’s terms, this means if your business is large enough, you’ll have to publish sustainability related reports. Broadly, these reports assess the impact of your business on people and the environment.
Seeing how CSRD applies to businesses generating significant revenue, they should probably be publishing these reports already. Let’s get into the details.
Who does the directive apply to?
There are four groups specifically outlined in the directive:
- Large “public interest” entities (companies already subject to NFRD)
- Large EU companies
- Small and medium-sized EU enterprises (SMEs)
- Large, non-EU companies
Large “public interest” entities
Those “public interest” entities outlined under NFRD are those with more than 500 employees like publicly listed corporations and banks. Spotify, which is based in Stockholm, is an example of one of these entities. If interested, you should check out their well put together Diversity, Equity & Impact page.
One important point to remember is how much bigger the pool of organizations will be. There are 11,600 currently applicable businesses under NFRD which will balloon to around 50,000 under CSRD. A fairly substantial increase for sure.
Large EU companies, SMEs, and non-EU companies
For the other three groups being introduced in CSRD, you can read below from the Wilson Sonsini Fact Sheet on the EU CSRD. This fact sheet nicely summarizes the applicable groups and when they need to begin adhering to the directive and publishing the reports.
It should be reiterated that by 2028 the scope does stretch to some non-EU companies. From the EU Corporate sustainability reporting page, “some non-EU companies will also have to report if they generate over EUR 150 million on the EU market.” CSRD generally applies to the big players in the industry, if you’re a small operation you should be in the clear.
What are the CSRD reporting requirements?
Now that we have a grasp of who applies, what do you have to report? We’ll, that depends.
CSRD follows certain reporting rules to ensure the quality and standardization of ESG reports. These standards are called the ESRS or the European Sustainability Reporting Standards. Although I won’t be diving into all the standards, you should know the basics. There are two groups of the standards. Cross-Cutting Standards incorporate multiple topics while Topical Standards will dive specifically into the subgroups of environment, social, or governance reporting.
One final point is the CSRD requirement to get your reports externally verified. This quality assurance audit is an expensive yet necessary addition to make sure nobody is bullshitting on their reports (which happens far too frequently).
Prime example for CSRD: Live Nation Entertainment
All the specifics depend on your type of business. Let’s take Live Nation Entertainment for example. Live Nation Entertainment is one of the largest events and ticketing providers globally. They will have to disclose the variety of environmental and social impacts from their events along with the measures they’re taking to improve these impacts. Of course, this would be one aspect of a highly comprehensive ESG report.
One point to look out for is the company has been accused of monopolistic practices and poorly handling ticket sales and certain events. These not so savory topics would be addressed in the governance section of their CSRD reporting.
What to look out for & how to get started
You might be thinking, the directive doesn’t apply to my business so I’m in the clear.
Maybe true, but with certain banks and other institutions asking for climate disclosures and more European Commission directives coming soon, better to start now. New directives or not, businesses should strive to be as transparent as possible when it comes to climate-related disclosures. Boom Festival in Portugal is a great example of going above and beyond in this case.
For those just getting started, here’s some helpful resources to start being more intentional in your music business. For climate reporting help, reach out to your legal team for next steps.
Music Sustainability Alliance (US based)
A Greener Future (UK based)
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This article is for informational purposes only on CSRD in the music industry and does not substitute proper legal counsel and due diligence.
