What Is CSRD and How Does It Affect Business Sustainability?

In this blog post, we’ll take a closer look at the CSRD, the EU’s Corporate Sustainability Reporting Directive, examining its implications for businesses.

To enrich the perspective, we’ll draw insights from an interview with our Chief Sustainability Officer, Maria Groth, aiming to highlight the significance of not only meeting CSRD requirements but also emphasizing the strategic importance of integrating sustainability into corporate operations.

We’ll also discover how PLM assists companies in providing detailed and comprehensive sustainability reports, aligning with CSRD’s requirements on transparency and accountability.

Finally, Maria will share advice for companies looking to leverage PLM as a key driver for change and sustainability, especially considering the evolving landscape of regulations such as CSRD.

Sustainability at TECHNIA

Maria Groth is the Chief Sustainability Officer at TECHNIA, responsible for setting the sustainability strategy and collaborating with and supporting customers. For nearly 11 years at the company and in previous positions, Groth has actively contributed to various PLM domains, encompassing product management, change management, and materials compliance management.

Groth emphasizes the critical role of PLM in driving change, especially in sustainability.

“PLM is pivotal in fostering change, particularly in the context of sustainability, because it provides a holistic approach to managing products throughout their lifecycle. This comprehensive view enables organizations to embed sustainable practices at every stage, from design and manufacturing to end-of-life considerations, contributing to a more environmentally friendly and socially responsible approach to business.”

Understanding the Significance and Impact of the CSRD

New regulations governing corporate sustainability reporting have been introduced under the Corporate Sustainability Reporting Directive (CSRD). For over 50,000 global companies intending to reach €150 million in annual revenue, including those operating in and exporting to the EU, compliance with CSRD requirements is mandatory.

The first companies will have to apply the new rules for the first time in the 2024 financial year for reports published in 2025.

The European Green Deal, initiated by the European Commission, is a comprehensive effort to transform the European Union (EU) into the first climate-neutral continent. Climate change and environmental harm pose significant threats to Europe and the global community.

In response, the Green Deal aims to reshape the EU into a modern, resource-efficient, and competitive economy. Announced in December 2019, this initiative outlines a roadmap for policy measures and actions to address climate change, environmental degradation, and various sustainability challenges.

This enables investors, stakeholders, civil society organizations, and consumers to assess companies’ sustainability performance as part of the European Green Deal.

CSRD requires companies to report on how their operations are financially affected by sustainability issues and, conversely, how the company’s operations impact the environment, climate, and society.

In embracing the principles of the CSRD and the European Green Deal, companies are not only meeting regulatory requirements but actively contributing to a more sustainable future for Europe and beyond.

According to Groth, “CSRD is only one of many legal requirements companies are facing, but the PLM platform can help collect, manage, and report on various environmental legal requirements as well.”

Agenda 2030 and the 17 Sustainability Goals

Addnode Group has identified six of the UN’s global Sustainable Development Goals that are most relevant to its business. These goals represent areas in which its divisions have the potential to make a meaningful impact.

The Global Goals and the 2030 Agenda for Sustainable Development seek to:

• End poverty and hunger
• Realize the human rights of all
• Achieve gender equality and the empowerment of all women and girls
• Ensure the lasting protection of the planet and its natural resources

TECHNIA strongly believes in reducing environmental impact through continuous improvement of internal operations. Our Quality & Environment policies provide guidance for ongoing enhancements to processes, products, and services to meet or exceed customer requirements.

Sustainable development, as defined by the United Nations Brundtland Commission, is meeting present needs without compromising the ability of future generations to meet their own needs. This responsibility at TECHNIA is articulated in four key areas:

• The way our solutions create value to our customers and contribute to sustainable development and society
• How we care about our people and take responsibility for planet in our own operations
• Our responsible way to work with partners and suppliers
• The way we create long-term financial viability

The Crucial Role of CSRD and PLM

A PLM system assists in resource management, quality control, and efficiency enhancement. By seamlessly integrating people, processes, and data, prioritizing the triple bottom line—people, planet, and profit—becomes more manageable and effective. PLM is crucial for managing CSRD and other compliance domains and the sustainability strategy.

The integration of the CSRD into PLM is imperative as it propels the adoption of sustainable practices, aligns with environmental objectives, supports strategic decision-making, ensures compliance, and fosters innovation in product development.

Groth emphasizes the vital role of PLM, stating, “PLM plays a crucial role in facilitating the generation of detailed and comprehensive sustainability reports by providing the necessary data and tools and offering full traceability.”

Moreover, involving the supply chain in the early stages is a vital step in obtaining valuable insights into materials and processes.

As Groth continues, “Involving the supply chain at an early stage is important to gather input on materials and processes and to set requirements and expectations, not only for the delivered material or service but also for corporate social responsibility areas, ensuring responsible supplies and legal compliance.”

While the journey towards achieving net-zero emissions is gradual, it is crucial to recognize the significance of implementing a robust Product Lifecycle Management (PLM) system as a pivotal step toward sustainable production.

“The starting point is, of course, to detail the different requirements applicable to your business and products or services, including the legal requirements such as CSRD, but also to integrate sustainability into strategic planning and product development throughout the entire lifecycle. The legal requirements are growing and changing fast, and the PLM system needs to be flexible and continuously developed to be able to support the company for many years.”

Advancing Sustainability with PLM and Virtual Twins

PLM solutions play a central role in advancing environmental sustainability goals by facilitating the closed-loop development of products.

“PLM provides a platform that manages the products of a company from the early design phase through the entire lifecycle. By introducing sustainability and requirements related to this domain from the very beginning, both materials and processes that are optimized and that have as little negative impact as possible can be developed and put on the market.”

The objective of this approach in product development is to ensure the optimal recovery of energy, resources, and materials from products at the conventional end of their life cycles.

According to Groth, the positive aspect is that, with this mindset and platform support, not only will the products become more sustainable, but they will also achieve increased cost efficiency.

“PLM and the virtual twin concept play a strategic role for companies going forward to not only manage compliance but to really drive change in the sustainability arena.”

Highlighting key aspects, Product Lifecycle Management (PLM) contributes significantly to fostering a sustainable future through:

• Simulation: Minimize reliance on physical prototypes and natural resources
• Lifecycle Assessment (LCA): Thoroughly assess the environmental performance of products across their entire lifecycle, from the extraction of raw materials to their eventual disposal or recycling. This comprehensive evaluation considers critical factors such as energy consumption, greenhouse gas emissions, water usage, and waste generation
• Efficient Production Planning: Decrease material and power consumption per unit through streamlined planning
• Control of Chemical Content: Mitigate release of hazardous chemicals into the environment
• Correct Design Data for Procurement and Production: Reduce scrap by ensuring accurate design data
• Design for Serviceability and Circular Economy: Encourage modular designs that facilitate serviceability and reuse, promoting a circular economy

The Virtual Twin Experience emerges as a catalyst for sustainable innovation, propelling product development into a new era. Surpassing the confines of a traditional static digital twin, it evolves into a dynamic digital model that interconnects your resources, products, and value network in real-time.

By leveraging real-time data, this immersive experience facilitates visualization, modeling, and simulation of intricate products and operations, empowering you to make informed decisions and achieve optimal outcomes.

“Ensuring that restricted and banned materials and chemicals are avoided, by optimizing the design from a material usage standpoint with simulations, by choosing efficient and energy-optimized production processes and plants, by validating designs through simulation, and by avoiding physical prototypes until a mature design is developed. By using modular design concepts to enable reuse between product families and models, and considering serviceability during the design phase, a circular concept is supported.”

In Our Experience…

While the CSRD brings forth various advantages, it also introduces notable reporting challenges for companies. However, by harnessing the LCA module within PLM, companies can compute and analyze essential sustainability metrics. This includes key components of sustainability reporting such as carbon footprint, energy consumption, water usage, and waste generation.

Lifecycle Assessment serves as a powerful tool within PLM, enabling companies to not only meet reporting requirements but also to proactively address and improve their environmental impact.

This integrated approach highlights the role of PLM in navigating the complexities of sustainability reporting and contributing to more environmentally responsible and innovative product development practices.

By working together, we can shape a world where sustainable products become the standard, conserving resources, minimizing waste, and preserving our environment for the well-being of future generations.