Corporate Sustainability Reporting Directive
The Corporate Sustainability Reporting Directive (CSRD) is a new regulation introduced by the European Parliament. It requires more companies to report on their social and environmental impacts. This directive builds upon the existing Non-Financial Reporting Directive (NFDR) and aims to facilitate the transition to a more sustainable economy. It also ensures greater transparency about sustainability-related information, which is vital for stakeholders such as investors and regulators.
In practical terms, the CSRD mandates European companies to identify and thoroughly document all significant sustainability issues related to Environmental, Social, and Governance (ESG) factors as of 2026. Since companies are only expected to report on topics that matter to their busniesses, the first step is to determine which sustainability topics are most relevant to their operations and stakeholders, following the principle of "double materiality." This requires conducting a comprehensive Double Materiality Assessment, which is a complex and time-consuming process.
To support Belgian diamond companies in meeting these requirements, AWDC, in collaboration with its partner Sustenuto, has developed an overview of all 'material' sustainability topics in the diamond industry. This tool provides diamond companies with a solid foundation for compliance, which they can further adapt to reflect their unique context.
Double Materiality Assessment for the Diamond Industry
What does 'Double Materiality' Mean?
Double materiality means that a company reports both on the impact it has on the environment and society (inside-out) and on the impact the environment and societal changes have on the company (outside-in).
The objective of the sector DMA is to create a benchmark that individual companies can build on for their own DMA. Specifically, it identifies the critical topics that all companies should report on, and provides insights into the materiality of other relevant topics.
Results of the DMA
During the Double Materiality Assessment for the diamond industry two critical topics where identified: responsible business conduct and workers in the value chain. These topics are no strangers to the diamond industry. However, the range of issues is expanding, from corruption/AML and child labour, towards a much wider range of governance and human rights topics.
In addition to these critical topics, two other topics were identified as having very high materiality: climate change (greenhouse gas emissions throughout the value chain) and affected communities. In both cases, these issues emerge primarily as a result of diamond mining.
The Key Principles of CSRD
- Organizations must map the impact of their entire value chain. This means that companies are required to report not only on their own sustainability performance but also on that of their customers and suppliers. For example, if a partner in the supply chain purchases raw materials or components from a country where child labor is present, the company must demonstrate that it has taken all necessary measures to prevent and combat child labor, such as monitoring and auditing suppliers and replacing those that do not meet the standards.
- Companies are required to have their sustainability reports audited by an external auditor.
- Sustainability reporting must be conducted by the same entity responsible for the financial reporting.
- The sustainability report must be published separately from the company’s annual financial statements.
For all your CSRD Questions: contact the Compliance Helpdesk
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