How corporate sustainability reporting will help drive development of circular products and circular packaging

By Georgie Messent, Begonia Filgueira, Christina Robertson, Aliyana Jiwani

The Corporate Sustainability Reporting Directive (CSRD) came into force on 5 January 2023. CSRD has introduced sustainability reporting obligations for more companies, both EU companies and non EU companies and expanded sustainability reporting for companies that were already caught by the Non-Financial Reporting Directive. It will also influence those companies’ strategies on circular products and packaging, as explained below.

In summary, CSRD reporting becomes mandatory for:

EU Companies	Non-EU Companies
Start date - Financial year 2025	Start date - FY 28
€50m net turnover; and	€150m consolidated EU revenue; and
€25m balance sheet total; and/or	Are a large EU subsidiary or branch with €40m net turnover
250 employees or more

Those companies who fall in scope must report on a much wider range of sustainability impacts than ever before.

Many businesses are unaware that CSRD will also drive progress toward circular products and packaging, by requiring additional reporting on packaging-related emissions.

If your business is impacted by CSRD and if climate change is a material impact to your business, you will need to:

consider and report on how your current products and packaging solutions help you meet your Net Zero targets; and
show what investments have been made in transitioning your business strategy to a circular economy strategy - e.g. changes in product design to make them more durable or use a higher recycled content in your packaging.

CSRD, alongside the tsunami of changing sustainable product and packaging regulations, will drive your businesses’ strategic choices in the future - from the design of products to the choice of supply chain partners.

In this article we’ve summarised some key CSRD’s obligations and cross-referred to connected legislation, that will drive sustainable packaging and products.

Net Zero Goals impacting packaging choices

Companies that are in scope of CSRD and identify material climate change risks, will need to report against the Climate Change standard (ESRS E1), on:

the businesses’ and its value chain’s emissions;
how climate change impacts the business strategy; and
your 1.5 degrees business transition plan.

When disclosing the transition plan and Net Zero targets, companies will have to provide evidence on what actions, or levers, will be used to meet this target.

In deciding on decarbonisation levers, ESRS E 1 requires consideration of, amongst other things, your:

product or service portfolio,
technologies that enable you to decarbonise both upstream and downstream; and
how much you are going to invest in supporting your product decarbonisation KPIs.

If you take an example of the retail sector, one can see a clear link between new ESG corporate reporting under CSRD, circular packaging and circular products. We say this, as packaging will be a huge part of a retail companies’ greenhouse gas emissions and development of sustainable packaging solutions and more circular products will be key to the decarbonisation strategy.

Resource use and the circular economy

If waste or resource use has a material impact on your business, and your business is in scope of CSRD, the CSRD standard on ‘‘Resource use and circular economy’ (ESRS E 5) will require you to make a number of disclosures that are likely to impact your product and supply chain choices, for example relating to:

how your products drive resource efficiency, renewable energy, and reduce waste;
the recycled content in products and associated changes to your supply chain;
actions taken to redesign your products to make them more repairable, providing spare parts and maintenance services that you currently do not have in place.

It’s clear that these disclosures are likely to drive a review of business strategy and changes to supply chains and supply chain contracts.

Related sustainable products and packaging regulation

In addition to CSRD, a tsunami of other regulatory changes are driving sustainable product and packaging decisions. These include:

the introduction of enhanced Extended Producer Responsibility (EPR) for packaging in the UK and across the EU by 2024, which will drive waste reduction and recyclable content of packaging, as there are typically lower fees if packaging is recyclable;
Bans on single use plastics in a number of countries, following the Single Use Plastics Directive (SUPD) - including France, Sweden and the UK - which have resulted in products being taken off the market and potentially stranded assets.
the draft Packaging and Packaging Waste Regulations (P&PWR) and Ecodesign Regulations, which are expected to be in force in the next 12 months. They are also likely to drive reusable, recyclable and refillable packaging and repairable products.

Strategic and compliance solutions

With this tsunami of legislation hitting all sectors and a wide variety of products, businesses must plan for the future in order to remain competitive and compliant.

PwC has a market-leading legal, commercial and operational team focussed on circular packaging and circular products, as well as ESG corporate reporting. We can help you with sustainability compliance, strategic planning and implementation.

We are helping many multinational clients to consider their pack mix of the future and the circularity of products, bearing in mind relevant commercial considerations and desired progress towards Net Zero goals. We are also advising a wide range of global EU and non EU businesses on how to implement CSRD reporting obligations.

We can help business comply and plan for the future by providing:

Horizon scanning and diagnostics - client-tailored diagnostic services which help you understand, interpret and respond to key circularity trends and themes (e.g. changing regulation, changing consumer demands, circular business models, feasibility studies);
Compliance mapping and in depth legal advice - we work across sectors and with local experts, to advise in detail on packaging compliance, and sustainability reporting;
Strategy development - understanding your responsibilities as a Net Zero business and as a products and packaging producer, and how these will change in the next 3 to 5 years, which often includes the creation of a bespoke enterprise-wide strategy with circularity at its core;
Transformation Roadmaps - the development of bespoke action plans (including operational model, technology transformation, project KPIs and governance etc.) used to implement decarbonisation and circularity strategy;
Corporate sustainability reporting support - we can help you prepare a CSRD readiness programme to manage your disclosures and data points required to make these. We are also advising clients on Corporate Sustainability Due Diligence Directive (CS3D) and how it crosses over with CSRD.