Will local authorities in the UK adopt the CSRD?
The CSRD Ripple Effect: How UK Local Authorities and Suppliers Face a Sustainable Future
The implementation of the Corporate Sustainability Reporting Directive (CSRD) in the EU is sending waves across the globe, and UK suppliers are feeling the pressure. In this article Omar Hadjel, Sustainability Consultant explores the impact of the CSRD's exacting impact reporting requirements, the evolving role of social value in Local Authority (LA) procurement, and the potential alignment between LA demands and the new European Sustainability Reporting Standards (ESRS).
The Squeeze on UK Suppliers: Meeting CSRD's Demands
The CSRD mandates comprehensive sustainability reporting for large companies, with a significant focus on environmental and social impact throughout their value chains. This means UK suppliers, regardless of their location, will be expected to provide data on their own sustainability practices. This creates a critical challenge:
Meeting Detailed Requirements: The ESRS, the technical guidance for CSRD reporting, lays out detailed metrics for a wide range of sustainability factors. Suppliers must be prepared to gather and report data on areas like greenhouse gas emissions, resource usage, labor practices, and diversity.
Navigating Complexity: The multi-tiered nature of global supply chains adds complexity. UK suppliers may struggle to obtain accurate data from their own partners, particularly those in regions with less developed sustainability reporting practices.
These pressures highlight the need for UK suppliers to be proactive. Investing in robust data collection systems, building supplier relationships focused on sustainability, and potentially seeking external verification of their practices will be crucial for navigating the CSRD landscape.
Local Authorities: Redefining Social Value
The CSRD's focus on social impact resonates with a growing trend in UK Local Government procurement: the consideration of "social value" alongside traditional price and quality factors
Prioritizing Social Good: Local Authorities increasingly recognize the power of procurement to drive positive social outcomes. This could encompass aspects like creating local jobs, offering volunteering hours towards community engagement and upskilling, supporting diverse suppliers, or promoting ethical labor practices.
Aligning with Sustainability Goals: Many Local Authorities are setting ambitious sustainability goals. By prioritizing suppliers with strong social and environmental practices, they can contribute to a more sustainable future. This is emphasised in the new Procurement Act 2023 which proposes a shift in the evaluation of suppliers’ tenders from MEAT (most economically advantageous) to MAT (most advantageous.)
The Future of LA Procurement: Aligning with ESRS?
The extent to which Local Authorities will align their social value requirements with the ESRS remains to be seen. Here are some potential scenarios:
Partial Adoption: LAs may adopt specific ESRS metrics relevant to their social value priorities, such as those related to labour practices or community engagement.
Complementary Standards: LAs could develop their own social value frameworks that complement the ESRS, ensuring a holistic approach to sustainable procurement.
Harmonization Over Time: As both the CSRD and LA social value measures evolve, there's a chance for greater convergence in reporting standards.
Total Adoption: LAs will adopt the standards to achieve consistency of impact measurement & reporting across the board including greater comparability of social impact between suppliers, equitable procurement and fair contract performance management among other benefits.
The CSRD and the growing focus on social value in LA procurement represent a significant shift towards a more sustainable future. While UK suppliers face challenges in meeting stringent reporting requirements, proactive measures can ensure compliance and potentially unlock new opportunities. For Local Authorities, aligning their procurement practices with robust sustainability standards allows them to source goods and services that contribute to a more positive social and environmental impact. Ultimately, this collaborative effort between suppliers, LAs, and the wider business community paves the way for a more responsible and sustainable future for all.
For more guidance on getting started with sustainability reporting, feel free to reach out—we’re here to help!
