Why Global ESG Standards Matter

Environmental, Social, and Governance (ESG) regulations are becoming stricter and more harmonised worldwide. The EU is leading the charge with two landmark initiatives: the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). These frameworks are designed to improve transparency, accountability, and sustainability performance across industries and supply chains.

For organisations operating in or trading with the EU, these regulations create both obligations and opportunities. Understanding their scope and requirements is crucial to avoid penalties, protect reputation, and gain investor trust.

CSRD: Elevating Sustainability Reporting

The CSRD expands the scope of the Non-Financial Reporting Directive (NFRD), applying to around 50,000 companies in the EU, compared with just 11,000 under the old rules. From 2024 onwards, large companies are required to disclose sustainability information with the same rigour as financial data.

Key features include:

• Mandatory reporting against European Sustainability Reporting Standards (ESRS).

• Disclosure of both financial materiality (impact on the company) and impact materiality (impact of the company on society and the environment).

• Digital tagging to make ESG data comparable across companies and markets.

Recent studies show that 73% of investors see CSRD as a critical factor in risk assessment and portfolio management (EY, 2023).

CSDDD: Embedding Due Diligence in Supply Chains

While the CSRD is about transparency, the CSDDD goes further—requiring companies to actively manage risks in their supply chains. It obliges large companies (and some SMEs in high-risk sectors) to identify, prevent, and mitigate human rights and environmental risks linked to their operations.

Practical obligations include:

• Mapping supply chains for ESG risks.

• Setting up due diligence processes for human rights and environmental impacts.

• Establishing grievance mechanisms for affected stakeholders.

• Publishing transition plans in line with the Paris Agreement.

Failure to comply could lead to fines of up to 5% of annual turnover, and companies may face liability for damages.

Why These Standards Affect You, Even Beyond the EU

The impact of CSRD and CSDDD is not limited to European firms. Any company trading with EU businesses—whether as a supplier, investor, or distributor—will be expected to comply. This means the ripple effect extends globally, influencing corporate behaviour in Asia, Africa, and the Americas.

For companies in emerging markets, aligning with these standards could be a competitive differentiator, opening access to funding, partnerships, and long-term contracts.

Leveraging Technology for Compliance

Managing compliance at this scale requires advanced tools. Companies are increasingly turning to:

• AI-driven risk assessment platforms to scan suppliers for ESG issues.

• Blockchain for traceability, ensuring transparency in raw materials sourcing.

• Digital product passports to standardise data across industries, especially in batteries and critical minerals.

According to PwC (2024), 62% of companies plan to use digital solutions to comply with CSRD reporting requirements.

How OROCON Supports Compliance and Growth

At OROCON, we integrate CSRD and CSDDD requirements directly into our ESG advisory services. Using AI-enabled workflows, we streamline supply chain due diligence, map ESG materiality, and deliver transparent reporting aligned with ESRS.

Our team combines policy knowledge with practical tools such as digital product passport readiness and data-driven ESG dashboards.

We don’t just prepare companies for compliance—we help them use these standards as a springboard for innovation, credibility, and sustainable growth.

A New Era of Accountability

The CSRD and CSDDD mark a turning point in ESG. For companies, this is not just about avoiding penalties—it is about proving responsibility, building trust, and securing long-term success in a rapidly changing market. The question is no longer whether to act, but how fast and how well.