How we can leverage CSRD to drive sustainability and innovation

As businesses navigate a new landscape, the CSRD challenges them to comply, but also to seize the opportunity for growth through sustainability.

In brief

• CSRD mandates detailed ESG reporting with more than 800 data points for large companies, ensuring transparency and accountability.
• CSRD encourages firms to use ESG data for sustainable innovation, offering insights for new strategies and long-term success.
• Effective CSRD compliance requires scalable technology solutions that support sustainability goals and enable strategic growth.

Embarking on a new era of transparency and accountability, the European Corporate Sustainability Reporting Directive (CSRD) is set to revolutionise the way large and publicly listed companies disclose their environmental, social, and governance (ESG) practices. Phase 1 of the CSRD targets large companies meeting at least two of these criteria: over €50 million in net turnover, more than €25 million in balance sheet totals, or an average of 250 employees annually.  This directive unfolds progressively through to 2029, with the goal for entities to measure, understand and communicate their ESG impacts in a transparent, consistent and comparable way.

The scope of the Directive, in terms of the amount of data needed and the specific requirements, including presentation, digital tagging, comparative data analysis and digital submission, is broad and detailed. There are more than 800 individual data points within CSRD, of which almost 200 are mandatory. 

CSRD incorporates quantitative and qualitative metrics, to measure the impacts, risks and opportunities of upstream, own-operations and downstream activities, based on a thorough double materiality assessment.

Moving beyond compliance

Companies now have the chance to extend their vision beyond mere compliance requirements by leveraging the wealth of data and analytics at their disposal to unlock a multitude of untapped opportunities. Preparation and presentation of comprehensive ESG reports provides organisations with actionable insights about their business that they did not previously have. We are working with many of our clients to use that information to identify and explore new opportunities and mobilise strategies that will drive sustainable innovation, including sourcing strategies, new manufacturing processes and optimised product lifecycle management.

Organisations are increasingly recognising that a well-defined sustainability strategy is essential for long-term success. As they develop and refine these strategies, the need for technology that not only supports but also enhances their sustainability goals becomes clear. Our role is to guide clients through the intricacies of sustainability planning, ensuring that the technology solutions we recommend are not just tools for compliance, but powerful allies in their quest for sustainable innovation. These solutions should be adaptable and scalable, evolving in tandem with the organisation's growth and sustainability ambitions. By integrating advanced data management systems, we help clients not only meet their ESG reporting needs but also provide a platform for performance monitoring and management, as well as scenario modelling to shape future initiatives. The right technology is a catalyst, propelling organisations towards their sustainability objectives and unlocking new opportunities for responsible growth.

A recent NASDAQ research report that interviewed 150 global sustainability, finance and legal executives found that investment in ESG software is helping to improve organisational collaboration, mitigate risks, and meet ambitious ESG and sustainability goals. Of those interviewed, 86% said that ESG software has improved the quality of ESG reporting and communications with stakeholders. 78% said that it improved their ability to manage progress towards delivery of their ESG objectives. And 81% of executives surveyed are aiming for leadership and industry competitiveness through their ESG and sustainability strategy.  

One of the predominant challenges that we are seeing for many organisations relates to value chain reporting. The need to share detailed, potentially sensitive, data between value chain partners, from raw material extraction to end-of-life disposal and recycling certainly brings an added level of complexity. Value chain reporting requirements for scope 3 emissions and on social areas, such as child labour and modern slavery, challenge the traditional definition of an organisation’s boundaries. As well as the processes and systems needed to capture accurate and reliable data, the related governance and cultural implications of this fundamental shift are complex and challenging. 

To meet these challenges, companies need to leverage technology that is adaptable to different frameworks including all the necessary integration capabilities with internal systems, i.e. ERP and HR, and automated data exchange for the supply chain. A future-proof solution that meets today’s reporting and ESG management needs, while also incorporating future additional evolving regulatory requirements, and others that may follow, is needed.