CSRD – not all that complicated ... or is it?

The CSRD demands comprehensive transparency and presents companies with the challenge of taking their reporting and controlling to a new level - from data analysis to actual implementation.

In my role as Expertise Lead, I’ve been getting a lot of inquiries about CSRD reporting. Some are from software providers advertising IT solutions, and others are from companies and existing customers, who ask: “CSRD? What’s that all about? When are we supposed to start? What about GRI, SDG, and ESG? What’s really important for us?” 

Reporting on non-financial business activities

This is a subject that is on a lot of people’s minds. And right now, that extends well beyond the departments that usually deal with things like this, like marketing and communications or CSR. Controlling, finance, and IT teams are now also talking about sustainability. I think that’s a really positive change. 
But I do also find it problematic that we’re talking about how we talk about it (sustainability, I mean). The CSRD alone will not make a company more sustainable. At the same time, implementing the CSRD requires significant resources – which, especially for medium-sized companies, end up being diverted from other measures. Is that what is really necessary now, in what the UN has called the “Decade of Action”? 

From what to how

In recent years, Campana & Schott has supported a number of processes to prepare for CSRD-compliant reporting, and we’ve had the chance to observe interesting effects along the way. Our CSRD Readiness Check compares the existing data basis against what the CSRD requires. This is a rude awakening for many. It can be shocking to consider the new reporting requirements, which can encompass as many as 1,200 potential data points. 
So, many people focus on double materiality analysis. In theory, this kind of analysis is the tool used to define the sustainability-related topics an enterprise is required to disclose. In practice, organizations are also hoping it will help them limit the time, effort, and expense involved in reporting, at least somewhat. Afterward, a gap analysis is performed to see which data points or reporting obligations are already in place and where new processes of collection and analysis need to be established. The step after that is where things get interesting again as far as sustainability is concerned. The gap between what is required and how things currently are is often bigger than those responsible would like it to be. And that raises the question of the financial and human resources that will be needed to close it. 

Transparency and greater sustainability

The wonderful thing about the CSRD and the sustainability reporting standards it entails is that the measures that are required necessarily involve fundamentally grappling with a company’s own structure and operations. And in turn, that necessarily means considering the following questions: 

  • Do you have a transition plan with binding, concrete goals that are consistent with the science, and is the funding in place for those goals?  

  • Do you analyze your supply chains with an eye to resilience in the face of climate-related risks?  

  • Have you created incentives for the management that are associated with achieving your sustainability targets?  

  • Have there been compliance violations, and how have they been handled?  

You are not required to have climate targets consistent with the science. What is required is disclosing whether you have these goals, and if not, whether you plan to have them. This is how regulations are advancing the sustainable transformation a bit. The people responsible for sustainability and reporting can now refer to the requirements and communicate to the management, for example: “For ESRS E1 Climate Change, we are expected to disclose how we are reducing our emissions and whether we use green electricity.”  

The fulfillment of reporting obligations complements the sustainable transformation

If the plans required pursuant to ESRS are not only drawn up, but actually implemented, that would mean fulfilling a large portion of the ESRS disclosure requirements. True, that alone does not yet represent a measurable contribution to the environment or society. But it does give us a better sense of where we stand, what our plans are, and what has already been implemented. In theory, this will make the non-financial disclosures in management reports more comparable.
In this way, the whole process of implementing the CSRD supports sustainability. To me, it’s clear that the CSRD is paving the way forward for what companies translate into reality: sustainable transformation, decarbonization, transparent reporting based on efficient data management, and the creation of a culture – not just within the organization itself, but also upstream and downstream in the supply chain. There is a lot to do, and especially for medium-sized businesses, the resources needed for reporting must be kept to a reasonable scope.


Frank Helbig

Expertise Lead Sustainability