CSRD/ESRS Update: Beginning with compliance and moving towards value creation

CSRD/ESRS: Where are we now?

With October 2024 upon us, companies are navigating the evolving landscape of the Corporate Sustainability Reporting Directive (CSRD) and the associated European Sustainability Reporting Standards (ESRS). 

Given the diversity in companies' reporting maturity, ranging from seasoned sustainability reporters to those just beginning their journey, there is no single approach to CSRD compliance. However, there are clear challenges most organizations will face, and understanding how to effectively address them is highly recommended for creating value from the directive.

Current priorities for CSRD: Getting started in October 2024

This point in time is exciting! As companies actively engage with CSRD/ESRS reporting for the first time. best practices are being formed, and learning opportunities are in every corner of the sustainability landscape. With this redrawing of the sustainability reporting map and the shift from voluntary frameworks to mandatory structures, there's a need for a few key elements—priorities, processes, and people! And platforms too, but we'll get to that in a moment.

Priorities - and phase-in disclosures requirements

Address Compliance First! Organizations must focus initially on closing compliance gaps. Meeting the mandatory disclosure requirements is of course important, as these are non-negotiable under CSRD. Once compliance is ensured, the remaining disclosures should be prioritized based on impact, opportunity, and risk and also on the organisations strategy for sustainability. Phased-in approach, as not every disclosure has to be addressed at once. A phased approach helps you manage workloads, while progressively aligning with the ESRS requirements. Make sure you know your reporting scope, with the phase-in disclosures and make compliance a first step, not the final goal. 

Process orientation data capture and data quality

Efficient Data Capture is a key for establishing processes and identifying the right tools to collect accurate data is essential. Consider how data from other reporting obligations can be captured simultaneously, optimizing the efficiency of data management strategies. For example - have you reported to CDP, SBTi, ISO? Do you want to continue doing that? Make sure to map the data requirements early for all of the above.

People - upskilling and delegating

Define responsibilities clearly within the organization. Determine who is in charge of what, and ensure everyone understands their role. Success depends on a “divide and conquer” strategy—mapping out who needs to know what, and defining a focal point for CSRD leadership. Make sure that you have the right internal competence and external support for your projects. If not, map out your needs. 

Beyond CSRD compliance

Once the compliance roadmap is in place, companies can begin to think strategically about value creation. Instead of just meeting requirements, they can streamline efforts to generate additional value, enhancing overall business sustainability and stakeholder engagement. We understand the pressure that most companies face, and that compliance is the first goal. However, with effective management, proactive thinking, and a "giraffe view" (big-picture perspective), this can be done as a two-stage rocket. Throughout 2025, sustainability managers can focus less on data management and more on sustainability strategy, initiatives, and change. And the other teams too!

How to use the ESRS Data effectively: adding value through CSRD compliance

CSRD/ESRS reporting is extensive. We know. With over 1,100 data points, more than 50% being narrative, it's easy to feel overwhelmed and opt for the quickest approach. However, have you considered the precautionary principle? Meaning, being thorough and setting extensive and granular data collection processes and systemising early to capture context, information and insights early. It may be tempting to take the easy way out and use a KPI focused approach for CSRD, but we think that may be a waste of your valuable time. Data capture, quality and depth is important. Without the correct measurements, the right data, you cannot make decisions. That is, without measuring, you can't manage. Without context, you lack understanding. Without frequency and detail, you miss important analytical insights. Sustainability deserves the same treatment as financial data, as it will be reported as such.

What do we mean? Well, quick metrics often fail to capture the full scope and depth of impacts. By focusing solely on high-level Key Performance Indicators (KPIs) and neglecting granular data, you may risk overlooking information that could drive meaningful change and improvement. Let us take an example to make it clearer:

Consider a manufacturing firm monitoring workplace safety. A KPI-focused method might only track the number of reported accidents, providing a simplistic view of safety performance. While this approach seems straightforward, it can miss details that are essential for creating a truly safe work environment. In contrast, a data-focused strategy would collect and analyze a wealth of information, including:

• Near-miss incidents: Events that could have resulted in injury but didn't, offering valuable insights into potential hazards.

• Types of injuries: Categorizing injuries (e.g., cuts, burns, strains) to identify patterns and specific areas of concern.

• Root causes: Investigating the underlying factors contributing to accidents, such as equipment failures, procedural gaps, or human errors.

• Employee feedback: Gathering input from workers about safety concerns, suggestions for improvement, and the effectiveness of current safety measures.

• Time and location data: Analyzing when and where accidents occur to identify high-risk areas or shifts.

• Training records: Correlating safety incidents with employee training to assess the effectiveness of safety programs.
  
  

This approach enables the company to implement targeted safety improvements, potentially preventing future accidents and fostering a culture of continuous improvement in workplace safety.

CSRD compliance can be likened to producing a comprehensive sustainability report card for your organization. While a KPI-focused approach might help meet basic reporting requirements, it often falls short in providing the depth and context necessary for true sustainability leadership. The data-focused strategy, on the other hand, offers a much fuller and more nuanced picture of the company's sustainability and social responsibility efforts.

This more detailed approach not only ensures compliance with CSRD requirements but also drives meaningful improvements across various aspects of sustainability performance. By embracing this data-rich approach, companies can transform CSRD compliance from a mere regulatory exercise into a powerful tool for driving sustainable business practices, enhancing stakeholder trust, and creating long-term value. It enables organisations to not just report on their sustainability efforts, but to truly understand, improve, and innovate in their journey towards a more sustainable and responsible future.

Our CSRD Module: A comprehensive reporting solution

To help organizations comply with CSRD requirements efficiently, our CSRD Module offers a powerful, flexible solution for sustainability reporting. This module supports alignment with the latest CSRD/ESRS standards, focusing on both functional and non-functional aspects to optimize reporting processes.

User centric focus

Our CSRD Module is built with a user-centric approach, designed to meet the complex needs of reporting companies, sustainability managers, and data reporters in the evolving landscape of Corporate Sustainability Reporting Directive (CSRD) compliance. This comprehensive solution serves as a central hub for all your sustainability data management needs, integrating with your organisation's existing processes and team structures.

Understanding that each company's journey towards CSRD compliance is unique, our expert system offers a tailored approach to sustainability reporting. We've leveraged cutting-edge technology to automate time-consuming tasks, allowing your team to focus on strategic decision-making and value creation. From data collection to analysis and reporting, our module streamlines every step of the CSRD compliance process.

Key features of our CSRD module include:

• Automated data collection and validation, ensuring accuracy and completeness of your sustainability metrics

• Real-time dashboards and analytics for monitoring progress towards CSRD compliance and sustainability goals

• Customizable reporting templates aligned with the latest ESRS standards

• Collaborative tools for cross-functional team engagement in the reporting process

With our CSRD Module, reporting becomes not just a compliance exercise, but a strategic tool for driving sustainable business practices. Your data is categorized and summarized within the CSRD/ESRS framework, allowing for easy export of your CSRD report. Moreover, our module ensures proper digital tagging for seamless integration into your annual report, meeting the latest regulatory requirements for sustainability disclosure.

Conclusion: Turning CSRD compliance into value creation

For companies navigating CSRD requirements, October 2024 represents a critical juncture. Ensuring compliance is just the first step; by implementing the right strategies, processes, and tools, organizations can turn CSRD from a regulatory obligation into an opportunity for value creation. With a strong data foundation, effective role allocation, and the right technology, companies can not only meet their reporting obligations but also enhance their sustainability performance and strategic value in the long run.

Book your CSRD software demo here