We’ve long been talking about the potential impact of the EU’s Corporate Sustainability Reporting Directive (CSRD) on how companies will have to report on ESG issues.
Replacing the Non-Financial Reporting Directive, CSRD came into force in January 2023 and has applied since the start of this year. For entities reporting in the EU, the implications have been widespread and well cataloged: among other things, there is an emphasis on double-materiality reporting.
For more expert analysis on the topic, I’d recommend this comprehensive feature written by my colleague Noemi: CSRD & ESRS compliance: Challenges, strategies and global impact.
New research, however, shows that the majority – 81 percent – of companies not subject to the directive intend to meet its disclosure requirements in some shape or form. That’s according to a survey of more than 2,000 people working in corporate reporting, sustainability or related functions carried out by Workiva, which also finds that respondents almost unanimously consider meeting the demands of mandates like the CSRD as the most pressing challenge ahead of them.
Those polled by Workiva further say the volume of different requirements they must contend with rank as their top compliance concern; 83 percent also agree that collecting accurate data to fulfil the double-materiality requirements of the CSRD is going to pose a significant challenge to their organizations.
Nonetheless, almost everyone surveyed agrees it is worth the admin headache: 88 percent of respondents say integrated reporting will have a positive, long-term impact on their organization’s value creation, with the same proportion agreeing that obtaining assurance over ESG data increases the likelihood a company will achieve its goals.
For the past few years, we have asked many IROs, CFOs and other reporting professionals whether they think the current alphabet soup of reporting frameworks and standards will start to coalesce into a unified set of standards across the industry. The findings of Workiva’s survey certainly suggest things are going to get more complex before they get simpler and that, at present, ongoing regulatory changes are going to make sustainability reporting more complicated rather than less.
The result? Well, typically for IR teams, it means it’s even more important to stay agile and react swiftly to the demands and expectations of not just investors but also the regulator.
Perhaps that’s why more than four in five (81 percent) of those Workiva polled agree that generative AI will make it easier for them to carry out their reporting role in the next five years. Projects like Alex Annaev’s CSRD Chat tool, which has been trained on reams of data from EU advisory groups and hours of official guidance videos, are already showing how this is possible.
So how are you planning to meet the demands of CSRD? Or will it not affect your work at all? As always, we want to hear from you – so please email us at [email protected] if you have thoughts to share.
