Strategic Support: Enhancing Business Resilience under CSRD 

Author: Sarah Shannon
Date:  May 13, 2024

Accountants know that staying ahead of trends is crucial for business success. While trends typically come and go, influencing strategies and operations in cycles, sustainability is proving to be far more than just a fleeting focus. Unlike other passing business fads, sustainability has solidified its position at the core of corporate strategies, driven not only by the climate crisis and consumer demand but also regulatory mandates - particularly CSRD - coming into force. 

Background and Evolution of CSRD 

Within the European Union, the CSRD was first proposed in 2021 as an update and expansion of the Non-Financial Reporting Directive (NFRD). The CSRD took effect in January 2023, introducing more rigorous demands for transparency and accountability in reporting sustainability issues. The new legislation mandates that companies adhere to the European Sustainability Reporting Standards (ESRS), which consist of 12 standards adopted by the European Commission in July 2023. These standards are designed to ensure that sustainability reporting aligns with the depth and rigor traditionally reserved for financial reporting. 

This regulation makes it clear: sustainability is no longer optional! 

It's a critical element that around 50,000 companies throughout the EU must integrate sustainability reporting into their operations. These businesses are required to approach non financial information reporting with the same rigour as financial reporting.  

What are companies expected to report on 

Under the CSRD rules, reporting entities are required to report on non-financial qualitative and quantitative information related to: 

  • Diversity of company boards 
  • Double materiality 
  • ESG targets and progress in reaching them 
  • Greenhouse gas emissions and targets 
  • Human rights issues 
  • Social responsibility and employee treatment 
  • Sustainability goals, performance and policies 

The knock-on effect of CSRD

Not only are large companies directly affected by these regulations, but their supply chains are also impacted. Larger organisations will now expect their suppliers to demonstrate and account for their sustainability efforts, extending the reach and implications of these standards throughout the entire supply chain. 

The Importance of Early Preparation 

Just like a house needs a solid foundation to stand strong, a business needs a robust base to grow and thrive as sustainability becomes increasingly central to operations. To report effectively, it’s important for businesses to start preparing now. As legislation evolves and becomes more demanding, companies will need to share more detailed non-financial information. Establishing a solid foundation today will help ensure that a business can meet these increasingly more stringent requirements in the future. 

Experts in the accounting profession foresee increasing regulation on data disclosure, information, and metrics around environmental, social, and governance (ESG) matters. Now is the best time for accounting and finance professionals to embed sustainability metrics into an organisation’s business model. 

Data Management: A Critical Component 

Effective data management under CSRD cannot be overstated. Relying on ad-hoc processes, clunky spreadsheets, shared drives or individual knowledge not only poses a risk to compliance but to the integrity and continuity of your business operations. Instead, collecting, organising and securely storing sustainability data in one single source of truth ensures that a company can respond quickly to regulatory requests and manage information efficiently. 

Visualise and Showcase Progress 

Visualising all sustainability data in one place not only simplifies compliance but also showcases a company's progress. It enables effective decision-making and highlights ongoing improvements in sustainability actions. This centralisation ensures that no effort is duplicated and that every stride towards sustainability is documented and accessible. 

Operational Strategy for Compliance 

Preparing for CSRD involves 3 elements: 

1. Data Collection: Establish robust systems to continuously collect detailed, accurate non-financial data. 

2. Analysis and Reporting: Implement tools and processes that allow for effective analysis and transparent reporting of sustainability efforts. 

3. Supplier Collaboration: Extend data practices to the supply chain, ensuring that suppliers can provide the necessary non-financial data to align with sustainability reporting requirements. 

In conclusion, the role of accounting professionals is more crucial than ever under the CSRD. By proactively collecting, managing and analysing sustainability data, a company will not only comply with evolving regulations but also position a business as a leader in sustainable practices. Put simply, start early, organise diligently, and embrace the CSRD with confidence. 

At Pulse Market we are working with accountants, CFOs and supporting organisations prepare for CSRD with our sustainability consultancy services and our sustainability platform for collecting, organising and visualising non-financial information.

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