If you’re operating in Europe, you’ve probably heard about the Corporate Sustainability Reporting Directive (CSRD). You may have even heard about a delay. But what does this mean for your preparations?  

Well, it isn’t a reason to let the ball drop! 

The directive is sprawling and complex, whilst the delay is small and specific. Preparing for it is a time-consuming process. But more than that, it is a valuable opportunity to demonstrate your commitment to sustainability to investors and the public – why wait? 

What you need to know about CSRD

The Corporate Sustainability Reporting Directive (CSRD), an EU regulation expanding on the Non-Financial Reporting Directive (NFRD), came into effect this year. It mandates transparent, standardized, and comprehensive reporting of ESG data for large firms operating within the EU.  

In a phased implementation, 50,000 organizations (including 10,000 non-EU companies) must provide ESG disclosures meeting the same assurance standards as financial reporting. With its emphasis on double materiality and adherence to new reporting standards (European Sustainability Reporting Standards), the directive introduces a complex reporting landscape. 

So, what’s all this about a delay? 

The European Parliament has announced that several elements of the CSRD will be delayed by 2 years – this includes the adoption of sector-specific standards and disclosures for non-EU companies. 

The delay aims to give companies in specific industries more time to get their reporting processes in place. It also gives a two-year reprieve to overseas companies, including an estimated 3,000 American firms, that will also be subject to the CSRD’s rules. 

A word of caution 

The CSRD itself is not being delayed. And two years isn’t long, especially given the mammoth task of reporting. So, if you haven’t already, you need to prepare now.  

Here are five steps to get you started: 

#1. Understand when to report 

With a gradual rollout planned it’s important to know when you’ll need to complete your first reports: 

• 2025: Businesses already subject to the NFRD will have to report on the financial year 2024. 
• 2026: Large undertakings not subject to the NFRD will have to report on the financial year 2025. 
• 2027: Small and medium enterprises will have to report on the financial year 2026. 

• 2029: Non-European companies that have European branches or subsidiaries will have to start reporting. 

#2. Assess what you need to report 

Next, you’ll need to conduct a double materiality assessment. This mandatory process helps pinpoint the reporting requirements specifically relevant to your business.  

It involves considering two types of materiality.  

• First, there’s impact materiality: examining how your company’s actions influence people and the planet across your entire value chain.  
• Then, there’s financial materiality: assessing how sustainability and climate factors impact your business in terms of growth, performance, and cost of capital.  

By considering both, you can identify sustainability risks and opportunities. 

You’ll need to evaluate all levels of the value chain, closely examining the short, medium, and long-term impacts of your business operations. Given the administrative challenges linked to materiality assessments, the process can easily take 3-6 months. So, it’s important to act now. 

#3. Assemble a team  

The scope of disclosures is broad, covering everything from greenhouse gas emissions to worker welfare – so you’ll need to collect data across business functions (EHS, IT, legal, risk, sustainability, the list goes on). You’ll need top-notch project management and collaboration across teams to pull it off.  

And, the data you collect needs to be investment grade and audit ready – so data governance should be high on your agenda. First, identify which teams and individuals will be responsible for CSRD reporting and notify teams who will be involved in data collection. You could even hire a dedicated project manager for CSRD compliance. 

#4. Identify data gaps 

You need to know how to collect, store, and update qualitative and quantitative data, covering everything from hazardous waste to reported bribery incidents. Reviewing each standard’s data requirements will reveal missing information and gaps in your data collection processes. 

Assessing your current sustainability framework and identifying the extent of work needed to comply with the CSRD is another good way to identify gaps. Good news for those already preparing disclosures for the TCFD (Task Force on Climate-related Financial Disclosures) – they’re closely aligned, so you will have a head start. 

#5. Set up a data collection process 

Collecting data across different teams requires robust internal workflows to streamline the process and standardize input. 

Beyond internal teams, there’s the challenge of gathering data from suppliers, operators, and company partners. Getting these external companies to share their data can be tricky. That’s why it’s crucial to establish a smooth and easy process for sharing, collecting, and organizing the data that suits everyone involved.  

Remember: merely presenting the data isn’t enough, you must provide information on how you collected and analyzed the data. Plus, you’ll need to make sure your reporting meets the ESRS, is digitally accessible, and is independently assured. 

Our pro tip… 

Technology is your friend.  

Considering complex software implementations can take up to a year, it’s a good idea to begin exploring software with robust capabilities in data collection, data management, and environmental reporting. 

A software tool, such as TenForce can: 

• Collect data through various channels into your enterprise data lake, where it can be aggregated, analyzed, and categorized into relevant topics for disclosure.  
• Ensure that the final output adheres to the correct formats required for reporting under the ESRS. 
• Increase traceability of information, providing transparency in the reporting process. 
• Automate the reporting process, minimizing the risk of errors associated with manual input. 
• Align with the latest requirements, as reporting regulations evolve, ensuring ongoing compliance. 

Getting started, without delay 

Preparing for the CSRD is a complex process – delay is not an option. Putting in the groundwork now is not about merely meeting an imperative but about grasping an opportunity to showcase your commitment to sustainability.  

We’ve given you a process to follow, and a pro tip – so now it’s time to get started! Book a demo today and we’ll walk you through how TenForce can be your partner in environmental reporting success. 

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