En route to becoming the most comprehensive sustainability standard in the corporate world, the Corporate Sustainability Reporting Directive (CSRD) is currently being integrated into legal frameworks all over Europe. Entities of various sizes have different timelines for when they must start complying with its measures, and all large entities will be subject to CSRD reporting by 2026 for the fiscal year 2025, including those not previously in scope of NFRD. This CSRD overview gives you the timeline of which companies are in scope of the CSRD and when.

Typical pitfalls

Our experience is that there are certain issues companies struggle with when handling the CSRD reporting process. Those are:

• Not understanding the reporting requirements and how they apply to your company, and not paying attention to changes in the regulations.
  

• Lack of data management, resulting in poor data quality, availability, and accountability.
  

• Having data scattered across files, emails, and people.
  

• Underestimating the resources and time needed to tackle the reporting requirements.
  

• Not linking sustainability reporting and data management with overall business strategy and operations.
  

Tips to get started

The days of glossy reports with poor content are over, and comparability and transparency are now in focus. CSRD compliance is a step in the direction of greater sustainability. Though reporting is important, remember that the primary goal is to enhance your company's sustainability. Don’t wait until you come into scope for mandatory reporting – look to peers and stakeholders when developing your sustainability disclosure roadmap.

To steer clear of pitfalls, here are our key takeaways:

1. Ensure organizational support
   The CSRD requires data points from many different data sources, so you’ll need help from your colleagues.  

2. Do the materiality assessment properly
   The double materiality is the basis for disclosure – do it properly and include the relevant stakeholders.
   

3. Build on what you have
   Most companies do not need to start from scratch. Adopt a pragmatic approach and utilize existing information on sustainability efforts.

4. Use technology
   Choose a tech solution to operationalize reporting to make it more efficient.
   

5. Get going!
   Start preparing sooner rather than later – that is the best way to identify gaps.

Suggested timeline

To ensure compliance with the CSRD by 2026 and have your sustainability statement ready for the financial year 2025 annual report, we suggest getting started now. Start by doing the double materiality assessment. Check out this article for guidance on conducting the assessment. Identify and resolve data gaps and verify data quality.

By the end of this year, run a test report on 2024 data. Running a test report teaches you what is required and exposes what processes and data are missing in a low-risk way. Utilize this insight to streamline processes, improve data accuracy, and ensure compliance.

To meet the CSRD requirements, companies must produce a report in line with the European Sustainability Reporting Standards (ESRS) and include a sustainability statement in their annual report. Note that the ESRS is developed to consolidate and strengthen existing frameworks, and it may reduce the overall reporting burden for international companies.

It's not expected that the CSRD report is perfect the first time around but make sure you are transparent. You’re also obliged to obtain limited assurance on your report. To ensure compliance we recommend getting started sooner than later.

How can Celsia help?

Recognizing the challenges of staying up-to-date with the evolving ESG legislation, we've decoded the requirements of the EU sustainable finance standard to save you the headache. Instead of engaging external parties to comply with the CSRD, we give you the tool to do it yourself. Our solution supports a step-by-step assessment of disclosure requirements and data gathering, using AI technology to streamline document review.  

Establish CSRD-compliant goals, policies, and actions, and track the progress with our user-friendly software. Easily integrate with existing systems and import data from any source. Engage your colleagues within the software to verify all required data points under the CSRD are addressed. Plus, our expert team will be ready to support you throughout every stage of your CSRD journey.