Are you ready for CSRD?

As CEOs work to decarbonise their organisations’ business models, regulatory complexity is proving a particular challenge.

With CSRD now in force for those public interest entities within the scope of the EU’s non-financial reporting rules and with 500 employees or more, this is a worrying hurdle.

CSRD aims to improve and standardise sustainability reporting across companies in the EU, and more entities will be brought into the directive’s scope in the years ahead. Other larger companies and public interest entities with 250 employees or more will be in-scope from 1 January 2025.

The complexity of sustainability regulations is a clear challenge for CEOs, and the impact of these complexities can be significant. They can cause business model concerns, increase operational costs and hinder effective sustainability strategies.

Nevertheless, there is a positive side to it. The focus on sustainability reporting encourages companies to adopt responsible and environmentally friendly business practices, a necessary step towards a sustainable future.

While these regulatory challenges can seem daunting, they can be overcome. CEOs can begin by taking the following practical steps in collaboration with their teams:

• Understand the impact of CSRD on your organisation, including your external stakeholders.

• Analyse your organisation’s existing sustainability reporting process with regard to internal controls and governance, and identify gaps to the new requirements.

• Consider and perform double materiality assessment to identify the relevant standards and metrics that will require disclosure.

• As CSRD reporting requires external assurance, discuss the impact with your assurance provider.

• Engage with key internal stakeholders to understand existing data management processes and identify any necessary actions.

CSRD is about more than just mandating sustainability disclosures; it aims to drive behavioural change. Organisations now have an opportunity to reframe the narrative around their purpose and business model in the context of sustainability and seek opportunities for value creation. It will be a journey but through active engagement, CEOs can position their organisations for success.