A report by Workiva has found a lack of action amongst European companies as they prepare for the Corporate Sustainability Reporting Directive (CSRD) compliance by 2024.
The report indicates that 94% of surveyed organisations are working towards this, yet they’re potentially underestimating the volume of effort ahead of the CSRD deadline.
Interestingly, the impact of the CSRD appears to be significant, with 59% of respondents not required to comply still planning on doing so voluntarily. This highlights that environmental, social, and governance (ESG) considerations are having a considerable influence on their annual reporting strategies.
Despite this, the majority of finance teams are being overwhelmed by their growing workload, which is being further exacerbated by additional reporting requirements.
The report shows that only a small fraction of companies surveyed (10%) are actively working on improving collaboration between their finance, sustainability, and risk departments. Despite this collaboration being a critical component of the CSRD mandate, many firms seem to be failing to appreciate the importance of this in meeting CSRD demands.
In terms of technology adoption, the survey shows that while almost half of the respondents are integrating or have already integrated technology into their reporting processes, there remains a significant portion of companies that still rely heavily on manual processes. This could potentially leave them ill-equipped to deal with the demands of the regulation.
Workiva senior vice president and general manager of EMEA Erik Saito said, “The CSRD mandate is already having a significant impact on the reporting landscape. Many reporting teams are at or near capacity and will be challenged by the workload pressure of additional CSRD reporting requirements.”
Saito added, “There is a clear lack of in-depth understanding when it comes to the requirements of integrated reporting—particularly in regard to CSRD compliance and the timelines needed to establish, test and optimise a truly cross-functional reporting structure. Organisations simply won’t be able to approach CSRD compliance with a ‘trial-and-error’ approach.”
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