A new survey by VinciWorks, a leading compliance and sustainability eLearning specialist, has found that most ESG leaders and compliance managers are not ready for the Corporate Sustainability Reporting Directive (CSRD).
The survey, which polled 175 ESG leaders and compliance managers, found that more than three-quarters (77%) have yet to commence preparations for CSRD reporting despite the CSRD being enforced in January 2023.
The CSRD is the EU’s answer to corporate sustainability reporting and seeks to plug gaps in existing regulation and disclosure in the hopes of creating more consistent and actionable corporate reports to support the investment community. It requires all large and listed companies, even some outside of the EU, to publish regular reports on the social and environmental risks they face and how their activities impact people and the environment.
According to the survey, only 50% of respondents acknowledged that their organisations are likely to fall under the scope of CSRD. However, of those who are aware of their obligations, only 23% have taken the initiative to commence preparations for CSRD reporting.
“The inaugural CSRD reports are slated for submission in 2025. Organisations that prioritise preparation over procrastination are better positioned to enact policies and procedures that ensure seamless compliance,” said Nick Henderson-Mayo, Director of Learning and Content at VinciWorks.
“Despite Brexit, CSRD will have a big impact on British business, particularly those trying to trade with the EU, or who are part of international supply chains. By training employees on sustainability and ESG principles, awareness can be cultivated, fostering active support for the organisation’s sustainable objectives.”
Should in scope businesses fail to comply with the regulation by disclosing their indirect (Scope 3) emissions in line with the requirements of the new CSRD, they will face potential fines and other penalties, with UK firms opening in the EU set to be charged up to £40 per tonne of CO2 emissions misreported under the new regulations.
Reporting challenges with CSRD
The survey found that the top challenge for CSRD compliance is gathering and reporting information on supply chains, including scope 3 emissions. This was identified by 48% of respondents, followed by awareness and understanding (28%) and regulatory adherence (10%).
Despite these challenges, an overwhelming 89% of ESG leaders and compliance managers recognise the value of implementing sustainability reporting within their organisations, a number reflected earlier this week in a report from Workiva.
The findings of VinciWorks are in line with those of other surveys conducted this year. For example, a survey by supply chain management firm, 7bridges found that more than half of in scope UK businesses are currently unlikely to meet the deadline for CSRD reporting.
However, research from disclosure platform CDP found that those currently using its disclosure platform are already mostly prepared to report under the new regulation, and the European Sustainability Reporting Standards (ESRS) that underpin it.
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