CSRD (Corporate Sustainability Reporting Directive) requires organizations across the EU to disclose information about their social and environmental impacts. The directive demands the same rigor and respect for ESG data as we're used to giving financial data, and there's no reason not to get started right away.
And yet... several underlying factors need to be in place in your organization before you can embark on CSRD.
CSRD starts and ends with management
Over the coming years, the financial bottom line of organizations will be joined by environmental, societal, and managerial bottom lines, all of which will be given equal weight. It's fair to call this a paradigm shift, and it places management demands which can't dismiss sustainability with a wave of the hand or leave it to an employee.
On the contrary, it will require human and financial resources to put together a toolbox and build a culture that can collect, implement, and report on the respective ESG data. And that's why the transition can only start in one place - with management.
Without management support, CSRD work will not take off. This task is so extensive that it cannot be solved by just one person or without the right tools. Therefore, the work must be anchored at the management level. If this doesn't happen, you won't be able to move forward with the other points we touch on in this article - so if you're unsure where to start with CSRD, management is a good place to start.
The ambition level forms the basis for the work
Before the actual work with CSRD can begin, it is important to define the organization’s level of ambition and set a strategy. Knowing the goal before investing in tools and employee engagement is relevant to ensure alignment between the allocated resources and the goal the organization wants to achieve.
And even with the goal in place, it's important to note that you can't wrap up the ESG accounting in the short term. It's an ongoing process, and the first step is to get off to a good start and create a culture where CSRD becomes an integral part of your organization’s operations.
Find the right tools
CSRD has extensive reporting requirements, and it's not something that can be done with an Excel sheet or two. It is important to find the right combination of tools to enable ESG managers to lead the project, collect the necessary data, and ensure that all the directive requirements are met. It is also important to give the responsible team the relevant tools to make the scope of CSRD visible to the CFO and the rest of the management team so the necessary resources are dedicated - both human and financial.
The choice of supporting systems should always be based on the data the organization needs to collect and report on, which emphasizes the importance of scoping the task and identifying what needs to be included. There is currently no solution that can handle the entire CSRD process in one system; it requires a combination of several systems that can solve the complicated process of collecting, implementing, documenting, and reporting ESG.
As an organization, looking for systems that build on the disclosure requirements of the European Sustainability Reporting Standards (ESRS) is a good idea. It is also beneficial if the system can help systematize your compliance work and streamline the collection and processing of data across the organization, keeping everyone involved on the same page from decision-making to execution.
Successful CSRD is a joint endeavor
When implementing CSRD in an organization, it is important to understand that it is a joint task. The work cannot be done alone or in compartmentalized teams - it will affect upstream and downstream activities in the value chain, which is why the compliance work must be done as one team.
For the same reason, it is essential to create the right mindset and understanding among those involved, as otherwise, it can be difficult to get the necessary processes and measures implemented in everyday life, making it difficult to collect the necessary data for CSRD reporting. An essential part of the CSRD project is identifying the right approach to create a successful compliance culture.
Creating a cultural change is an extensive task. First and foremost, ESG must become a permanent fixture in goals, strategies, processes and decisions, and the various areas must be articulated and communicated across hierarchies and departments. And then the cultural change starts in one place and only one place - with management.
Although the work starts at the top level, it's important to involve individual managers early to create an inclusive community where engagement and ownership become the cornerstones. This is essential when it comes to spreading the culture to your employees.
Include right people
Management support and the right tools are one thing, but another is that a successful implementation requires the right people in the driver's seat - and it is not unimportant which profiles are put in charge of the project.
In addition to having several ESG experts associated with the project, appointing one or more Change Managers who can lead the transition and drive the cultural change needed among employees can be beneficial. In this regard, several characteristics can be advantageous for the person in question - among other things:
- Adaptability: A good Change Manager understands the importance of change and speaks positively about it - and wants to help their colleagues achieve the same understanding.
- Commitment: The right change agent is committed and likes to lead from the front.
- Well-liked: It's important that the Change Manager is generally well-liked among their colleagues and can speak to everyone at eye level to communicate the CSRD work in an easy-to-understand language.
At the same time, it's important to understand that even the best Change Managers can't change the culture without full support from management. Successful implementation always starts at the top and slowly moves to individual employees.
Sustainability is an ongoing task
In conclusion, it's worth mentioning that sustainability, ESG data, and CSRD are not one-off tasks to be solved once and for all. Quite the contrary. It is an ongoing task that requires the organization to remain dedicated to the effort and allocate the necessary resources now and in the future.
The continuous work on collecting and reporting social, environmental, and management data also helps the work to take root in the organization and eventually become a natural part of the work.