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CSRD

Helping clients prepare for a new era of sustainability reporting

The Corporate Sustainability Reporting Directive (CSRD) is set to transform sustainability reporting, raising the requirements to a similar level to those for financial reporting. Historically, sustainability reporting has been somewhat of a communication exercise, allowing companies to highlight positive aspects of their business. The aim of CSRD is to make this information user-friendly, comparable and transparent by requiring all companies to report in the same way. Over the past year, Adrian Fintling and his team at Deloitte have been assisting clients in Sweden to prepare for CSRD, which comes into effect for most affected companies in 2025.

For companies, the implementation of CSRD begins with identifying their key sustainability areas. These can range from climate change and biodiversity to personnel matters, business ethics and human rights. The process involves conducting a double materiality assessment – something Adrian and his team have assisted a number of clients with over the past year.

"The double materiality assessment is a significant undertaking, closely tied to corporate strategy. It involves assessing how the company impacts its surroundings and how changes in these areas affect the company’s financial results, assets and risks, and what opportunities they provide", says Adrian.

Once the key sustainability areas are identified, companies must perform a gap analysis against the reporting requirements. The recommendation is then that they develop an action plan or roadmap to close any gaps and implement necessary measures.

"The comprehensive approach ensures that companies can prioritise their efforts and focus on the most critical sustainability issues and complex reporting matters", says Adrian.

Practical implications for companies

Challenges and long-term goals

Adrian believes the sheer volume of detailed data points required to be one of the key challenges with CSRD. Collecting and reporting this data demands considerable administrative effort and precision, and companies may need to source and manage data they have not previously tracked. Meanwhile, they need to ensure the reporting is coherent, readable, understandable and maintains a clear narrative.

"Integrating sustainability efforts across the organisation is essential, involving various departments such as financial reporting, communication and sustainability functions. A holistic approach helps ensure that sustainability reporting doesn’t become a compliance exercise but a strategic component of the company’s operations", says Adrian.

Despite the challenges involved, Adrian believes the long-term benefits of the directive will be significant. The new requirements are crucial for listed companies and investment funds, as accurate data is needed to determine if a fund is genuinely green and to make informed decisions. All types of investors, including banks, require this detailed data to drive change. The board of directors plays a key role in questioning unmet climate goals, leading to resource allocation and actions. Ultimately, being data-driven and transparent will make companies more accountable and could provide competitive advantages.

"Transparency and accurate data are the cornerstones of sustainable business practices, driving accountability, fostering trust and enabling companies to drive change where it matters most. We’re happy to play a part in establishing these processes with our clients and supporting them on this journey", concludes Adrian.

Click here to read more articles in our Swedish Impact Report series.

Link to the 2024 Global impact report landing page.

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