Navigating ESG Data Challenges: EU Firms Prepare for CSRD Compliance

In recent years, the focus on environmental, social, and governance (ESG) criteria has intensified, especially with the implementation of the EU’s Corporate Sustainability Reporting Directive (CSRD). A new study reveals the challenges faced by UK and French companies in ensuring the accuracy and management of ESG data, as they prepare for upcoming regulatory changes.

Challenges in ESG Data Management

According to a report by Yahoo Finance, the complexity of current sustainability guidelines is causing apprehension among businesses. A survey of 1,000 IT and data executives uncovered several key insights:

• Two-thirds of companies are preparing to meet audit and reporting deadlines within the next year.
• 25% of respondents are skeptical about the reliability of their ESG data.
• Just 27% of participants express confidence in their data management systems to fulfill the stringent reporting requirements of the CSRD.

Shifting Responsibilities for Compliance

The study also indicates a notable shift in responsibility for CSRD compliance, increasingly falling on IT departments. Key findings include:

• 68% of executives consider roles such as chief data officers and chief information officers critical for compliance.
• Only 54% attribute responsibility to senior sustainability officers.
• A mere 33% involve their CFOs in the compliance process, despite the financial implications.

Investment in Data Management

To bolster their readiness for compliance, over two-thirds of businesses are planning to allocate more than 10% of their annual IT budgets to improve data management systems. Notably, 26% of companies are dedicating over 20%.

Hervé Chapron, Semarchy EMEA’s global sales manager, highlighted the significance of reliable data management: “With regulatory uncertainty and rising expectations around sustainability reporting, many organizations view compliance as a significant hurdle. Most companies already collect the data they need for CSRD compliance; adopting centralized, scalable tools allows them to meet regulatory and business deadlines with minimal disruption.”

Future Regulatory Framework

This evolving landscape sets the stage for the Omnibus Simplification Package under the EU Green Deal, aimed at reducing the reporting burden for small and medium enterprises (SMEs) by up to 45%. The CSRD, which came into effect on January 5, 2023, seeks to enhance the transparency of social and environmental data reported by companies.

For more information on ESG compliance and best practices, visit our internal page on ESG Compliance Strategies.