What 2024 Taught Us: 3+1 Key Lessons from Implementing CSRD Reporting Projects on the Ground

As we move into a new year, it’s time to reflect on what 2024 taught us about navigating the complexities of the Corporate Sustainability Reporting Directive (CSRD).  Through hands-on projects with clients, we faced challenges like immense data demands, non-standardized processes, and organizational barriers. From these experiences, we distilled 3+1 key lessons that can help organizations streamline their sustainability reporting in 2025.

Key challenges and lessons learned

1. Underestimating the time and volume of data required

Organizations must report on 161 mandatory data points irrespective of materiality, assessments, covering actions, policies, metrics, and targets. Additionally, 622 data points are subject to materiality analysis, significantly increasing the reporting burden. Many organizations underestimated the time and resources required to collect this data, resulting in delays. Waiting for the completion of the double materiality assessment (DMA) can exacerbate these delays due to its complexity and time-intensive nature. These factors create bottlenecks in the timely collection of mandatory data points, posing a substantial challenge for organizations striving to comply with CSRD requirements.

2. Reporting IROs is not standardized

CSRD reporting is not a standardized process, requiring organizations to tailor their approach to define and report Impacts, Risks, and Opportunities (IROs). Companies struggle with linking policies, actions and targets to material IROs across diverse structures and regions. The need for comparative data, granular breakdowns, and entity-specific disclosures adds complexity, making the process resource -intensive and challenging to streamline.  

3. Lack of granularity in disclosures

Once a topic is deemed material, organizations often struggle with achieving the required level of granularity. Complex data collection procedures make it challenging to maintain visibility across policies, actions, and targets.

Organizations with multiple entities across geographies face additional hurdles, including miscommunication and data bottlenecks. Many data points remain uncaptured due to these constraints. EFRAG guidance emphasizes the importance of detailed and precise data collection to ensure comprehensive reporting, yet variability in organizational structures complicates achieving this level of detail.

4. Limited stakeholder engagement

Impact assessments often occur in silos without engaging key stakeholders early on, both internally and externally. For example, the finance team is frequently excluded in the initial stages, despite their critical role in linking materiality assessments to financial effects such as cash flows, financial position, and access to capital.

Additionally, companies often underestimate the impact of value chain players, leading to incomplete data, particularly on workers’ conditions, wages, and safety measures. Failure to engage stakeholders early compromises the accuracy and completeness of the sustainability report.

What we urge organizations to prioritize

1. Start early with mandatory data points

Do not wait for the double materiality analysis to conclude. Begin collecting the 161 Minimum Disclosure Requirements (MDR) data points immediately. For example, companies in the energy sector can focus on mandatory data like scope 1 and 2 emissions while aligning early with ESRS E1 requirements, which are typically material for this industry.  

2. Streamline the reporting of IROs

Establish a structured process to report IROs (Impacts, Risks, and Opportunitie) by clearly linking policies, actions and targets to material topics. For example, a consumer good company might link their recyclable packaging policies to financial opportunities derived from reduced material costs. Use standardized reporting formats to ensure consistency in data collection, tracking and simplifying complex disclosures.

3. Mitigate data gaps and complexity

Assign centralized oversight for sustainability reporting to ensure alignment across all entities. Standardize data collection processes using integrated systems and adopt an iterative approach to address gaps and align sustainability data with financial disclosures. This governance structure reduces complexity and ensures consistent reporting.

4. Embrace collaborative responsibility

CSRD compliance requires collaboration across teams and leveraging advanced tools like Net Zero Cloud systems to streamline data collection and reporting. For example, during a reporting automation with a multinational retailer, we leveraged data cloud solution to streamline and automate data collection and centralize scope 3 emissions tracking. This system connected multiple teams across various geographies enabling real time visibility.  

Conclusion

By addressing these challenges and focusing on these priorities, organizations can streamline their CSRD compliance efforts, reduce complexity, and ensure a more efficient and comprehensive reporting process. As we move forward into another year of sustainability innovation, these lessons will be pivotal for success.