Navigating Compliance in Sustainability
The corporate responsibility environment is rapidly changing as new rules and guidelines are established. It is crucial for companies to comprehend these regulations and their implications as EU continues to place a high priority on sustainability.
Corporate Sustainability Reporting Directive (CSRD)
The sustainability environment in the EU is evolving quickly. The European Parliament passed the Corporate Sustainability Reporting Directive (CSRD) on November 10, 2022. The CSRD is a Directive, a legislative act that frames what EU countries must achieve and incorporate into their own legislation by mid year 2024. The CSRD expands the scope of mandatory reporting requirements on more companies, including SMEs, and introduces stricter reporting obligations for the years to follow. Key provisions include reporting thresholds, disclosure requirements, and the use of digital reporting formats.
The European Sustainability Reporting Standards (ESRS)
The CSRD introduces the requirement for companies to report according to a new set of European Sustainability Reporting Standards, the ESRS. The latest set of draft standards were published by the EFRAG in November 2022 and draw inspiration from, and build upon previous international standardization initiatives in the sustainability sector, including the GHG Protocol and GRI which most reporting companies should already be familiar with.
Navigating Compliance Challenges
Complying with the CSRD and ESRS may present challenges for organizations, particularly for small and medium-sized enterprises which have less experience in the matter. Yet, there are opportunities that should be considered and embraced.
Some of the challenges seen;
Compliance with CSRD and ESRS may require companies to have dedicated sustainability teams or personnel with expertise in sustainability reporting and data analysis. Hiring or training individuals with the necessary skills and knowledge can be a resource challenge, especially for smaller organizations with limited budgets or a lack of internal capacity.
Collaboration with industry associations and sustainability experts can provide guidance and support, while also facilitating knowledge sharing among peers.
- New processes
Data collection and management can be complex, especially when organizations operate across multiple locations or have extensive supply chains. Moreover, ensuring the accuracy and reliability of reported information demands robust internal processes and controls.
Investing in data systems and technology solutions that facilitate efficient reporting and data analysis can streamline the compliance process.
To navigate these challenges effectively, businesses should adopt a proactive approach. It is essential to conduct a comprehensive assessment of current reporting practices and identify gaps in data collection and management.
Embracing Compliance for Sustainable Success
For eligible organizations, the CSRD poses both challenges and opportunities. On one hand, compliance may require additional resources, improved data collection processes, and enhanced reporting capabilities. On the other hand, it offers several opportunities as well;
- Reduce negative impact and additionally costs associated to it
- Attract investors
- Attract talent
- Strike better deals
- Stronger brand and company culture
By embracing the CSRD, businesses can demonstrate their commitment to sustainability and contribute to a more transparent and accountable business environment.
How can a platform improve and help your company to embrace the opportunities?
Klappir has been operating and developing sustainability software for the past decade. With a well-established presence and offices in Copenhagen and Reykjavik, Klappir has introduced the Sustainability Platform to companies with great success. The platform supports companies and institutions to get ready for the new CSRD-directive and ESRS standards with both numerical carbon accounting and qualitative IRO, strategy and target-management tools.
"Klappir has been a significant part of our company's success in working with carbon accounting. Klappir has assisted and advised us right from the start of our sustainability journey, with their knowledge and expertise they have been able to supplement and substantiate with our suppliers' data, map critical areas and advise us on best practice so that we can use our sustainability data to make more sustainable decisions. Their platform is also super easy to learn to use, and Klappir has dedicatedly supported us throughout our journey in working with sustainability and carbon accounting," says Rasmus Christian Jørgensen - Innovation Manager from Symbion A/S.
Klappir’s Sustainability Platform provides the tools and guidance to help businesses comply with these new rules. The solution is made affordable by standardizing and automizing lots of the work, saving employee resources on data collection and ensuring sufficient expertise in order to comply and cover all ESG matters. At Klappir, we are working hard to adapt our technology and methods to the CSRD requirements, so businesses of all sizes can get on board with Europe's sustainability plans.
"We no longer need to worry about how we collect consistent ESG data for the entire group, even across national borders. When we need data from a new supplier, we add them to our Value Chain, and Klappir ensures that data comes in with specifically calculated emission factors. This means that we can start optimizing each business and involve the entire organization in our sustainability journey," says Elnaz Ehsani, Climate and Sustainability Manager at BYGMA.
Additionally, the Platform saves costs, reduces risks from the value chain and creates new opportunities to reduce emissions. We support our customers in engaging more and better with their suppliers, so that they can get more accurate and transparent data, while easing the process for suppliers in providing it.
Compliance with the CSRD and ESRS is not merely a legal obligation but also an opportunity for businesses and organizations to differentiate themselves as sustainable leaders. By embracing these regulations, businesses can enhance their reputation, attract responsible investors, and contribute to a more sustainable future.
Article published 14.06.2023 in csr.dk, Hvordan ændrer vi “kedelig” compliance til nye komparative fordele?