Greenomy - Ultimate CSRD Checklist: 10 Steps for Successful Compliance

There are ten fundamental steps that apply to most organisations embarking on their CSRD compliance journey. In this article, we will go through 10 essential steps that companies should undertake to ensure successful CSRD compliance.

Greenomy, 31 Ott 2023 - 09:33

Step 1: Scope the Application of the CSRD

When scoping the application of the CSRD for their company, organisations should consider various factors, including their corporate structure, subsidiaries, consolidation requirements, the value chain as well as material impacts, risks and opportunities arising from their value chain. Therefore, prior to looking at the standards themselves (ESRS), companies should determine the CSRD perimeter that applies to them.

Step 2: Consider the Level of Disaggregation of Material Information

The ESRS specify that organisations should ensure to consider impacts, risks and opportunities before undertaking the Double Materiality Assessment, so that it is consistent throughout the whole reporting process.

Step 3: Perform the Double Materiality Assessment

The materiality assessment process requires a thoughtful methodology, including stakeholder engagement to identify and evaluate material impacts, risks and opportunities. It ultimately determines the ESRS that are applicable to the company and informs substantial parts of the company’s reporting.

Step 4: Familiarise Yourself with the ESRS

To ensure a seamless connection between the outcomes of the Double Materiality Assessment and reporting under the ESRS, companies should conduct a thorough analysis of the ESRS understanding the applicable CSRD requirements. Understanding the mechanics of complex interactions such as between transition plans and the key performance indicators (KPIs) outlined in the EU Taxonomy is crucial for ensuring the successful execution of reporting obligations.

Step 5: Engage with your Organisation and Communicate CSRD Requirements with Internal Stakeholders

To successfully carry out reporting obligations under the ESRS, a collaborative effort is imperative, involving multiple teams within the organisation, including, among others, the sustainability, financial, and management teams. It is therefore crucial to educate all members of the organisation about ESRS to guarantee successful reporting. Effective communication of the CSRD requirements is also vital to assess the organisation's data readiness level and the anticipated effort, which leads to the next step.

Step 6: Perform a Data Gap Assessment

Assessing data availability and quality against CSRD requirements is an important step to understanding the maturity of the company towards its CSRD compliance journey. This step requires identifying, for each data point required by the ESRS, whether the data is available, where it is stored, and who are the responsible data owners within the organisation.

Step 7: Discuss with your Auditor

This step should be undertaken throughout the entire CSRD reporting journey. The Directive mandatorily requires limited assurance on CSRD reports (with reasonable assurance potentially coming into play from 2028). Therefore, early engagement with a statutory auditor or an audit firm to understand how they consider the CSRD and its ESRS will considerably help companies in drafting compliant disclosures and evaluating pre-assurance readiness.

Step 8: Streamline Data Collection and Monitoring

ESRS requires the integration and analysis of data from various IT systems used in an organisation, such as enterprise resource planning (ERP), CRM, and HR Systems. IT systems need to be harmonised and translated into validated KPIs with an auditable trail.

Step 9: Embed Technology Tools for the Production of the Report

Technology plays a pivotal role in simplifying ESG reporting. By utilising advanced software solutions, businesses can effortlessly gather and monitor data, significantly streamlining the reporting process. This not only accelerates the process but also ensures accuracy and compliance with intricate ESG standards.

Step 10: Ensure Continuous Learning on Latest Sustainable Finance Regulations

Remaining well-informed about ESRS advancements empowers businesses to take proactive steps in adjusting to the ever-evolving sustainability reporting standards.