Almost two-thirds (63%) of companies confident they will be ready for CSRD, but much more work to be done: PwC Global CSRD Survey

Almost two-thirds (63%) of companies say that they are very or extremely confident that they will be ready to report under the EU’s new Corporate Sustainability Reporting Directive (CSRD), according to PwC’s inaugural 2024 Global CSRD Survey, published in Ireland today. 

The global survey, of more than 500 senior executives and business professionals, including finance, sustainability and risk leaders, found that the EU Directive, which will impact about 50,000 companies, is having a global impact. 

Preparing to report under the EU’s Corporate Sustainability Reporting Directive (CSRD) is leading companies to give more weight to sustainability in business decisions. Around three-quarters (76%) of companies preparing to report under the Directive, including those headquartered outside the EU, say they are factoring sustainability into decision-making. 

While the survey results indicate confidence around sustainability reporting, survey respondents cite obstacles to implementation. The single biggest concern listed is data availability and quality (59%). 

Only one-fifth of companies due to report in the next 6 months have validated the availability and completeness of data for their disclosures. Additionally, less than 60% of all respondents have involved their technology function, although most respondents plan to do so, and most companies are not using specialist tools or technology for sustainability reporting. Spreadsheets are the most commonly used tool (74%), compared with 37% using carbon calculations tools, 26% using centralised sustainability data storage and 20% using AI, although more have plans to use these tools in the future. 

As the countdown to CSRD compliance approaches, it is positive to see companies are largely confident that they will be ready to report. However, there is still some way to go, with the majority grappling with complex challenges, particularly the quantity and quality of data required, not only for their own operations but across their value chain.”   

The breadth and depth of CSRD reporting presents a massive challenge as teams work to collect, verify and consolidate many new types of data.  Organisations need a plan for how they are going to define, source, govern and process  the data, in a manner  to ensure that it is capable of being assured.

As the CSRD essentially requires sustainability reporting to be on par with financial reporting, leading executives are recognising that sustainability information must be available, accurate, and capable of being assured: not just on a one-time basis, but annually. The global impact of CSRD shows the importance of getting to a global baseline of reporting standards to reduce complexity and improve comparability.

Implementation obstacles 

Despite high levels of confidence, especially for companies due to report in the next 6 months (72%), less than half of these companies have completed key activities, such as confirmation of reporting options (39%), double materiality assessment (38%) and validation of availability of data (20%). Nonetheless, companies that have completed early-stage activities are more likely to be confident in meeting the reporting requirements. 

While respondents report high confidence on topics that are generally included in existing disclosures such as workforce (75%), business conduct (75%) and climate change (60%), they are far less confident in their ability to meet reporting requirements on less familiar topics such as biodiversity (35%), pollution (43%) and workers in the value chain (44%). 

Sustainability is rising in the leadership agenda 

The survey finds that 76% believe CSRD has or will lead to company leadership considering sustainability in decision making, including 59% who say sustainability is already being considered to a greater extent due to CSRD, and 17% who say it will be considered. 

Companies expect business benefits

Companies expect a wide range of business benefits to flow from CSRD. Namely, more than half (51%) expect benefits to a large or very large extent to include better environmental performance, 49% expect improved engagement with stakeholders (both internal and external) and 48% better risk mitigation.  

Almost one-third believe CSRD benefits will include competitive advantage (38%), revenue growth (28%) or cost savings (26%). The expectation of competitive advantage is higher for companies closer to their reporting deadline, with 45% of companies due to report in FY2025 expecting to see competitive advantage.

The PwC survey shows that leading companies are increasingly embedding sustainability into their decision making. Through the implementation of CSRD, they are expecting strong environmental benefits, better risk mitigation and improved engagement with internal and external stakeholders. We’re also seeing companies that are further along in their CSRD journey expecting greater overall benefits from its implementation. In particular, those that are closer to their reporting deadline see much greater financial benefits such as access to capital, revenue growth and cost savings than those due to report in later years.

by Fidelma Boyce, Assurance Partner, PwC Ireland