EcoOnline recently published a new CSRD Readiness Report 2024, examining responses from over 50,000 companies subject to the CSRD. This report focused on both mid-market companies (those with 100-500 employees and between $10m and $1bn in annual revenue) and enterprise businesses (those with 1000 employees and over $1bn in annual revenue), including Fortune 500 companies. The report found that many mid-market businesses do not feel prepared for incoming CSRD reporting requirements.
Main findings of the report
According to the report, while all respondents have started preparing for CSRD compliance, a clear divide in readiness has emerged between enterprise companies and mid-market firms. Enterprise organisations, defined as those with annual revenues exceeding €1 billion, are notably further along.
Among them, 60 percent report having the right tools and processes in place, though they acknowledge the need for external support to achieve full compliance. In contrast, 40 percent of these enterprises remain in the early stages of reporting. For mid-market companies, with annual revenues between €50 million and €999 million, progress is slower.
The report reveals that 63 percent of mid-market firms are still in the early stages of implementing reporting processes, while only 37 percent claim to have the necessary tools and systems in place. However, even those with systems ready also indicate they require external support to navigate certain aspects of the regulation.
Some of the reasons suggested for the gap in readiness include earlier deadlines for larger companies, bigger budgets, and more personnel dedicated to sustainability initiatives. Overall, the report highlights the risk of being ‘left behind’, but businesses have shared common challenges that impact their ability to achieve CSRD readiness and turn the risk of being “left behind” into a real scenario for some.
Key challenges span areas like emissions accounting, data collection, and report creation to meet compliance requirements. Moreover, a positive finding from the report is that over 50 percent of firms are leveraging double materiality assessments not just for compliance but also to identify areas for resource investment. This is a clear indication that the intention of CSRD to drive standardisation, transparency and ultimately, sustainability action from businesses operating within the EU is having its desired effect.
Tapping into the benefits of CSRD compliance
Although many businesses are still navigating and familiarising themselves with the CSRD, the report did note that it is bringing benefits. For instance, 89 percent of businesses have executive or senior leadership tasked with overseeing sustainability strategies, with many leaders having a direct line to the CEO.
To tackle the complexity of compliance and reporting, organisations are adopting a cross-functional approach whereby collaboration is occurring between leaders, sustainability teams, finance, and operations. On top of that, 95 percent of businesses have plans to increase investment over the next few years, with priority areas including team training and consulting support.
Two-thirds of respondents are already searching for consultancies to assist them in preparing for the CSRD. Businesses are also beginning to recognise the long-term benefits associated with CSRD compliance. Two-thirds of enterprises and 89 percent of mid-market organisations believe the Directive will spur meaningful sustainability integration within their operations over the next 3 to 5 years.
Sustainability reporting has often been fragmented and complex due to various frameworks and requirements. This made it difficult for businesses to measure and disclose impacts effectively. The introduction of the CSRD marked a major step forward by standardising reporting practices, with a number of frameworks and standards undergoing work to align their methodologies and standards with CSRD to reduce complexity for businesses. For example, the Carbon Disclosure Project (CDP) has shared that it will be aligning its surveys with the European Sustainability Reporting Standards (ESRS).
Conclusion
This report emphasises the challenges and opportunities businesses face in meeting CSRD reporting requirements. While enterprise organisations are further along in their preparation, mid-market businesses risk falling behind due to hurdles such as emissions accounting, data collection, and report creation.
Despite these challenges, the CSRD promises significant short-term and long-term value, driving sustainability integration and fostering strategic growth. With compliance deadlines fast approaching, businesses must act now to close the readiness gap and secure their competitive advantage.
Our comprehensive, online CSRD training is designed to bridge knowledge gaps and address resource challenges, equipping your team with the expertise needed to navigate emissions accounting, data management, and reporting complexities. Enrol today to ensure your organisation is fully prepared for compliance and positioned for success.
