A recent survey by PwC Luxembourg reveals that less than half of the companies mandated to report under the EU’s newly enforced CSRD feel fully prepared to meet their obligations.
According to ESG Today, this uncertainty comes despite the critical importance these companies place on CSRD reporting, especially in terms of enhancing access to finance and improving employee retention.
The CSRD, which significantly updates the EU’s previous Non-Financial Reporting Directive (NFRD), now requires over 50,000 companies to submit detailed disclosures on their environmental impact, human rights practices, and sustainability-related risks. This is a substantial increase from the 12,000 companies previously mandated under the NFRD. The directive, part of the broader European Green Deal, aims to elevate sustainability reporting to the level of financial reporting.
Michael Horvath, Advisory Partner and Sustainability Leader at PwC Luxembourg, emphasized the directive’s transformative potential. “The CSRD is the cornerstone enabling Europe to deliver on the European Green Deal, elevating sustainability reporting over time to the same level of importance and rigour as financial reporting. It puts sustainability at the core of companies’ business models and operations, prompting them to integrate it into their strategic decision-making processes,” he said.
Despite the strategic importance, the survey—which included 215 C-Suite executives across the European Economic Area—highlights a significant gap in readiness. Only 4% of companies required to report in 2024 are ready to publish their CSRD report, with a staggering 5% yet to start their CSRD implementation process. Furthermore, a mere 42% of the respondents are “fully confident” in their ability to comply by next year.
The concerns about readiness are mirrored by worries over the management of the increased volume of required sustainability information, especially regarding data quality and consistency. Companies closer to their reporting deadlines expressed greater concerns about these issues than those with more time to prepare.
Olivier Carré, Deputy Managing Partner, Technology & Transformation Leader at PwC Luxembourg, noted the pivotal role of technology in addressing these challenges. “The successful implementation of CSRD hinges on leveraging advanced technology solutions that can efficiently manage and integrate vast amounts of sustainability data. While challenges in maintaining data quality and consistency are anticipated, the demands for accurate, real-time ESG reporting present an opportunity for growth. Companies must invest in robust data management and reporting systems to overcome these hurdles,” he commented.
As these companies scale up their preparations to meet the CSRD requirements, the majority report plans to invest significantly in technology and training. Over 90% of respondents beginning reporting in 2024 or 2025 have implemented or plan to implement technological solutions tailored for CSRD compliance.
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