A PwC survey shows many companies are still struggling with a range of complexities as they prepare to comply with the EU’s upcoming CSRD requirements.
Most companies are confident that they will be ready to implement the EU’s Corporate Sustainability Reporting Directive (CSRD) for their business, but many have still to carry out key activities required if they are to comply, according to PwC’s 2024 Global CSRD Survey.
PwC surveyed over 500 senior executives and business professionals to assess the impact that the new sustainability reporting requirements – which affect some 50,000 companies globally – are having on business. The survey covered both EU-based companies and those based elsewhere in the world that need to comply with the CSRD.
Of the companies surveyed, 63% were very or extremely confident that they would be ready to report under the directive – a figure that was even higher (72%) for the first wave of companies, which need to report in early 2025. However, fewer than half the first wave companies reported having completed key activities, such as confirmation of reporting options (39%), double materiality assessment (38%), and validation of availability of data (20%).
The CSRD effectively requires companies to disclose more detailed information relating to their social and environmental impacts, such as that on climate change, that will allow investors to make better informed assessments about those impacts and the associated financial risks and opportunities. It covers more companies than under previous frameworks, including listed SMEs, and also includes non-EU companies if they generate over €150m on the EU market.
The first wave will have to apply the new rules for the first time in the 2024 financial year for reports published in 2025, with reporting for other companies being phased in over the following years, mainly based on size, with some SMEs able to opt-out on CSRD reporting until 2028.
Data challenge
The biggest challenges in meeting CSRD requirements reported by companies are data availability and quality (59%), value chain complexity (57%) and staff capacity (50%).
The survey showed only a fifth of companies due to report in the 2025 financial year had validated the availability and completeness of data for their disclosures. PwC noted that fewer than 60% of all respondents had involved their ‘technology function’ in this task, though most said they planned to do so, and that most companies are not using specialist tools or technology, such as centralised data storage and AI. Spreadsheets remain the most commonly used tool (74%).
Nadja Picard, global reporting leader, PwC Germany, said that, while it was positive to see companies were largely confident that they would be ready to report when the CSRD deadline arrived, the majority were grappling with complex challenges, particularly relating to the quantity and quality of data required, not just for their own operations but across their value chains.
“As the CSRD essentially requires sustainability reporting to be on a par with financial reporting, leading executives are recognising that sustainability information must be available, accurate, and audit-ready: 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,” she said.
Sustainability benefits
But appreciation of the long-term benefits of incorporating sustainability reporting into company plans appears high, with 79% of companies based outside the EU and 74% based within the EU saying CSRD would lead – or is already leading – to their leadership taking more account of sustainability in decision making.
Around half of companies surveyed said they expected benefits to flow from this to a “large” or “very large” extent, including better environmental performance, improved engagement with stakeholders, and better risk mitigation.
Only around a quarter of respondents thought the benefits of CSRD would include revenue growth or cost savings. However, Will Jackson-Moore, Global Sustainability Leader at PwC UK, said the survey showed that companies further along in their CSRD journey were 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,” he said.
