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PwC Global Survey Reveals Key Benefits and Challenges of CSRD Implementation
PwC’s Global CSRD Survey 2024 offers a comprehensive overview of how companies are adapting to the EU’s Corporate Sustainability Reporting Directive (CSRD). The survey reveals key findings, recent developments, significant milestones, and ongoing challenges associated with CSRD implementation.
Key Highlights from PwC’s Global CSRD Survey 2024
Business Benefits: Companies expect CSRD compliance to enhance environmental performance, stakeholder engagement, and risk mitigation, with around one-third anticipating revenue growth and cost savings.
Challenges: Major obstacles include data availability, quality issues, and value chain data collection complexity.
Senior Executive Involvement: Over 70% of companies involve executive committees or boards in CSRD implementation, with nearly 80% for those planning to report in FY2025.
Technological Investment: Over 90% of companies rely on spreadsheets for sustainability reporting, with fewer using advanced technologies like sustainability data lakes and carbon calculation tools.
Scope of Reporting: The CSRD affects about 50,000 companies globally, requiring detailed sustainability disclosures across a wide range of topics, including climate change, pollution, and biodiversity.
Implementation Confidence: Despite the broad scope, most companies are confident in meeting CSRD deadlines, though confidence varies by topic.
Cross-Functional Efforts: On average, eight business functions are involved in CSRD implementation, highlighting the need for broad organizational collaboration.
Assurance Providers: Nearly 80% of respondents have engaged an assurance provider to ensure compliance with CSRD requirements.
Double Materiality: Companies use double materiality assessments to determine which sustainability aspects are material to their business and stakeholders.
Technology Integration: Less than 60% of companies have involved their technology functions in CSRD readiness, underscoring the need for early-stage tech engagement.
About the CSRD
The Corporate Sustainability Reporting Directive (CSRD) requires companies to disclose detailed information on sustainability performance. This directive is underpinned by 12 European Sustainability Reporting Standards (ESRS) and impacts approximately 50,000 companies worldwide.
The CSRD aims to enhance transparency and accountability in corporate sustainability practices, covering a wide range of topics, including climate change, resource use, pollution, and biodiversity.
Progress Towards CSRD Implementation
While many companies already produce annual sustainability reports, the CSRD demands more comprehensive and auditable processes. The directive requires companies to report not only on their operations but also on their entire value chain. This includes detailed disclosures on sustainability impacts, risks, and opportunities across various topics.
Despite the broad scope and complexity of the CSRD, an overwhelming majority of survey respondents express confidence in their ability to comply with the reporting requirements. However, the survey also reveals potential challenges, such as low completion rates for early-stage activities and the need for senior stakeholder involvement.
Notably, only 3% of companies expecting to file in FY2025 report a lack of confidence in meeting the CSRD deadlines.
Key Findings from the PwC CSRD Survey
The PwC survey highlights several critical insights into the implementation and impact of the CSRD:
Business Benefits: Companies anticipate significant business benefits from CSRD compliance, including better environmental performance, improved stakeholder engagement, and enhanced risk mitigation. Approximately one-third of survey participants expect CSRD implementation to lead directly to revenue growth and cost savings.
Challenges: Data availability and quality are cited as the biggest obstacles to CSRD implementation. Companies must collect, verify, and consolidate a wide range of new data types, often manually, from various sources across their value chain. Value chain complexity is identified as the second-biggest challenge.
Senior Executive Involvement: Effective CSRD implementation requires strong governance and cross-functional collaboration, driven by senior leaders. Executive committees or boards are involved in CSRD implementation at over 70% of companies, with this proportion rising to almost 80% for those planning to report in FY2025.
Technological Investment: The survey indicates that most companies rely heavily on manual processes for sustainability reporting. Over 90% of respondents use spreadsheets, while fewer leverage advanced technologies like sustainability data lakes, disclosure management solutions, and carbon calculation tools.
Organizing for the CSRD
A successful CSRD implementation necessitates a cross-functional effort under senior leadership sponsorship. On average, eight business functions and departments are involved in the implementation process, including sustainability, finance, operations, procurement, technology, and legal.
Given the CSRD’s requirement for assurance, engaging an assurance provider from an early stage is critical. Nearly 80% of respondents have already engaged an assurance provider, whether their financial auditor, a different audit firm, or another third-party provider.
From Compliance to Value
The CSRD is part of a broader policy effort to steer economies towards sustainability and low-carbon futures. Beyond compliance, the directive offers companies opportunities to integrate sustainability into their business strategies and decision-making processes. The survey confirms that many businesses are beginning to recognize this potential, even as some maintain a compliance-only mindset.
To transition from compliance to value creation, companies should:
Understand Scope: Accelerate upfront scoping activities to comprehend the CSRD’s impact and make concrete plans fully.
Invest in Data and Systems: Develop robust data processes and systems to ensure sustainability information is accurate, audit-ready, and integrated into decision-making processes.
Engage Top Executives: Foster cross-functional collaboration at the highest level, involving CFOs, CIOs, and CSOs in the CSRD implementation process.
PwC Global CSRD Survey: Final Insights and Strategic Recommendations
PwC’s Global CSRD Survey underscores the transformative potential of the CSRD in driving sustainable business practices. While challenges exist, the anticipated benefits in environmental performance, stakeholder engagement, and risk management make a compelling case for companies to invest in robust sustainability reporting frameworks.
For more detailed insights, visit the PwC Global CSRD Survey 2024.
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