Next year sees a new swathe of companies come into scope of CSRD. Both large private businesses operating in the EU and non-EU companies with large EU operations are due to report in 2026 on their 2025 performance.
Having worked with and facilitated forums for large, listed companies currently preparing their first CSRD disclosures, we took the opportunity to collate three key areas of advice that practitioners had for those companies just starting out on their CSRD journey.
1. The scale of internal engagement and education needed shouldn’t be underestimated
The one piece of advice that practitioners told us most often was around how the CSRD process should be communicated internally. They stressed the importance of standing back to carefully plan out which internal stakeholders need engaging and how. Better stakeholder engagement can help prepare internal governance structures to deal with these new flows and oversight of data insights and information that CSRD demands.
Companies have reflected on having rushed to engage with stakeholders to get the assessment moving, without taking the time to really think about how this brand new regulatory requirement is going to feel from the perspectives of the executive team.
Education is key throughout engagement to ensure that stakeholders understand what the CSRD process is requiring the business to do, as well as the implications of the decisions made. We’ve heard some examples of a double materiality assessment having to be re-completed when a CFO realised the implications on assurance costs, or a General Counsel engaged recognises the potential legal exposure that disclosure could create.
It is important that governance structures are well mapped and stress-tested and that frequent education sessions occur throughout the CSRD process, to ensure stakeholders - and especially executives - are engaged at each stage.
2. CSRD doesn’t work if it is just a sustainability project; line up members of the finance and legal teams to be part of the core project working group
One of the big realisations for businesses going through the process has been that the responsibility for CSRD cannot sit solely within the sustainability team. With many companies finding themselves with 600-700 disclosure requirements (or more), there is a significant new data burden that requires connections across almost every part of the business.
With granular impacts, risks and opportunities now requiring assessment by issue owners on an ongoing basis, finding ways to improve governance processes, and also look at the longer term value of tech tools given the annual disclosures will be external assurance.
Improving data governance and quality is undoubtedly going to take substantial amounts of time over the coming years. Engaging with finance teams early on can be beneficial, with the experience of rigorous controls, data collection, data system implementation and assurance processes, to lead this effort.
However, with truly good quality data still years off, practitioners are having to look for ways to set priorities and ramp up progress across the range of material sustainability topics. Early and ongoing engagement with finance colleagues, supported by a data-driven materiality assessment foundation, can provide the right structures upon to which to build a solid, repeatable and consistent approach (watch this recent webinar with Datamaran, Accountancy body AICPA and Wells Fargo to find out more about bridging the gap between ESG and finance teams here).
3. Don’t expect too much of your stakeholder engagement; think about how to use it sparingly through your process
Practitioners repeatedly raise the fact that CSRD is just too complex for most external stakeholders to engage with meaningfully. Many companies have found significant differences between what external stakeholders perceive versus the outcomes of double materiality assessments. Often this is due to stakeholder groups being too far removed from the intricacies of a company’s business model to provide insights on impacts, risks, and opportunities.
For companies yet to complete double materiality, this provides an important warning to carefully consider how stakeholder engagement processes are used, avoiding too heavy a reliance on these outputs.
In this CSRD era, using a data-driven approach can provide a solid foundation from which to test, challenge and validate double materiality findings with stakeholders. This gives stakeholders something to react to and elicits more constructive conversations earlier in the process.
We’ve found that it’s these informed conversations with wider teams, notably finance, risk and legal, that gets to the heart of what matters most and helps leadership move forward with confidence through ongoing strategy, disclosures, governance and controls processes.
Outcomes from these better-informed conversations help companies move quickly to considering implications for disclosure strategy, and how you actually communicate your sustainability performance.
The single piece of advice that practitioners emphasised most was not to underestimate the scale of the CSRD process, and the level of engagement it requires from across the business.
This is the first requirement for many companies that will need education of and engagement with a large number of stakeholders across business, really putting sustainability on the map. It does also provide an opportunity to take a step back and really look at where your sustainability priorities lie, assess the quality of your materiality insights, and to properly integrate these within the business.
We’re constantly working with our clients on exactly these challenges so please do reach out if you want to chat through any challenges you are currently facing.
Written in partnership with SB+CO.
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