CSRD implementation: Hidden success factors and pitfalls

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CSRD

Sustainability is a key topic that has required companies to provide detailed reports on environmental, social, and governance (ESG) aspects since 2023, under the new EU directive CSRD. While its implementation poses challenges for businesses, it also presents opportunities to develop future-proof strategies.

Sustainability is a popular topic among environmental activists, NGOs, and politicians, as well as business representatives and corporate leaders. Since this year, the European Union has required many companies to report in detail on sustainability aspects, integrating environmental, social, and governance (ESG) factors (for more on which companies are affected and when, see our article “Implementing the CSRD”).

The Corporate Sustainability Reporting Directive (CSRD) presents companies with significant challenges but also offers an opportunity for future-proof positioning. There are several success factors and pitfalls to consider during implementation.

Success factors in implementing the CSRD

Early implementation of the materiality assessment

A key to success is the timely execution of a comprehensive materiality assessment that considers both internal and external stakeholders. Companies must ensure they identify topics relevant to their business, such as direct production impacts, transportation, or high personnel involvement along the value chain. The materiality assessment should address immediate economic risks and consider the company’s impact on the environment and society. Clear documentation and an annual review of this process ensure that the company can respond flexibly to new developments.

“Defining the appropriate scope for reporting is a crucial step at the very beginning of the process. It is worth investing sufficient time here, as certain decisions can only be revised later with significant effort.”

Dr. Hannes Gmelin, Partner

1. Integration of sustainability into corporate strategy
Sustainability must be embedded in corporate strategy and not treated as an isolated issue. Successful CSRD implementation depends on top management taking responsibility for sustainability topics. This goes beyond compliance to actively leveraging sustainability strategies for value creation and risk minimisation.
2. Collaboration along the value chain
One of the central challenges of the CSRD is collecting data along the entire value chain, not just the supply chain. This requires close collaboration with suppliers, partners, and other stakeholders. Transparent and consistent information exchange is essential to obtain reliable sustainability data. Companies should ensure that their data flows are well integrated with existing ERP systems to enable smooth integration of sustainability and financial data, relying on a Single Point of Truth (SPOT) for underlying data.
3. Building internal capabilities
Companies should broadly anchor CSRD reporting skills within the organisation, as the requirements affect a variety of data and departments, such as:
- • Procurement for supply chain data and sustainable sourcing
- • HR for data on working conditions, diversity, and social standards
- • Production for data on energy consumption, resource use, and emissions
- • Logistics for CO₂ data on transport routes and supply chains
- • Sales for capturing customer expectations regarding sustainability
- • Facility Management for building energy efficiency, waste disposal, and water consumption

Companies should ensure that employees in all relevant departments are trained, especially if audit-compliant reporting processes are not yet established in these areas.

Pitfalls in implementation

1. Insufficient process documentation
The CSRD places a high value on the traceability of reporting. Companies must ensure that their processes are clearly documented. There is often a lack of realistic representation of data collection processes, even in the materiality assessment. In view of external audits, companies should begin early to establish clear internal control systems. This increased transparency can also be used to improve business processes.
2. Reputational risks from Greenwashing
Another pitfall is the risk of greenwashing. Companies that are overly optimistic or inaccurate in their sustainability reports risk reputational damage if their claims prove unfounded. It is therefore essential that sustainability reports are both transparent and verifiable, based on reliable data. Integrating these processes with existing risk management reduces the quality assurance burden and prevents inconsistencies across reports.
3. Lack of integration into existing systems
A common mistake made by many companies is setting up separate systems to collect sustainability data. Because integrating into existing systems is often more complex than building new ones, companies tend to choose the latter. However, building a parallel infrastructure, such as using Excel or isolated databases, poses a risk of inconsistencies and increases the effort required for quality assurance and system maintenance. Therefore, it is advisable to use existing systems – particularly ERP systems – and integrate new requirements there. Our experienced data science consultants can design and implement the best integration for your systems.

“A ‘good technical implementation’ in a separate dashboard of an external provider is less helpful than maximum integration into the company’s ERP. Even if the look and feel and user experience may be significantly worse here. Special attention should be paid to the requirement of how reporting can be sustained over the coming years.”

Dr. Hannes Gmelin, Partner

1. Limited resources and high costs
Many companies struggle with limited resources – both financial and personnel related. Building capacity for collecting, consolidating, and preparing sustainability data can be costly and time-consuming. Decentralised data collection and consolidation from (international) subsidiaries, for example, is particularly challenging. To reduce the effort, it is essential to make use of the many legal facilitations available in the early reporting years and to prioritise reporting obligations. Contact us to learn more about potential concessions during the ramp-up phase!

“In all areas – environmental, social, and governance – the new regulations may necessitate the collection of additional KPIs. When introducing further metrics, it is important to approach this in both a business-driven and pragmatic way to limit the effort required.”

Stefan Bülow, Partner

nxt statista as a partner in CSRD implementation

As experienced consultants, we help companies meet CSRD requirements efficiently. For 25 years, we have stood for strategic excellence, with many of our consultants coming from leading strategy firms worldwide. As the founders and builders of a globally leading data portal, Statista, we have data in our DNA.

We develop sustainability systems and reporting, including for CSRD, for our national and international clients. We have extensive experience in highly regulated industries such as banking and the energy market, and our in-depth knowledge of EU regulations makes us a valuable partner in implementing the CSRD.

Our expertise in data science and engineering enables customised reporting solutions. Our data science consultants provide you with prototypes, mock-ups, and functional systems. But we also dive into the backend when necessary, analysing databases and interfaces and adjusting processes. We understand the needs of departments and management and can also communicate effectively with software engineers and developers.

“It is often more efficient to work directly with the client’s data infrastructure. Recently, a senior developer from the client sent us a CSV export, assuming we could not handle the Redshift Data Warehouse in AWS. However, the connections between individual data points were not apparent from the file. By working directly on the client’s infrastructure, we were more efficient, saving the developer’s time and avoiding lengthy coordination loops.”

Dr. Schüssler, Senior Data Science Consultant

Conclusion

Implementing the CSRD is both a challenge and an opportunity for companies. While the regulatory requirements are extensive and require additional resource investment, they also offer companies the chance to position themselves sustainably and secure competitive advantages. The key to success lies in proactively integrating sustainability into corporate strategy, carefully conducting the materiality assessment, and efficiently using existing systems and resources. Companies that act early and consider these success factors can not only meet CSRD requirements but also benefit from sustainable corporate governance in the long term.

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