New Corporate Sustainability Reporting Directive calls for a new approach

For the past many years, corporate sustainability work and reporting have been more or less ungoverned and unaudited (under the Non-Financial Reporting Directive). Soon, with EU’s Corporate Sustainability Reporting Directive (CSRD) coming into effect in January 2024, the scope of requirements will be significantly extended, impacting up to 50,000 European companies.

With the CSRD, the focus will shift from framework commitment and reporting to data and metrics reporting as well as a requirement for third-party assurance and external auditing. This will greatly increase the need for data measurement and management – and within a relatively short period of time too.

Companies are looking at the expensive options of staffing up and/or automating data management and reporting, with neither option necessarily providing a means of recuperating from the added costs – much less keeping a firm focus on driving sustainability progress.

Is the outlook really that grim?

We sat down with Lars Dinesen, Head of NNIT’s ESG Advisory Services for some input on how companies might turn the prospect of increased regulation and administration into a competitive advantage.

Leapfrogging beyond compliance to a competitive advantage

“What if we looked beyond the compliance aspect of our sustainability work? What if we invested in a future where our sustainability efforts generate value for investors, customers, employees and society at large – and we had the data at hand to prove it on a continuous basis,” Lars Dinesen rhetorically asks and kicks off the conversation.

He calls for a radically different approach to sustainability work and reporting, specifically when it comes to reporting practices with the goal of change rather than just compliance:

“Why is it that we’re satisfied with reporting on our progress only once a year? Why not measure and demonstrate our impact – or when it comes to the environment reduced impact – on an ongoing basis? With constant measurement and reporting, we can both communicate and act more proactively to secure a better future,” he asserts.

He is talking about NNIT’s new partnership with IBM on the Envizi ESG suite; a dedicated, automated and auditable ESG reporting system offering financial grade data management and reporting in addition to dynamic dashboards to drive ESG change and excellence.

New progressive ESG tool on the block

As a leading digitalization partner, NNIT looks for opportunities to transform customers’ business with the right IT solutions to help them continually release their potential. This is especially important when impacted by new regulation requiring 100% compliance, but also in mitigating the risk of stalling all progress because of increased administration.

Lars Dinesen and team believe they have found the right solution to the upcoming ESG reporting challenge – a solution that also looks to our sustainable future:

“With the Envizi ESG suite, companies don’t just get an ESG reporting system, they get a sustainability system that can drive the business forward by bringing their efforts and results to light, enabling key stakeholders such as investors, customers and employees to actively engage with the company,” Lars Dinesen states and adds:

“We need to move away from the manual processes and invest in a better future – both from a business and society point of view. The CSRD is coming into effect, but so are climate changes and new standards for corporate social responsibility, and we need to get in front of them rather than lagging behind and trying to catch up.”

Invest now, save in the long run

As with ERP systems, when they were introduced to the market, a progressive and fully compliant ESG system comes with an initial investment.

“On the bright side, once implemented, the Envizi ESG suite will automate most of the previously hand-held data collection and management processes, and it will ensure 100% compliance with ESG regulation as well as provide accurate data to allow you to communicate sustainability stories without any risk of ‘washing,’ because it’s simply stating the validated facts,” says Lars Dinesen.

He continues: “The Envizi ESG suite was built by ESG specialists, it incorporates CSRD and ESRS and comes with strong data management capabilities, so you will be able to drastically reduce the need for consultants. Once configured, the system does most of the ESG consulting for you. If you want to move beyond the compliance aspect and save on costs, frankly, it’s the only way to go.”

Get strategic with increased transparency

According to Lars Dinesen, another added bonus when you drive your sustainability activities similar to the way you drive your financial top and bottom line is that it will ensure the engagement of all the right stakeholders inside and outside the business.

“With increased transparency and data validation, and your targets plotted into the system, you will know exactly where you’re at as well as where you need to go. And you will be able to communicate this progress – or lack thereof – to the right stakeholders on an ongoing basis, thereby engaging them on the path to change. I think we all want to get engaged, but we need more timely information in order to know what to do and when to act,” Lars Dinesen says and ends:

"Of course, in order to get started, the ambition must go beyond compliance, and it can be difficult to convince our stakeholders before we are able to provide the transparency and added value that comes with the system. But we will keep pushing this, because we know it is the only way to turn a compliance exercise into a competitive advantage.”