31 Aug How businesses are preparing for the new ESG reporting mandate
A recent study has suggested that nearly 80% of businesses have yet to prepare for new environmental, social and governance (ESG) reporting requirements due to be launched in the EU in various stages from January next year. The figure represents a key finding from a survey of 175 ESG reporting and strategy leaders at businesses likely to be within the new European Corporate Sustainability Reporting Directive (CSRD) delivered by VinciWorks. Furthermore, approximately only half of those surveyed believed that their businesses were likely to fall within the CSRD mandate.
The CSRD is a new corporate sustainability reporting directive that aims to provide a clear view of the sustainability performance of businesses. The proposed directive will impact around 50,000 larger companies operating in the EU, an increase from approximately 11,000 businesses within the current ESG reporting mandates. Most businesses are focusing on improving the quality of reporting on challenges like indirect (Scope 3) emissions and value chain impacts on nature.
The VinciWorks survey discovered that one-quarter (23%) of businesses surveyed have started preparing to report by the CSRD. The first aligned reports are due for the 2025 financial year. An additional 29% of businesses plan to start within the next six months, which leaves many companies likely unprepared for the start date. The requirements of CSRD will commence from January 2024 for companies already following the EU’s Non-Financial Reporting Directive (NFRD). The mandate will then expand to incorporate other larger organisations from January 2025. Businesses must report if they have over 250 employees and assets exceeding £20 million or revenue above £40 million.
VinciWorks asked respondents about their priority concerns regarding preparing for the CSRD, and around 50% stated that they are facing significant challenges gathering data from the supply chain on issues like nature and emissions. Other research from other companies showed a lack of CSRD preparation associated with Scope 3 emissions from suppliers.
Businesses prioritising planning over delaying are in a stronger position to implement policies and processes that enable smoother compliance. Nick Henderson-Mayo, the director of learning and content at VinciWorks, explains that despite Brexit, CSRD will significantly impact British businesses, especially those attempting to trade with the EU or those part of international supply chains.
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