Staffing requirements significantly underestimated according to Statista study
The European Parliament adopted the EU Corporate Sustainability Reporting Directive (CSRD) at the end of 2022. Numerous companies – capital market-oriented companies, but also many SMEs – will be legally obliged to publish information on the social and ecological impact of their actions (“Environmental, Social, Governance”, ESG for short) by the beginning of 2025 at the latest and to report according to a clearly defined set of criteria. These criteria are bindingly defined in the ESRS (European Sustainability Reporting Standards). The principle of dual materiality applies within the framework of the future reporting obligation. This means that aspects must either have a significant impact on people or the environment (impact materiality) or a significant financial impact on the company (financial materiality). If one or both of these criteria apply, companies must include these points in their sustainability report. On the one hand, this regulation can be seen as a relief, as it restricts the reporting obligations. On the other hand, however, companies must also carry out a materiality assessment that clearly demonstrates why they do not report some ESG aspects.
The regulations and their implementation are complex
In short: preparing a legally compliant sustainability report is often more complex than many company managers assume. According to a survey that we conducted together with the data specialists at Statista, we see this thesis largely confirmed. This is because companies surveyed that are required to report for the first time estimate the need for qualified personnel to be significantly lower than those that have already undergone ESG reporting. This realization is all the more difficult given that many companies are already clearly feeling the effects of the shortage of skilled workers and the workload at board level is already high.
Clear responsibilities, KPIs and efficient IT support are required
This makes it all the more important to establish clear roles and responsibilities as part of the reporting obligation and to define the specific sustainability criteria and key performance indicators. It is also imperative that companies develop a method to determine which aspects are material for them. However, the biggest challenge for most companies lies in identifying, collecting and analyzing the data required for ESG reporting. The key question is therefore how transparent reporting can be efficiently mapped with IT support and how digitalization and process automation can help to bundle all the necessary data from different sources and make it available in a clear dashboard.
Three building blocks that pave the way for legally compliant ESG reporting
In this context, our IT experts emphasize three building blocks that are essential for successful ESG reporting:
- A stakeholder and materiality analysis is mandatory under the CSRD. This illustrates how important this first building block is, as such an analysis lays the strategic foundation for a company not only to determine the key objectives and measures in sustainability management, but also to identify the areas of action with the greatest impact. This allows economic, ecological and social impacts to be assessed, enabling a company to formulate concrete sustainability goals and establish appropriate measures for sustainable development.
- Requirements must be defined in accordance with the ESRS scope verification or a company-specific sustainability management system must be established. This is the only way to determine how ESG reporting can fulfill the required transparency and the underlying reporting structure. This methodology can be used to reliably determine what data is required, what sources it comes from and who is responsible for it within the company. With the results obtained, the next step is to determine how this data can be transparently bundled in a suitable data warehouse concept and how its procurement can be digitized and automated in order to finally relieve the management board in the company with suitable dashboards in the course of the reporting obligation.
- Finally, in the third step, those responsible should transfer the knowledge gained into a suitable IT solution. At the beginning of such an implementation project, it should be determined at which points manual input is required for data collection and at which points automatic interfaces can be used. Once these requirements have been clarified, it is important to deal with the necessary IT architecture and the right choice of tools.
In order to implement efficient ESG reporting, you are therefore well advised not to underestimate the complexity involved. Rely on experienced consulting companies and implementation partners who know how to establish individual ESG reporting in your company, digitize the necessary data and obtain it automatically. In this way, you not only meet the legal requirements and avoid the risk of severe penalties for non-compliance. You also ensure that the effort and additional personnel requirements for ESG reporting remain manageable at all times and do not get out of hand.
