Corporate Sustainability Reporting Directive (CSRD), European Sustainability Reporting Standard (ESRS), Double Materiality Analysis (DMA), Impact, Risks and Opportunities (IROs)….. There is a long list of new terms that have entered the board rooms and management teams for thousands of EU companies. Many of these companies have contacted us at Enact to ask for advice on how to navigate this new world of sustainability expectations and procedures.
A company I spoke with recently comes to mind. It is a large organisation of approximately 700 people in the EU and USA working within digital media. The new CSRD requirements feel completely foreign to them, a big step away from the short-versioned sustainability report they have been publishing for a number of years. They recognise that engaging in a DMA and subsequently performing a gap analysis and reporting strategy according to the ESRS standard will be extremely time consuming for their management teams. Not to mention costly.
My first words of advice to this company were to not view the CSRD as first and foremost a reporting requirement. But instead, I argued that they should regard it as a guidance on how some pretty clever sustainability professionals, contracted to write up the ESRS standards, believe business can be run more sustainably. If done well, a DMA can offer companies’ some valuable insights on where to focus their efforts in reducing negative harm and advancing sustainable opportunities. The ESRS standard serves as a guideline on how companies can build systems and due diligence processes to channel these efforts.
Enact is a purpose driven company, and we really do believe that businesses have a role to play in securing a more sustainable future for this planet, both in terms of the environment and in terms of respecting human rights. We support companies with the CSRD not only for the sake of producing a well-executed report. We wish to guide companies in identifying their impacts, risks and opportunities and advise them on how they can manage these impacts in the best possible way.
Of course, we do believe that there is great value in companies reporting according to the same standard, so investors and stakeholders can compare apples to apples (as much as possible) and create corporate accountability. But fundamentally, we believe that the ESRS standard, if used as a guidance, can help companies to better understand their role in developing a more sustainable business. If viewed this way, then companies’ engagement with CSRD becomes far more than just a report; it becomes a new way of working.