The Costs and Benefits of CSRD Reporting

The costs of CSRD reporting may seem high at first. Companies must comply with CSRD and the ESRS standards and produce a complete sustainability report that can be assured. However, numerous benefits come with CSRD reporting.

Sustainability will play an increasing role in how companies do business. The reporting obligations set by the CSRD have implications beyond reporting alone.The new reporting obligations require that sustainability be embedded in the long-term business model and strategy and in the decision-making process of the management board and board of directors.

The ultimate purpose of the CSRD is to increase transparency on how companies work with sustainability-related issues and to help companies consider sustainability on a long-term time horizon.

Costs of CSRD Reporting

The initial costs of CSRD reporting can be high. Collecting, analysing, and reporting data requires significant resources, including time, human resources, and financial investment. For compiling the sustainability report, from double materiality analysis to digitally tagging the statement, new skillsets and tools are needed.

The EU’s sustainability directive lists 84 reporting requirements and over 1100 data points. In 2022, EFRAG, the advisory body on corporate reporting to the European Council, estimated the costs of kickstarting the sustainability reporting for companies. According to EFRAG, the total administrative costs for the first reporting for large companies in the EU will be approximately €1.7 billion in initial costs and €1.9 billion annually in recurring costs. In addition, companies must verify reports by external auditors, which is estimated to result in up to €4 billion in additional annual costs.

Benefits of CSRD Reporting

CSRD reporting promotes transparency. It allows stakeholders, including investors, employees, and customers, to gain insights into a company’s sustainability efforts. This transparency can enhance the company’s reputation and foster trust among stakeholders.

Sustainability reporting can also lead to improved decision-making and cooperation through the value chain. By systematically collecting and analysing sustainability data, companies can identify areas of improvement, set realistic goals, and make informed decisions. Having a clear view of the company’s true impact will help the management to make more informed decisions, leading to financial benefits. In addition, sustainably conducted businesses draw in investors.

How to minimise the costs and maximise the benefits of CSRD reporting?

CSRD reporting mandates a digital approach from the beginning. A purposefully built CSRD software is an invaluable instrument for CSRD reporting. Old methods like Excel cannot fully meet the requirements of the European Sustainability Reporting standards under CSRD. When utilising Ecobio Manager software for CSRD reporting, you can streamline your reporting process through the parallel paths of double materiality assessment and data collection, taxonomy classification and KPI report to sustainability preparation and assurance.

A well-crafted CSRD software provides numerous advantages. Ecobio Manager’s streamlined process ensures a smooth reporting experience and helps navigate the CSRD reporting guidelines. Setting up a CSRD reporting system can account for 0.5% to 1% of a company’s turnover. Effective data collection and workflow can help save costs.

By embracing CSRD reporting, companies can enhance their sustainability performance and gain a competitive edge in today’s business landscape. However, companies must approach CSRD reporting strategically to maximise the benefits and minimise costs, ensuring they have the necessary resources and expertise.