Non-financial reporting has become the focus of attention for many companies, and CSRD in particular. The teams responsible for completing and publishing these reports often point to the time-consuming nature of the exercise, which they feel is to the detriment of the development of concrete actions in favor of the environment.
These reports need not, however, be seen as a constraint. Correctly conducted, they can become the foundations of an effective climate strategy and generate numerous benefits for companies.
Non-financial reporting: a thorn in the side of companies?
The apparent complexity of the CSRD has led to an outcry from many business players. And, indeed, this new reporting model applicable to over 50,000 companies operating within the European Union has, at first glance, everything to frighten.
As a reminder, the CSRD is :
- 12 sets of reporting standards, the famous ESRS
- over 1,100 data points
- justified uncertainty calculations for each item of data entered
- publication of a comprehensive climate action plan
- the obligation to provide objectives, trajectories and financing plans for actions undertaken
It covers topics as varied as carbon footprint, biodiversity, pollution, water resources, corporate governance policy, the workforce, the impact of your activity on your value chain...
And the exercise has to be repeated every year. So it's no surprise that many CSR and finance departments see it as a modern-day version of the myth of Sisyphus.
So how do you get to grips with the subject without over-mobilizing your teams and turning ESG reporting into a gas factory?
CSRD - a model designed to lead to concrete action
What tends to frighten CSR managers is not so much the number of boxes to be filled in as the lack of data, or the absence of quality data.
Many companies have already put in place procedures to measure their carbon footprint on their scope 1, 2 and 3, the most important part of the CSRD. However, uncertainty calculations, the presentation of transition plans, their financial modeling or the measurement of expected impact are questions that very few of them are currently able to answer.
And that's perfectly normal.
The first year of reporting will inevitably be a test year, requiring structuring and iterations.
The very principle of this extra-financial report, and it is perhaps on this point that communication has faltered, is to change the mindset of companies. The idea is to move away from simple ESG reporting and move towards an ESG data management system.
This management is organized in several stages:
- Identify data sources
- Collecting data
- Process and transform this data
- Organize at the most granular level possible
- Analyze it
- The reporter
- Operating it
The CSRD thus provides companies with the model they need to gain an overall view of their ESG data, monitor it and structure tangible action plans.
This structure should eventually lead to concrete action plans and, above all, encourage companies to make the effort: the effort to have a long-term vision, the effort to set concrete, measurable objectives and, finally, the effort to finance these actions.
Equip yourself for the challenge of reporting
The nomenclature proposed by the various extra-financial reporting standards has rendered obsolete the use of the "simple" Excel spreadsheet, which for years was the benchmark tool for measuring your carbon footprint. This limits the possibilities of analysis and, above all, is not the best solution for making the link between your data collection and the implementation of an impact reduction trajectory.
The first essential step before embarking on the publication of an extra-financial report, and in extenso on an action plan, is to equip yourself with the right tool. This is the sine qua non for appropriating the data collected and using it efficiently.
This tool must be able to help you :
1 - Collect ESG data of all kinds
A flexible data collection system is needed, capable of retrieving data in a variety of formats and from a variety of sources (API, Excel files, questionnaires, etc.), given the varied origins of this data.
2- Data processing
The solution must be able to process the raw input data and integrate it into your ESG database. This process is unique and complex in the context of CSR, as this data must often be subject to calculation assumptions, extrapolations...
Added to this complexity is the need for traceability of these assumptions; necessary for your teams who will process these data and their evolution year after year; necessary for the auditors who will come to consult your extra-financial reports (which is mandatory within the framework of the CSRD).
3 - Analyze the data
Once the data has been processed, the tool must enable you to organize and analyze it in the most granular way possible. In the case of CO2, the various sources of emissions must be able to be related to the country of origin, the site concerned, the product designed...
The finer this granularity, the more relevant your analysis will be, and the more you'll be able to draw up action plans to take concrete action on the various ESG indicators.
4- Model action plans
Ideally, the solution you choose should enable you to reuse this data to model your various action plans. It allows you to set objectives, a timeline and measure the impact that a given change will have on your greenhouse gas emissions, as well as what it represents in terms of APEX and COPEX.
Once all this information has been centralized in the tool, all you have to do is extract it in a format compatible with the standards set by your extra-financial reporting. All that remains is to complete the qualitative questions.
The CSRD or any other standard are therefore no more than additional functionalities in an ESG data management system.
From reporting to concrete action - operational teams in the driver's seat
The framework imposed by the CSRD therefore has an underlying objective. To put you in a position to implement an ESG strategy.
You have :
- a collection structure
- quality data
- fixed-term objectives
- an estimate of expected impacts
- financial outlook
All we need to do is organize all this information to identify the most "profitable" levers of action. What efforts are required (structural, human, financial...) for what expected result? Your plan will depend on the choices you make in the light of these considerations.
In terms of organization, these actions are not driven by CSR departments. Instead, it's the operational staff who are in charge. Here too, a change of mindset is required. Everyone needs to be involved if implementation is to be effective. The CSR department defines and communicates the broad guidelines of the company's environmental transition.
It collects data from all levels of the company, consolidates it to obtain a global vision of the group, defines objectives and supports operational staff in implementing actions to achieve them.
Once these actions have been implemented, the updated data is sent back to the CSR department, enabling it, year after year, to enrich its CSRD reporting and adjust actions in line with the objectives to be achieved.
CSRD enables you to set up a virtuous circle based on a solid ESG data management system. This approach, long seen as a constraint, is in the end more than a necessary short-term evil, but a real springboard, enabling the development of concrete actions and the achievement of your medium- and long-term objectives.
