Businesses unlikely to be ready for EU’s new ESG reporting mandate, survey reveals
Almost eight in ten businesses have not started preparing for new Environmental, Social and Governance (ESG) reporting requirements that will be implemented in the EU in phases from January 2024.
The statistic is a key finding from a survey of 175 ESG reporting and strategy leaders at businesses likely to fall under the new European Corporate Sustainability Reporting Directive (CSRD), conducted by VinciWorks.
Worryingly, only half of those surveyed believed that their business was likely to fall within the CSRD mandate.
The CSRD is a new corporate sustainability reporting directive that aims to provide a more comprehensive picture of companies’ sustainability performance.
It will impact some 50,000 larger businesses with operations in the EU, up from around 11,000 businesses under existing ESG reporting mandates. Most businesses will be compelled to improve the quality of reporting on issues such as indirect (Scope 3) emissions and value chain impacts on nature.
VinciWorks’ survey found that one-quarter (23%) of the businesses polled have started to prepare to report in line with the CSRD. Their first aligned reports will be for the 2025 financial year. A further 29% of businesses are planning to start preparing within the next six months – but this still leaves the majority of businesses likely to be unprepared for the initial start date.
CSRD requirements will apply from 1 January 2024 for businesses already subject to the EU’s Non-Financial Reporting Directive (NFRD). The mandate will then expand to cover other large businesses from 1 January 2025.
Businesses will need to report if they have more than 250 employees and either assets exceeding €20m or revenue exceeding €40m.
When VinciWorks asked respondents about their top concerns in terms of preparing for the CSRD, half said they are facing significant challenges collecting data from the supply chain on issues such as emissions and nature. Previous research from 7Bridges also revealed a lack of CSRD preparation relating to Scope 3 emissions from suppliers.
“Organisations that prioritise preparation over procrastination are better positioned to enact policies and procedures that ensure seamless compliance,” said VinciWorks’ director of learning and content Nick Henderson-Mayo.
“Despite Brexit, CSRD will have a big impact on British business, particularly those trying to trade with the EU, or who are part of international supply chains.”
Related guidance: What is the CSRD and how will it affect your business?
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