Six Essential ESG Readiness Actions to Work on Now!

1. Does your organisation operate in the EU as a subsidiary or parent entity?

2. Is there more than €20m on the balance sheet, a net turnover of more than €40m, and you have more than 250 employees in your organisation?

Do you answer yes to the first question and yes to two of the three parts of the second question?

Then, your organisation must likely comply with the CSRD (Corporate Sustainability Reporting Directive) regulatory framework. This significant reporting and disclosure development requires the attention of the CFO.

What is the timeline for compliance?

EU-listed companies meeting the above criteria but with over 500 employees must begin data collection in January 2024 for reporting in 2025.

Other EU companies meeting the above criteria must begin data collection in January 2025 for reporting in 2026.

SMEs can begin data collection in January 2026, although they can opt out of reporting for two years.

Non-EU parent companies must begin data collection for reporting in 2029.

While the implementation of the CSRD has been delayed by one year from the initial proposals, it’s crucial to note that the schedule remains tight. This underscores the importance of starting your compliance journey as soon as possible.

What sort of assurance do auditors have to provide?

The CSRD requires that the quality of sustainability information be at the same level as financial information. This means that the external auditor must provide assurance on financial and non-financial information.

In the first instance, this can be provided on a limited assurance basis. As we move towards 2030, the requirement will be that the audit be performed on a reasonable assurance basis.

What challenge does this present to most companies?

Under the CSRD, companies must publish substantial new and highly specific information. Failing to meet these requirements could lead to severe consequences, making it clear that many companies must significantly enhance their administrative organisation and internal control framework. The days of managing sustainability reports with a simple spreadsheet are numbered.
The data requirements are qualitative and quantitative, look forwards and backwards, describe the short-, medium- and long-term, and cover the entire value chain.

The value chain requirement will likely be a hurdle in CSRD compliance for many companies. Data and technology issues relevant to meeting CSRD compliance include non-financial data collection, auditability and alignment to financial data. Furthermore, the credibility and transparency of the data and the surrounding governance can be challenging.

ESG Readiness Actions

Here are six readiness actions you, therefore, should be considering now:

Is your organisation poised to deliver on these ESG readiness actions?

Moreover, do you have the necessary resources, time and expertise available?

Would you like to learn more about what ESG readiness consists of for your organisation and how to complete these actions? In that case, we welcome your scheduling a complimentary ESG briefing with Loughridge Transformations‘ Principal Consultant.

ESG Readiness Delivered? What Comes Next?

At Loughridge Transformations, we possess the governance and assurance expertise necessary to assess and recommend improvement actions and deliver robust implementation. We collaborate with external auditors when required. Our comprehensive skillset, including governance and audit, process and control design, and project and change management, ensures sustainable improvements and ESG regulatory compliance.

Furthermore, our design and deployment approach, which delivers on these ESG challenges, includes the necessary changes to the ERP, AI-enabled tools and upgrades across the Planning, Appraisal and Reporting Landscape using our Elements of Transformation model:

Our consultants have years of experience working across locations and time zones. They are also experts in delivering all services remotely or onsite in SOx (SEC), EU, UK and other regulatory environments.

We welcome any discussion on the above and more, so please get in touch!

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