55% of companies cite data quality challenges in CSRD reporting

55% of FY2024 companies foresee hurdles in maintaining data quality and consistency, while 45% are concerned about having enough resources to meet the requirements.

PwC Luxembourg's latest report reveals that although 50% of companies surveyed see the Corporate Sustainability Reporting Directive (CSRD) as a catalyst for strategic value creation, 55% of companies anticipate challenges in maintaining data quality and consistency, and 45% express concerns about having sufficient resources to meet the directive's requirements. The EU's CSRD mandates regular ESG reporting for large businesses to improve transparency and sustainable investment.

The report, "All Hands on Deck: CSRD reporting as the accelerator for sustainable business transformation," provides a comprehensive overview of the current state of CSRD readiness among over 200 C-Suite executives from financial market participants and operating companies. It highlights that CSRD with its value chain approach requires the full C-Suite to be actively involved. Most companies expect to allocate between three and five full-time employees (FTEs) to their CSRD projects.

Among the key findings, over 80% of respondents, regardless of reporting year, have either already adopted new technological solutions for CSRD reporting or are planning to do so. Additionally, 58% of FY2024 firms have already started using non-financial company performance as a material KPI for the variable remuneration of C-Suite members, with an additional 29% planning to do so.

The report highlights the significance of the CSRD, noting that it will elevate sustainability reporting to the same level of rigour as financial reporting, and serve as a game-changer in evaluating and tracking progress on ESG metrics.

Olivier Carré, Deputy Managing Partner, Technology & Transformation Leader, states:

"The successful implementation of CSRD hinges on leveraging advanced technology solutions that can efficiently manage and integrate vast amounts of sustainability data. While challenges in maintaining data quality and consistency are anticipated, the demands for accurate, real-time ESG reporting present an opportunity for growth. Companies must invest in robust data management and reporting systems to overcome these hurdles.

We are committed to guiding businesses through this technological transformation, ensuring that they not only meet compliance requirements but also gain actionable insights to drive sustainable growth."

Commenting on the report, Michael Horvath, Advisory Partner and new Sustainability Leader, highlights:

"The CSRD is the cornerstone enabling Europe to deliver on the European Green Deal, elevating sustainability reporting over time to the same level of importance and rigour as financial reporting. It puts sustainability at the core of companies’ business models and operations, prompting them to integrate it into their strategic decision-making processes. At PwC Luxembourg, we see this as an opportunity for businesses to enhance their long-term resilience and competitiveness in an increasingly sustainability-conscious market."