While CSRD is a complex implementation exercise that will require resources, isn’t business success a costly exercise?
That was the question asked – rhetorically – to the audience at an event organised in the European Parliament, and marking the launch of the GRI’s CSRD essentials.
‘Asking’ the question was Camille Sztejnhorn, ESG impact director for Lefebvre Sarrut and member of the European Association for Sustainability Professionals.
Companies can consider CSRD as a compliance exercise if they don’t care about the long-term sustainability of their businesses, she argued. “But actually, the double materiality assessment is a great strategic tool and is part of a company’s management hygiene.”
The double materiality tool is a strategic tool because it forces one to take a step back and conduct a series of analyses, not too dissimilar to SWAT analysis, consumer centricity and risk cartography - in other words “basic material for strategic analysis and strategic vision”, she said.
And it is part of company management hygiene, “because when you start filling the data point that you need, you might realise it's like really basic management tools”.
She gave examples of questions companies would need to answer: do you have a good view of your company's suppliers in all your subsidiaries so as to optimise purchase? Do you have the HR policy to share with your current and future employees? Do you have a good view of the training that you provide to your employees to upskill them and to make sure your company is future ready? Do you have a plan in case you cannot provide any more computers or phones to your employees? Or even a plan if you cannot build a product that you want to sell?
“If you say yes to all these questions, super good for you, CSRD will not be so difficult,” she said. “You have all the answers, and OK, it will take time and effort to gather them, but you have them.”
And if a company doesn’t have an answer to these questions, Sztejnhorn added, “I'm not sure the one to blame is CSRD”.
“Just think about financial disclosures,” she said. “It's a nightmare for many companies, but do you blame it on the law? You need it to run your company.”
Sztejnhorn also criticised the argument often levered at the ESRS that 1,200 is impossible to implement. “The truth is written in the CSRD essentials: no one will have to fill in all of the 1,200 data points, some are relevant to some companies and others to other companies,” she said.
Daniele Ciatti, researcher EU Sustainable Finance at E3G, echoed her comments, and argued that CSRD couldn’t be “a simple mere checkbox exercise”, the regulation requirements should be taken up by companies “as a very thorough analysis of the sustainability impacts risks and opportunities that every company's faces in their own business operations and value chain activities”.
Marc Boissonnet, director ESG at TIC Council, gave a more nuanced answer to the question, arguing that CSRD requirements brought more transparency, but were also a constraint on businesses.
But the main critic of the regulation came from Le Quanq Tran Van, director for financial affairs at French Association of Private Enterprises (AFEP), which was largely unsurprising, given AFEP has never been a fan of the ESRS.
“I understand that some people in the room are very optimistic regarding the implementation of the CSRD, unfortunately we are not because there are only six months left and many issues many interpretations to address,” he said arguing that many preparers still don’t know how much and on what they need to report. “CSRD will be a very big implementation challenge because of the timeline and complexity of the information required. […] the risk that it becomes a compliance exercise is real.”
He called for companies to get more time for implementation and for more coordination between what is done at national and EU level.
On that last point, he particularly criticised the lack of a clear definition of what a transition plan is. “We cannot deal with 10 different definitions of transition plans. So [regulators and standards setters should] get together and just [come up with] one clear definition of what a transition plan is.”
Ciatti agreed for the need of a “centralised legislation for transition planning in Europe”, adding that CSRD “holds the centrepiece of the puzzle for transition plan is in Europe” as, in his view the ESRS description of what a transition plan is should be the one used across the board.
Tran Van was also critical of the sustainability assurance landscape in Europe, as no single standard has been adopted at the EU level, he said “we are seeing divergence in the member states about what compliance with the ESRS means or is and what sustainability assurance is”.
If assurance is essential to ensure reliability of information in the sustainability regulatory framework, “then the framework the rules are incomplete”, he said. “So how are we supposed to implement something that is incomplete?”
Tran Van continued: “Some partners of large audit firms have told us that eventually the amount companies will have to pay for the sustainability audit will equal the amount of fees for financial audit, if you pay €30m for financial audit you’ll have to pay €30m for sustainability audit. Eventually, I'm not sure sustainability reporting needs to be on the same level. [These amounts are] not acceptable for our members.”
On that point, Boissonnet argued that the provision in the CSRD allowing for independent assurance service providers (ISPs) to assure ESRS reports provided a potential solution. Having ISPs part of the ecosystem, he said, is beneficial for the market because it provides more competition and improves quality.
“So, my recommendation to member states is to seize this opportunity to give access to ISPs because this is possible only if the country decides to give access,” he said. “So far, we identified only five [countries that] have decided to open up the market for the ISPs.”
On the next panel, Sven Gentner, head of unit at DG Fisma, clarified: “We are tasked with adopting a delegated act on assurance in 2026 and we want to make it clear that what we do chimes with what is done internationally so we are looking very closely at the work that is done by the IAASB, that is another area where we need to make sure that what we do works internationally while at the same time insuring that the standards we adopt in 2026 are fit for the CSRD/ESRS, which is probably a bit different from what the IAASB is preparing at the moment.”