Greetings from New York: How the CSRD is transforming sustainability reporting

On January 15, Inclus organized a roundtable event in New York, co-facilitated by David Curran from Paul, Weiss. The discussions centered around the challenges US-based companies face in aligning with the EU-driven Corporate Sustainability Reporting Directive (CSRD). The event, held in collaboration with the Consulate General of Finland, brought together industry leaders, sustainability experts, and advisors to share insights on assurance, governance, and ESG integration while highlighting the importance of collaboration among service providers in advancing sustainability reporting. 

The CSRD (Corporate Sustainability Reporting Directive) introduces key changes to sustainability reporting, focusing on assurance, governance, and the integration of ESG (Environmental, Social, and Governance) factors into business strategy. Companies must ensure their processes and outputs are ready for independent assurance, which brings greater transparency and accountability.  

This blog post explores the challenges and opportunities companies face in adopting these changes, highlighting the role of technology, stakeholder engagement, and regulatory differences between the US and EU. 

The role of assurance, governance, and technology in shaping sustainability reporting 

The CSRD has introduced significant changes in how companies approach sustainability reporting. A key element of these changes is the emphasis on assurance and governance. Companies are now expected to ensure that both their reporting processes and the final outputs are ready for independent assurance. This focus on both the process and the output is crucial for ensuring accurate, transparent, and reliable sustainability reports. 

Integrating ESG into business strategy and enterprise risk management 

ESG is increasingly being viewed not only as a compliance requirement but as a strategic priority that can enhance a company’s resilience and long-term value. Data analysis tools, including AI, are helping organizations identify and manage risks associated with ESG factors. By integrating ESG into their enterprise risk management (ERM) strategies, companies are evolving their risk management processes and uncovering new opportunities for growth. 

Challenges in data management and materiality assessments 

Companies often face challenges when it comes to managing and analyzing ESG data. These include difficulties in contextualizing ESG topics, collecting accurate data, and determining which issues are most material to the business. Conducting a thorough Double Materiality Assessment (DMA) is essential to navigating these complexities, but it is a time-consuming process. Digital tools can help companies manage these challenges by streamlining the DMA process and ensuring that ESG data is accessible for long-term analysis and audit trail purposes. 

Navigating regulatory differences between the US and EU 

Sustainability reporting practices differ between regions, particularly between the US and EU. In the US, there is no federal standard for sustainability reporting, leading to discrepancies in how ESG data is handled. US companies typically report less sustainability information in their financial filings compared to EU companies. To address these differences, companies must rely on sustainability professionals and digital tools to ensure they are aligned with both regional and international reporting requirements. 

Stakeholder engagement, communication, and technology’s role 

Effective stakeholder engagement is key to successful sustainability reporting. Many stakeholders may not fully understand what is expected of them, leading to gaps in the process. Clear communication and digital collaboration are essential for ensuring alignment and engagement across the organization. AI and other technologies also play a vital role in organizing and analyzing large volumes of data, helping companies stay compliant while reducing the risk of errors in their reporting. 

Future opportunities and implications 

The CSRD offers companies an opportunity to improve their sustainability reporting processes by making them more efficient and effective. As enterprise risk management evolves, the tools and processes used to manage ESG data will become more sophisticated, providing deeper insights into company operations. Companies must continue to adapt and learn to keep up with changing regulations and stakeholder expectations, using assurance, governance, and technology to drive sustainable, long-term growth. 

SAVE THE DATE! The Inclus CSRD expert roundtable series will continue in New York on March 25th 2025, with a breakfast event designed for ESG practitioners and leaders.