The CSRD reporting requirement is a major focus for us and our partners: We are currently conducting around 30 different consulting projects for CSRD implementation, experiencing very intensive processes and a variety of successes and challenges within the companies. To keep you informed, we report on this regularly – for example, in our article about CSRD implementation at the Kalle Group.
We wanted to know how auditors view the implementation of the CSRD. Therefore, we asked Tilman Just from our cooperation partner, the auditing and tax consulting firm RWT Crowe GmbH , a few interesting questions and received insightful answers!
Arqum: Through your work as an auditor, you have many contacts with medium-sized businesses. In your opinion, how are these companies positioned?
Tilman Just: Almost all affected companies that will be required to publish sustainability reports for the 2025 reporting year starting in 2026 have begun to address the issue of sustainability reporting. However, the level of implementation is quite heterogeneous. On the one hand, there are companies that are already in the process of preparing an initial draft report. On the other hand, there are companies that are only now beginning to engage with the topic.
Especially among small and medium-sized enterprises (SMEs) not directly affected by the CSRD and EU taxonomy regulations, there is still considerable uncertainty regarding upcoming changes. These companies face indirect impacts through transparency requirements and expectations passed on by customers and banks.
Arqum: What challenges do you observe in companies?
Tilman Just: Companies immediately notice the high complexity and massive scope of the standards. However, this is often still accepted.
Once the focus shifts to the details of the standards' requirements, the implementation challenges become more complex. This includes, for example, the complexity of defining the company's individual value chain and determining the scope of consolidation to be included in sustainability reporting. Uncertainty often arises at this stage regarding the correct implementation, especially since there are no concrete regulations. Companies must therefore make their own decisions within the given framework.
Another often critical point is data availability and data quality. Without sufficient data on the necessary sustainability topics, comprehensive sustainability reporting cannot be produced.
These two challenges are linked to the topic of resource management: The focus here is particularly on the capacity of the employees, the available budget or costs, and the individual expertise of the employees who are to implement the topic.
Arqum: What opportunities and advantages do you see in reporting for companies?
Tilman Just: I think that many companies now see sustainability reporting as nothing more than an administrative burden, for example, due to high implementation efforts and costs, insurmountable data requirements, extensive management reports, and so on. However, it's often forgotten that regulatory requirements can also be used as an opportunity for positive sustainability reporting. Furthermore, strategic insights can be derived and risks mitigated.
Sustainability criteria are increasingly being taken into account by investors (e.g. banks) or customers in their decisions regarding further cooperation.
This is because considering sustainability criteria in a company's strategy supports long-term planning and thus the stability and resilience of companies.
Furthermore, this also promotes long-term investments (financing). Risks related to ESG factors are identified more frequently and can be mitigated early on through appropriate measures. In general, companies that focus on sustainability criteria improve their reputation and demonstrate their commitment to environmental sustainability and social responsibility. This leads to greater trust among customers, investors, and other stakeholders.
Arqum: What advice do you, as an auditor, give to companies?
Tilman Just: The period leading up to the first reporting deadline is already underway. Companies should now, at the latest, familiarize themselves with the requirements and the associated need for action. Small and medium-sized enterprises (SMEs) in particular should assess the extent to which they are affected by the scope of the CSRD or the EU Taxonomy. This involves analyzing the specified deadlines and size categories. Affected companies are advised to create a timeline and implementation plan.
The first steps towards implementing CSRD requirements involve defining the value chain and the individual consolidation scope for sustainability reporting. Following this, a double materiality analysis is the key element for identifying the scope of the subsequent sustainability report. This is typically followed by a gap analysis to determine the specific implementation needs, i.e., verifying the availability of concrete data within the company for required key performance indicators (KPIs). After the identified measures have been implemented, the actual sustainability report is prepared.
It's important to note that various individuals and departments within a company will be involved in the entire implementation process. Experience has shown that the actual implementation can be quite extensive and may also necessitate further measures. Therefore, we recommend addressing this issue now, if not sooner. The larger and more complex the company, the sooner the implementation should begin.
During the implementation process, we strongly recommend early coordination with the auditor to ensure resource-efficient implementation.
Your contact person at Arqum: Theresa Steyrer