Increased sustainability reporting requirements mean a lot of changes that companies need to get ready for as soon as possible. The new conditions mean a change for many companies and groups. Here, Cecilia Almér, sustainability expert at Stratsys, highlights nine important aspects to keep an eye on and which will affect many companies in 2024 and beyond.
1. Understanding
The aim of more comprehensive sustainability reporting requirements is to increase transparency and comparability and thereby also reduce the incidence of greenwashing. It is important to understand as soon as possible what the new legal requirements mean for your business; When in time are we affected by the requirements? Do we belong to a group that is responsible for reporting or do we do it ourselves?
Initially, it is larger organizations that are affected by CSRD, but small and medium-sized businesses also need to read up and start preparing.
2. Need for skills
New laws and regulations require updated skills. What is the state of competence in our business? Who monitors and has knowledge of sustainability requirements? Widespread professionalization is needed, both in the public and private sectors. Many companies will need expert advice, but internal competence development is also required to achieve successful sustainability work.
3. Board responsibilities
The board's responsibility for sustainability performance increases with CSRD - they are responsible for ensuring that the report is prepared, that it is in line with the requirements, and that the content is correct and accurate. With that comes the need to ensure sustainability competence both on the board and in the management team. Knowledge and understanding creates the conditions for a proactive approach to sustainability issues and their integration into the business model and strategy.
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Cecilia Almér, Sustainability Expert at Stratsys
4. Increased cross-functional collaboration
As reporting requirements increase, more competencies and roles need to be involved in sustainability work and cross-functional work is becoming increasingly important. Work on sustainability, risk, internal control, finance, purchasing, quality and, of course, health and safety are all linked. It is important to create good opportunities for collaboration within the organization. The right conditions are needed for communication, understanding each other and collaboration to support goals and actions, but also to get the team spirit going.
5. Division of responsibilities
The sustainability manager will not be able to do all this alone. Nor should they be able to solve it themselves; a spirit of the ESRS is that management and the board should be involved and that sustainability work should permeate the business.
To make the whole of the sustainability work work, responsibility needs to be distributed. Decisions need to be made about who will be responsible for sustainability reporting. It is not necessarily the sustainability manager. The sustainability team needs to concentrate on actions and progress instead of getting bogged down in reporting requirements. The finance team, on the other hand, is used to data management, already has processes for internal control and may be better equipped for the responsibility of keeping the reporting together. The key is to establish where the responsibility lies - and it will probably look different in different companies.
6. Increased use of AI
The possibilities of AI are developing rapidly and are already being used to collect data. All indications are that it will continue in that direction going forward. In addition to increasing the efficiency of sustainability processes themselves, key uses include summarizing reports, detecting anomalies and analyzing data. It is highly relevant to ask how AI can be implemented to streamline sustainability work in your organization.7. Value chain, due diligence and third-party risks
Mapping your value chain and knowing the impacts, risks and opportunities that exist or have the potential to arise there are additional elements that many companies need to improve. Managing third-party risks and impacts in the value chain is not only a strategic priority but a requirement in areas such as due diligence, climate change assessments and the EU taxonomy. Start by understanding your context across the value chain, making a list of impacts, risks and opportunities, and then getting the data. Understanding across the value chain requires good coordination between functions such as purchasing, procurement, risk management, information security, etc.8. Don't lose momentum
Keep up the momentum in the transition! It takes effort not to get caught up in data collection and disclosure requirements. Keep your mind on the bigger picture, on the big picture: Why are we doing this? What is the purpose? What can we achieve? It is a question of being progressive or reactive. Taking action is usually much more satisfying than reporting. But it is challenging because there is a lot of work to be done to comply with new rules around reporting.9. Sustainability investments are increasing
CSRD compliance is not just a cost, but a strategic investment. By minimizing risks and embracing opportunities, companies build resilience for a changing future. A proactive approach to sustainability opens the door to innovation, increased investment and accelerated business growth.Read more here about Stratsys product for CSRD sustainability management, or contact us directly if you would like to know more.
