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2025 is approaching: What CSRD Means for the Future of Business
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As the end of the year approaches, many companies are taking stock and planning for the future. This time of year, traditionally associated with strategic reflections, now takes on an even greater significance due to the regulatory changes coming into force in 2025. These include the Corporate Sustainability Disclosure Directive (CSRD), which is transforming the way organizations communicate their performance in environmental, social and governance (ESG) areas.
The CSRD not only increases the number of companies covered (including large companies and listed companies), but also requires a much higher level of detail in the information provided. From 2024, companies with more than 250 employees or with certain financial thresholds (revenues of more than 40 million euros or assets of more than 20 million euros) will have to disclose precise information on environmental impact, social practices, corporate governance and sustainability-related risks.
With CSRD, companies face a new level of transparency and accountability, but also significant challenges related to data collection and analysis, the implementation of processes and the associated costs.
The CSRD requires companies to disclose detailed data on the impact of their activities in areas such as carbon footprint, gender diversity, working conditions and supply chains. For example, in the fashion sector, some brands are already facing significant challenges in reporting the full traceability of their supply chains. Similarly, in the energy sector, companies are detailing the CO2 emissions of their operations and implementing measures to reduce their environmental impact.
This initiative aims to harmonize ESG reporting, allowing investors and stakeholders to better understand the risks and opportunities related to sustainability.
According to PwC's Global CSRD Survey report, companies are generally aware of the importance of the CSRD and the need to adapt to the new requirements. However, the survey reveals that many still face significant difficulties in implementing the changes required by the directive.
One of the biggest difficulties reported by companies is the ability to collect and analyze ESG data effectively and accurately. CSRD requires a high level of detail and precision, which implies setting up robust systems to monitor and report on their activities. Many companies do not currently have the necessary infrastructure to correctly measure their environmental, social and governance impact. For example, the lack of a uniform methodology for measuring the carbon footprint or monitoring social inclusion and diversity practices are recurring problems.
Another challenge identified is the lack of standardization in ESG data. Although there are various sustainability initiatives and frameworks, such as the UN's Sustainable Development Goals (SDGs), the absence of a single methodology for all ESG indicators makes it difficult to implement efficient solutions. Companies have to adapt to a variety of systems and benchmarks, which increases the complexity of the compliance process.
In addition to the challenges related to data collection, another major obstacle is the need to invest in technology. Many companies do not have adequate technological systems to deal with the growing amount of data required by the CSRD. Digitizing sustainability processes will be essential to ensure accuracy and compliance with CSRD requirements. However, the costs and complexity of implementing specialized technological systems represent a significant barrier, especially for smaller companies that need scalable and affordable solutions.
Figure 1: Obstacles to implementing CSRD
The PwC survey highlights that without significant investment in technology, organizations will have to continue to rely substantially on manual processes. When asked about the technological tools used, more than 90% of the participants in the study said they were using spreadsheets for sustainability reports. This is much higher than the number of companies that are adopting more advanced technologies, such as data lakes or management solutions and carbon calculators.
Figure 2: Few companies are already using specialized technological solutions for sustainability reporting
This reality demonstrates the urgent need to invest in more efficient and automated tools that ensure not only the efficiency of reporting, but also the incorporation of sustainability data into decision-making processes within companies.
It is hoped that the use of tools based on artificial intelligence for sustainability reporting is expected to increase substantially. This transformation will be essential for companies wishing not only to comply with the CSRD, but also to optimize their management processes and guarantee the accuracy and reliability of ESG data.
AI has the potential to automate many of the tasks related to collecting and analyzing ESG data, allowing for a more agile and effective approach. The incorporation of predictive analytics and machine learning provides deeper insights into the environmental and social impacts of companies' operations, contributing to more informed decision-making.
Despite the difficulties, the PwC study also points to several opportunities associated with CSRD. Rather than being seen as a regulatory burden, many companies are beginning to perceive CSRD as an opportunity for transformation and differentiation in the market. Those that manage to adapt effectively to the new requirements will not only have the ability to improve their image with investors and consumers, but also to optimize their risk management and promote more sustainable and efficient business practices.
Strengthening Corporate Reputation
CSRD offers a golden opportunity for companies to improve their reputation. With the growing focus of consumers on environmental and social issues, companies that stand out for the transparency and accountability of their ESG practices tend to be more valued in the market. Effective implementation of CSRD can help companies build trust with investors by demonstrating that they are committed to sustainability in a clear and verifiable way.
Improving Risk Management
Another benefit identified by PwC is the ability of companies to better manage the risks associated with their operations. By more closely monitoring the environmental and social impacts of their activities, companies can more effectively identify the risks associated with unsustainable practices, such as excessive consumption of natural resources or unfair labor practices. The CSRD forces companies to reflect more deeply on their processes and practices, encouraging more proactive risk management.
Increasing Competitiveness in the Global Market
Companies that manage to integrate sustainability goals into their corporate strategy will have a significant competitive advantage. Transparency in ESG reporting not only attracts investors, but also allows companies to stand out in the global marketplace. The focus on responsible business practices is becoming an important differentiator in the choice of consumers, who prefer brands committed to environmental and social issues. CSRD therefore offers an opportunity for companies to position themselves as sustainable leaders.
Assess the current state of ESG reporting and identify gaps in relation to the new requirements. This diagnosis is essential for defining a clear strategy in line with the CSRD requirements.
Adopt digital tools that automate data collection and analysis, reducing manual effort and minimizing errors. These tools can include specialized sustainability software, which allows ESG metrics to be tracked and reported efficiently.
Invest in training employees and hiring ESG specialists. According to PwC, companies that prioritize training are able to implement changes more effectively and quickly.
Work with specialized consultants and participate in collaborative networks to share best practices. In addition, creating synergies between different stakeholders, such as suppliers and customers, can ensure an integrated approach to sustainability.
As the CSRD comes into force, companies have the opportunity to transform the way they approach sustainability reporting. Rather than a simple regulatory requirement, the Directive offers an opportunity for digital transformation and the strategic integration of sustainability into business. Effective implementation of the CSRD can not only improve companies' credibility, but also enable more effective risk management and a competitive edge in the market.
Companies that stand out for their transparency and commitment to sustainability will be better placed to thrive in a global market that increasingly values responsible business practices. The future of ESG reporting is undoubtedly digital, automated and integrated into the company's strategic decisions, allowing organizations to move towards a more sustainable and resilient business model.
Prepare your company for the challenges and opportunities of CSRD. Find out how Nextbitt's solutions can support your journey towards efficient ESG reporting in line with 2025 requirements. Contact us and build a more sustainable future for your business!
Sílvia Sousa
Product & Brand Manager, Nextbitt
