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CSRD from the CFO’s perspective – Part 3: Reporting (& repeating)

Three Rs for successful implementation – Part 3: Reporting (& repeating)

The first part of this series focused on the change the Corporate Sustainability Reporting Directive (CSRD) is bringing, and the second part discussed resources needed to answer it. In this third and final part we focus on the core of CSRD, the reporting.  

In the previous parts we touched the topic of European Sustainability Reporting Standards (ESRS), which form the detailed reporting requirements for companies in the scope of CSRD. The first set of ESRS was published in July 2023, and it contains two cross-cutting standards providing general reporting concepts and ten topical standards that present detailed disclosure requirements for all areas of ESG: environmental, social and governance. Like financial reporting standards, ESRS present also certain quality standards such as relevance, faithful presentation, comparability, verifiability, and understandability. In June 2024 the currently published set will be complemented with sector-specific guidance. 

In addition to ESRS, another set of standards for sustainability-related financial disclosures called IFRS S1 and S2 are expected to be published in January 2024. The general understanding at this point is that compliance with ESRS aligns with IFRS S1 and S2, and no material inconsistencies should occur. In other words, reporting in accordance with ESRS shouldn’t be an issue for IFRS adaptation later.   

Following a set of reporting standards may first sound straightforward for financial professionals, but there are some twists and turns along the way. The biggest difference between the financial and sustainability disclosures on the general level the is the amount of qualitative and company-specific (some may say subjective) information. CSRD requires strategic work with for example double materiality assessments, sustainability targets, and governance, some of which form the basis for the whole reporting. Companies need determined decision-makers with understanding of both corporate sustainability and general accounting principles such as materiality, conservatism, and consistency to move forward with CSRD. In many companies, CFOs have this needed skillset and possibilities to influence throughout the organization and the decisions needed for CSRD implementation have landed on their table.  

One option is to outsource the first steps such as double materiality analysis to external consultants. The purpose for this strategic groundwork is to highlight the essential, company specific reporting areas, which means that some areas can be genuinely ruled out. There are some cultural differences between EU countries among companies and auditors on how to react on this. The Finnish mentality is generally obliging and honest, meaning that there is generally more hesitation in excluding topics than reporting on them. This hesitation may complicate the whole implementation, and therefore the courage to make strategic decisions is needed for efficient implementation.  

The fact that the legislation itself is still under the development is highly challenging for companies. For example, the field is still expecting the sector specific ESRS, even though we’re already in the middle of the First Phase of CSRD implementation The uncertainty is extremely demanding also for auditors. The CSRD requires third-party auditing for sustainability reports, and auditors have started to prepare for the upcoming challenge with internal trainings and new recruitments. Fortunately for both the companies and auditors the first years may be taken more of a trial, since from the beginning only limited assurance is required, giving adaptation time for all parties. CSRD implementation should be considered more of a journey than a separate project, meaning that it develops over time and the first publication won’t be perfect nor it should be. 

At the end of this series, we should still add one R for Repeating. As with financial reporting, success stories with sustainability reporting lean on predictable processes, repetitive cycles, and unsurprising results. CSRD implementation should is more of a journey than a separate project, meaning that it develops over time and the first publication won’t be perfect nor it even should be. Answering to company specific requirements with new policies, systems and procedures should aim for long-term stability, making the sustainability work and reporting gradually an integral part of the company’s whole business model. How ready the corporate world may be or not, the CSRD compliant reports are here to stay, and now is the time to take responsibility of this change, allocate efficient resources and start the reporting work.  


Written by 

Aura Koikkalainen 

ESG & Financial Consultant 

+358 405730723 


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