When it comes to CSRD, does your software need an update?
The Corporate Sustainability Reporting Directive (CSRD) will impact over 50,000 companies with significant business in the EU, regardless of their headquarters’ location. Under the CSRD, companies will need to include detailed ESG data in their annual reports in line with the European Sustainability Reporting Standards (ESRS).
Because of CSRD complexity and the potential for non-compliance penalties, depending on where a company is located, sustainability officers may wonder if new sustainability software is needed to prepare for their CSRD disclosures?
Here are eight factors to consider when assessing whether you need to upgrade your software for CSRD:
1. Regulatory requirements
First and foremost, you should check the specific regulatory requirements in your jurisdiction related to CSRD reporting. Different regions or countries may have different compliance requirements, deadlines, and reporting formats. Ensure that your current software can accommodate these specific requirements.
2. Software readiness
Assess your existing software. If you are using outdated software that does not support the latest CSRD reporting standards, you may need to upgrade or switch to a different software solution that is compliant with the current reporting requirements.
3. Reporting complexity
The complexity of your CSRD reporting can also influence the need for software upgrades. Due to the volume and detail of data needed for CSRD compliance, you might require more advanced software to handle the task efficiently and accurately.
4. Data collection and integration
Consider how your software handles data collection, integration, and analysis. Ensure that it can easily gather relevant sustainability data from various sources and perform necessary calculations.
5. Workflow efficiency
Evaluate the efficiency of your current reporting workflow. Upgrading to software with features like automation, data validation and report generation can save time and reduce the risk of errors.
6. Support and updates
Check whether your current software provider offers regular updates and support for CSRD compliance. If your software is no longer supported or updated, it may be necessary to switch to a more reliable solution.
7. Cost and budget
Consider the cost of upgrading your software compared to the potential benefits, including improved compliance and reporting efficiency. Assess your budget and weigh the costs against the advantages.
8. Training and transition
Factor in the time and resources required for training your staff and transitioning to new software if needed.
In conclusion, it's essential to review your current software's compatibility with CSRD reporting requirements, assess your specific reporting needs, and consider the regulatory environment in your jurisdiction. If your current software does not meet these criteria, upgrading or switching to suitable software may be necessary to ensure compliance and streamline your reporting processes.
With over 20 years of experience in environmental, social and governance (ESG) and sustainability software, UL Solutions ESG data management software can support companies throughout their CSRD journey, including data digitalization, harmonized processes, automated data collection and more.
Independent research firm, Verdantix, gave UL Solutions’ ESG data management software high marks for its disclosure approval and tracking workflow. Assigning disclosure sign-off can be followed down to the individual question level, with the status of each disclosure section shown in a dashboard. UL Solutions also received a top score for its audit tools, with audit log reports, value chain reports and a data browser allowing users to interrogate any data point’s source, change history and calculations.1
1 Verdantix, Green Quadrant: Enterprise Carbon Management Software 2023, November 2023, gated.
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