By Iain Anderson, ESG Technology and Data Leader, PwC UK
Along with defining more stringent regulatory reporting requirements, the scale of the data demands within the CSRD is accelerating the development of ESG technology capabilities as the importance of leveraging technology to help to deliver CSRD requirements is brought into sharp and urgent focus.
The challenges don’t just include how much ESG information your business will have to collate, evaluate and report, but also the need to bring the disclosures up to the same ‘investor grade’ standard as financial reporting. According to PwC’s Global CSRD Survey 2024, the vast majority of UK respondents - 80% - currently rely on spreadsheets for their sustainability reporting. But this simply isn’t viable in the long run, tying up too many people, heightening the risk of error and audit challenge, reducing scalability and making it harder to generate deeper insights.
By automating routine reporting and increasing analytical capacity, technology can help your business to meet your regulatory obligations in a reliable, durable and cost-efficient way. Crucially, it can also help businesses accelerate the delivery of social, net zero transition and other ESG objectives by freeing up the sustainability team to focus on strategic sustainability goals.
But before we go any further, it’s important to stress that there’s no magic tech solution here.
Sustainability management and ‘last mile’ regulatory reporting capabilities are developing at pace. But your business will still need to bring together multiple platforms and data feeds, from internal and external sources, ranging from procurement and operational systems for environmental data to HR platforms for social disclosures on pay gaps and workforce diversity.
Ultimately, sustainability reporting is primarily a data rather than technology challenge. The challenges in sourcing and verification are heightened by the fact that so much of the data will be coming from outside your organisation. Organisations need to think about governance and control around data and not just technology in which data is managed. Governance over data sources and quality, combined with technology, can ease the strains of collection, evaluation and final disclosure.
But the technology needed for sustainability reporting is just one of many competing demands for investment in organisations. This underlines the need for a prioritised and pragmatic approach. A connected sustainability and technology team could play a crucial role, identifying areas to plug into existing initiatives and looking for opportunities to expand to include sustainability. Businesses should consider how they can use existing systems and think about where they can prioritise changes in the short and medium term.
“Technology is a critical enabler of sustainability strategy and reporting, giving organisations the sustainability data and insights they need to move from ambition to action.”
Iain Anderson,
ESG Technology & Data Lead Partner, PwC UK
So how can your business use technology to meet reporting demands and accelerate the delivery of your sustainability strategy? Three priorities stand out:
Carry out a gap analysis to map what data you need, what you have and what more you need to source and verify.
Some of the necessary information may be available in various enterprise systems but has not been collected before. This underlines the need for close collaboration between sustainability teams and different business functions such as technology, HR and procurement.
With data coming from so many different sources internally and externally, it’s important to check the basis for measurement and make sure the information is consistent and reliable. As with financial data, this quality check will need to be supported by a clear and verifiable audit trail.
As you look at how to reduce the amount of time needed to source, check and cleanse the data, one option includes creating a single ESG data repository to bring together HR, environmental, operational and financial information on a consistent and accessible basis.
Taking a more holistic approach is crucial. Bringing expertise together and boosting collaboration across sustainability and technology functions is key, not only for data collection, but also to deliver greater value more broadly.
Whilst you may be using spreadsheets for much of your reporting, it’s important to develop a long-term roadmap for improving ESG analysis and automating routine data collection and reporting.
As a UK organisation, you may have more time to prepare for the CSRD than EU-headquartered counterparts. But technology and data management tools take time to implement, so it’s never too early to start. The investment case won’t just centre on reducing compliance costs and strengthening assurance, but also how to accelerate the delivery of ESG objectives and realise the resulting benefits in areas such as customer advocacy and access to capital.
Harnessing the technology potential calls for more than just systems implementation. Success requires organisational mobilisation and collaboration, along with clarity on the skills, processes and controls needed to get the most out of these investments. Technological change is constant in organisations and there could be an opportunity to capitalise on this by addressing sustainability as part of broader transformation.
As regulatory reporting requirements drive businesses to be more transparent about their sustainability efforts and allow for comparability between organisations, ESG considerations can no longer be viewed and managed in isolation. Around three-quarters of companies preparing to file under the directive, including those headquartered outside the EU, are factoring sustainability into decision-making to a greater extent or plan to do so.
The need to put sustainability at the forefront of business decision-making reinforces the importance of integrating ESG data into risk, financial planning and other corporate systems, not just for reporting but also modelling strategic options, tracking value creation and day-to-day decision-making. As part of this integration, it’s important to ensure that sustainability is factored into digital transformation. By viewing sustainability as a strategic opportunity and capitalising on data insights, organisations can see beyond compliance to deliver on ESG ambitions more effectively.
Technology and data are fundamental to delivering an organisation’s sustainability strategy, especially in relation to meeting regulatory reporting requirements, creating trust, and driving growth.
We bring together the right people with the right technology to equip you to navigate sustainable reporting regulation and deliver net zero outcomes.
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The Corporate Sustainability Reporting Directive (CSRD) marks a significant step change in reporting, with more companies impacted, more data required and more stakeholder scrutiny than ever before.
