From relatively straightforward metrics on the number of full-time employees in a company to more sensitive data around median pay ratios, where it is deemed material, CSRD reporting requires data on both a company’s own employees and the workforce of its suppliers. This creates a significant task for reporting and HR teams, embracing new technologies and harnessing HR insights to drive efficient and effective CSRD reporting.
“A unified approach that brings together multiple functions and stakeholders from across the business is crucial for CSRD reporting. HR teams should take a proactive approach: The CSRD is more than just a compliance exercise, it’s a catalyst for HR to drive strategic change.”
Phillippa O'Connor,
Chief People Officer, PwC UK
Despite the breadth, increased complexity and higher levels of assurance, organisations seem to be optimistic about workforce reporting. In PwC’s recent Global CSRD survey, 73% of UK companies said they were very or extremely confident about their ability to report on their own workforce.
However, business leaders may be underestimating the challenge ahead. Workforce is likely to be a material topic for many organisations and the CSRD workforce reporting requirements are far more stringent and complex than many are used to. Reporting teams may think that HR data is easy to access but in reality organisations may not have the data they need, in the format required, at their fingertips. To get ahead of this, sustainability reporting and HR leaders need to be taking steps now to ensure they have the right people and expertise along with the systems and technology to deliver on the breadth of data points required.
The CSRD provides an opportunity to join up workforce reporting with an organisation’s wider sustainability reporting strategy and plan. To do this successfully, involving HR teams early in the process is crucial.
Navigating complex technical areas and definitions will be challenging for businesses without HR support. Our Global CSRD Survey highlights that Sustainability (93%), ESG/ Sustainability committee (84%) and Finance (77%) teams are most involved in the process, underestimating the need to consider HR across the CSRD lifecycle from the double materiality assessment through to implementation. Where HR or Reward teams are not part of the process, blindspots may arise.
of UK companies are concerned about staff capacity when it comes to CSRD implementation
PwC’s Global CSRD Survey 2024 - UK respondents
Workforce reporting under the CSRD will take significant up-front time and investment to satisfy assurance requirements. 58% of UK companies in the Global CSRD survey are concerned about staff capacity to implement reporting. And it’s not just capacity that’s a challenge, 48% of UK companies are concerned about staff expertise when it comes to implementation, recognising the need for HR insight, support and guidance. Organisations need to ensure they have the right resources in place - in the form of people, systems and technology to deliver their workforce strategy and reporting.
“A cross-functional approach to the CSRD is crucial but few businesses are involving HR and that needs to be a priority. This is an opportunity to recognise the importance of your people as the workforce impacts every facet of an organisation- and HR is a critical part of the jigsaw.”
Lesley Graham,
Workforce Sustainability Lead, PwC UK
While reporting requirements can be complex, they elevate the importance of people data, providing HR leaders with richer workforce insights to inform strategic decision-making, and an opportunity to showcase the positive impact of their workforce.
Under the CSRD, HR data will be subject to assurance for the first time. According to our 2024 Excellence in Social Reporting report, only 26% of companies have comprehensive downloadable ESG data, including social, and only a very small number disclose assured social metrics.
of UK companies have comprehensive downloadable ESG data, including social
PwC UK’s Excellence in Social Reporting 2024
of UK companies are confident about their ability to report on workers in their value chain
PwC’s Global CSRD Survey 2024 - UK respondents
With data being extracted from multiple systems, mapping and understanding these are key. It is important to review the source as part of the disclosure creation along with the validity of the data. Early engagement from HR and legal teams will also be needed as each European country transposes the directive into its own legislation which may lead to nuanced differences that need to be interpreted.
The extent of reporting has also broadened with comprehensive data requirements on topics such as wages, gender equality and collective bargaining requiring broader consultation across a range of stakeholders. The first step for reporting and HR teams is to evaluate any workforce data gaps and use this analysis to devise a workforce reporting readiness plan.
For many organisations, reporting requirements will also extend beyond direct employees to include contractors, self-employed and the entire value chain. According to PwC’s Global CSRD survey, 40% of UK companies are confident about their ability to report on workers in their value chain. In reality, this will require extensive and detailed data collection across different suppliers and systems that organisations are likely to be unprepared for.
For HR teams, gathering the data is just a starting point as they look to unlock insights to truly understand the how and why underpinning workforce data. HR leaders can add real value here as they provide the context to explain any changes in data year-on-year that other functions in the business won’t have understanding of.
Joining up workforce reporting with your organisation’s wider sustainability strategy and plan is key. Robust workforce reporting provides many strategic benefits, including: a better understanding of the business, a more streamlined approach to ESG considerations, improved employee engagement, enhanced stakeholder relations and more sustainable investment opportunities.
When demonstrating progress, businesses need to set clear, measurable goals that are linked to the company strategy and underpinned by data insights. Metrics need to be specific, quantifiable and standardised to enable objective assessments and comparisons against other organisations. Taking this further, organisations can improve the relevance and authenticity of reporting by demonstrating stakeholder engagement and incorporating feedback from employees, customers and investors.
“Joining up workforce reporting with your organisation’s wider sustainability strategy, plan and reporting is critical. Taking a strategic and holistic approach to reporting and data, powered by the right technology, can give you access to decision-grade insights, helping you to tap into your potential, understand risks and create value.”
Tom Loukes,
Sustainability Partner, PwC UK
With the reporting landscape evolving fast, even organisations leading in workforce reporting will face challenges in staying up to date with requirements. However, the CSRD creates an opportunity too. Implemented effectively, the critical insights and data it uncovers can deliver sustainable and positive commercial outcomes for businesses.
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.
Track and measure your impact with confidence
PwC's review of social reporting in the FTSE 350, with examples of best practice and a look forward at the impact of new regulations.
How can organisations harness technology and data to tackle the complexity of today’s ESG reporting requirements?
