Several dozen organizations is a sufficiently large sample to attempt a statistical analysis. Among companies seeking support in adapting to ESRS, four groups are visible. The first (about 20% of the total) are listed companies with extensive experience in non-financial reporting. They usually have structures in place that deal with sustainable development, and these organizations have already produced at least a few solid reports based on GRI. They usually need very specific knowledge about ESRS and limited consulting, in which consultants will indicate what needs to be changed in the existing data monitoring or reporting processes. I believe that these companies will cope quite well with entering the world of CSRD. One challenge may be the need to unlearn some habits acquired in GRI reporting, such as basing materiality assessments solely on a stakeholder panel or sometimes taking a rather light-hearted approach to the selection of reported indicators.
The second group (also numbering around 20% in total) consists of listed companies subject to non-financial reporting requirements, which, however, took a minimalist approach to this obligation. The lack of robust reporting standards, the lack of strict supervision of reporting, and the recent pressure from financial institutions have meant that many of these companies do not have robust data monitoring systems and have never conducted materiality assessments. Reporting has so far been carried out as part of annual reporting, often by a single person whose main responsibilities lie elsewhere. These companies need a comprehensive preparation program and solid support, not only in terms of knowledge transfer, but also in terms of building an ESG function (which does not formally exist in the organization) and implementing an appropriate team of people. The challenge for these companies is time, as they should be ready before the start of 2024, i.e., in five months.
The third and largest group (approx. 35% in total) consists of private companies that have experience in ESG reporting or in managing at least some aspects of sustainable development, but the CSRD directive will not apply to them until 2025. The interest in ESRSs already indicates that these companies are approaching their new responsibilities with care. The longer preparation time and structured approach suggest that they will be ready. The challenge for them may be the transition from voluntary reporting to a regime defined by law. Some of these companies started reporting as part of their public relations activities, and now they will have to face strict standards, which was usually the domain of the finance department, not corporate communications.
The fourth group (approx. 25% in total) is the most heterogeneous. It includes, among others, companies that have not reported, have heard about the new obligations, and first want to determine when and to what extent they will be subject to the new obligations. It also includes small and medium-sized private companies that will not be covered by the CSRD but want to report voluntarily. They know that this will be expected of them by their customers (if they operate in a B2B model), banks, and insurers. These companies are also looking for a suitable reporting model. They do not necessarily want to report immediately in accordance with the full ESRS created for large companies, but on the other hand, they do not want to wait for the release of simplified standards for SMEs.
The structure of companies seeking support in implementing ESRS will certainly change over time. I am most pleased to see that private companies are already visible in this structure, as most of them will have to devote more time to preparations. Now everyone (primarily companies, but also advisors, auditors, IT solution providers, and training companies) will have a lot of work to do, but even the most difficult regulations can be dealt with.
* The Commission has not announced when exactly it will issue the delegated regulation introducing the final ESRS, so we obviously do not know the date either, but... keep an eye on our announcements in the coming days 😉
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