Report Finds Business Unprepared for New EU Corporate Sustainability Reporting Law
Perhaps not surprisingly, the world lacks a body of experts in stakeholder management and sustainability reporting that will be required for compliance with the new EU Corporate Sustainability Reporting Directive, according to this recent article in Responsible Investor. In other CSRD news: the EU seeks to create a marketplace for auditors and independent service providers, and the UK publication Edie finds that few companies have begun preparing for the new law.The world is lacking in the number of experts needed to help organizations in the European Union and in countries around the world create corporate sustainability reports in conformance with the new EU Corporate Sustainability Reporting Directive, according to this recent article in Responsible Investor. The article, which can be accessed through a free registration, highlights the lack of expertise not only to help organizations create corporate sustainability reports but to have them independently “assured” or audited.
In a separate RI article, the publication reports that “the European Commission believes it is very important that both auditors and independent service providers are able to carry out assurance for the CSRD.” In the meantime, the report in Edie, a UK sustainability media platform, cites a survey conducted by VinciWorks of 175 ESG reporting and strategy leaders at businesses likely to fall under the new law, finds that only 20% have begun preparation. “Worryingly, only half of those surveyed believed that their business was likely to fall within the CSRD mandate,” the article states.How prepared are businesses? According to experts quoted in the RI article, “Not fully prepared, to put it mildly,” says Wim Bartels, a Senior Partner at Deloitte who sits on the sustainability reporting board of the organization that created the standards. Bartels questions “whether there is the capability and capacity in the wider market to provide insurance for the 40,000 plus additional firms that will be required to disclose their sustainability data over the next three years.” He believes that acquiring that may prove difficult because of the limited number of experts.
“There is very, very little time to prepare,” says Hilde Blomme, Deputy Chief Executive at Accountancy Europe. “The timeliness is going to be an issue for the reporting, but also for sustainability assurance.”
Carmen Lu, Counsel at Watchtell, Lipton, Rosen & Katz, told RI that she sees the risk of possible “near-term” shortages of assurers to do the work. Lu was featured on an Enterprise Engagement Alliance Youtube program on the law earlier this year.
The report notes that to avoid conflict of interest, the advisory firms that help organizations comply with the new law cannot be the same ones to audit the reports, further limiting the supply of expertise.
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