In recent years, companies are facing an increasing wave of regulations focused on data tracking, reporting, and transparency, especially regarding sustainability. The European Union (EU) is leading this push, not only with the Corporate Sustainability Reporting Directive (CSRD) but also by planning future regulations aimed at strengthening environmental and social accountability. As this regulatory landscape expands, businesses must be proactive in developing effective data management strategies to meet these growing demands. Preparation now, especially in non-financial data management, will ensure companies can adapt smoothly to reporting requirements like CSRD and remain compliant as new standards emerge.

This article is written by Chung Do ([email protected]). Chung is part of RSM Netherlands Business Consulting Services with a focus on Technology and Digitalization.  

Overview of CSRD 

The CSRD is a central pillar in the EU’s strategy to promote transparency in corporate sustainability practices. Building on previous non-financial reporting frameworks, CSRD mandates that larger companies operating within the EU report detailed information on their environmental, social, and governance (ESG) performance. By focusing on comprehensive, comparable, and verified ESG data, CSRD aims to increase corporate accountability, enhance investor confidence, and provide stakeholders with a clear view of how companies address sustainability issues. This directive applies to large companies—both public and private—meeting specific thresholds in turnover, size, and employee count, and it is expected to expand over time, gradually including smaller organizations within its scope. For more insights into the implications and requirements of CSRD, please refer to our other articles on the topic here.

Under CSRD, companies are required to report on a broad spectrum of ESG data points that must be accurately collected, verified, and disclosed. This includes quantitative data, such as greenhouse gas emissions, energy usage, waste and water management figures, and workforce diversity metrics. Qualitative data is also vital, covering governance practices, environmental policies, and social impact initiatives. Together, these data elements provide a holistic view of a company’s sustainability efforts. The European Financial Reporting Advisory Group (EFRAG), in collaboration with the European Commission, has established standards that define the type, quality, and format of data companies must report. Compliance with these standards requires rigorous data accuracy, completeness, and consistency to allow comparability across industries.

Implementing a Structured Data Management Strategy for CSRD Compliance
To help companies meet CSRD requirements, RSM offers a structured six-step approach that guides them through the data complexity and reporting process. This roadmap starts with compliance understanding and data collection, followed by a data completeness check and data quality assurance to ensure accurate and reliable information. Once validated, the report can be generated by either human expertise or supporting tools, with an emphasis on process improvement to continually refine reporting over time. This ongoing improvement process enhances report accuracy and completeness, positioning companies to meet not only CSRD but also future reporting needs in an evolving regulatory landscape.

1.    Understand and Align with Requirements

Conducting a Double Materiality Assessment (DMA) is an important part of identifying which ESG topics are material for your business impact and stakeholders. This assessment helps determine relevant data points specific to your company. With over 1,200 potential data, companies do not need to report on all metrics; instead, the DMA helps identify key areas that impact ESG, highlighting relevant data points for individual businesses. By aligning early on with CSRD’s expectations, companies can target their data collection and reporting efforts efficiently, addressing compliance needs from the outset.

2.    Map Your Data Environment

To create a CSRD-compliant report, it’s essential to fully map your data environment, identifying where key ESG data resides across internal systems and external sources. This begins by understanding the CSRD requirements, pinpointing which data points are necessary, and then locating these within financial and non-financial databases, data warehouses, and any third-party data repositories. By thoroughly mapping data locations and sources, companies can uncover and address potential gaps or inconsistencies, ensuring comprehensive coverage. This data environment map becomes a crucial foundation for tracking and monitoring data flow and verifying that ESG metrics are traceable and accurate from their source through to the final report. With a mapped data environment, companies can now identify and close gaps that might hinder compliance.

3.    Identify and Address Data Gaps

Performing a thorough data completeness check is essential for pinpointing any missing information and establishing a clear path for improvement. Documenting qualitative data—including strategy, governance practices, environmental policies, and social initiatives—requires the involvement of designated management. Quantitative data, in contrast, demands IT support, time, and rigorous verification to ensure accuracy and completeness. Initially, this process may involve manual data collection, but it sets the foundation for enhancing IT systems to enable streamlined, automated data acquisition in future reporting cycles. By proactively addressing data gaps and planning for continuous improvement, companies can build a resilient data infrastructure, ensuring that all relevant information is captured accurately, reliable, and fully compliant with reporting standards.

4.    Assure Data Quality 

Data quality is essential for compliance and audit readiness, ensuring adherence to CSRD's accuracy and quality standards. This involves thorough data cleaning and validation processes to prevent discrepancies and errors in reporting, as well as tracking and verifying data sources to create a robust audit trail. Conducting early data quality scans can help identify potential issues, ensuring that the information is both reliable and audit ready. By improving data quality, companies enhance their ability to comply effectively with CSRD and additional regulatory requirements, thereby strengthening their compliance framework. To achieve this, companies should implement consistent data collection methods across departments and establish a centralized validation process that confirms the integrity of ESG metrics prior to reporting. This strategy guarantees the reliability and completeness of the data, which is critical for both current CSRD compliance and future regulatory obligations.

5.    Generate report

Once data is accurately collected and validated, companies can proceed with CSRD-compliant report generation. This process involves integrating non-financial ESG data alongside financial disclosures, creating a comprehensive view of the company's sustainability performance. For effective CSRD reporting, companies should adopt formats and structures consistent with the EFRAG standards, ensuring that reports are clear, transparent, and comparable. This reporting approach not only aligns with CSRD but also positions companies to meet broader non-financial reporting requirements as sustainability regulations continue to evolve. Additionally, the reports must include digital tagging, facilitating interoperability and compliance with emerging standards. Various tools are available to support report generation, automating the integration of required information and enabling XBRL reporting to streamline the compliance process.

6.    Automate Compliance Processes

After defining the data to collect, mapping the data environment, identifying reporting gaps, and ensuring data quality, companies will have a clear roadmap for effective reporting compliance and improved efficiency. By automating various processes—including data collection, aggregation, validation, calculations, and report generation—organizations can significantly reduce human effort, minimize errors, and ensure consistent data quality. A thorough understanding of the existing processes is essential for ongoing improvement.

Automation tools can streamline workflows, continuously monitor data accuracy, and flag discrepancies, making compliance management more efficient and scalable. 

Foward Thinking: Future-Proofing Compliance

With CSRD and similar regulations expanding data requirements, companies are faced with managing substantial volumes of ESG data, intensifying the demand for robust data compliance. In addition to CSRD, other EU regulations, such as the Corporate Sustainability Due Diligence Directive (CSDDD) and EU Deforestation-free Regulation (EUDR), call for extensive tracking, analysis, and reporting of environmental and social data, requiring scalable data management and compliance structures. This shift compels companies to build resilient data management frameworks that will support ongoing regulatory changes and future reporting requirements. By establishing resilient data processes, companies not only fulfill CSRD requirements but also lay the groundwork to meet future compliance standards as the EU’s regulatory landscape evolves. 

RSM provides comprehensive, end-to-end support for regulatory compliance including CSRD, guiding companies from understanding compliance requirements to mapping data environments, and ensuring data quality. Beyond knowledge-sharing sessions, RSM offers hands-on technical assistance to help companies build data processes that comply with both current and future regulations. RSM’s team brings specialized expertise in creating tailored solutions to meet unique company needs, ensuring sustainable compliance strategies.

RSM is a thought leader in the field of Sustainability consulting. We offer frequent insights through training and sharing of thought leadership based on a detailed knowledge of industry developments and practical applications in working with our customers. If you want to know more, please contact one of our consultants.