Informatica: Can AI Help Overcome CSRD Reporting Challenges?

As companies around the world grapple new regulation, including The Corporate Sustainability Reporting Directive (CSRD), Informatica’s Leverent Ergin explores how AI could be the key to overcoming sustainability reporting challenges.

Please introduce yourself and your role.

I am the Chief Strategist for Climate, Sustainability and Generative Artificial Intelligence at Informatica. In this role, I work with large EMEA and LATAM organisations to use data management and GenAI to transform their business and comply with various climate and sustainability regulations.

I have over 25 years experience in regulatory compliance & change, data risk & controls and data governance in organisations like HSBC, Deutsche Bank and NatWest Group. I am a High-Level Data Expert for the United Nations Science Business Policy Forum and have contributed to initiatives like the Net Zero Data Public Utility (NZDPU) launched at COP28.

What is the CSRD?

The Corporate Sustainability Reporting Directive (CSRD) is a new regulation effective from January 2025, significantly expanding sustainability reporting requirements for companies operating in the European Union. It applies to all EU and non-EU companies listed on EU-regulated markets, with over 500 employees and to those already subject to the EU’s existing Non-financial Reporting Directive (NFRD). 

Under CSRD, companies will need to disclose detailed information about their environmental and social impacts, risks, opportunities and how their activities affect people and the planet. However, the inclusion of 1,400 Critical Data Elements (CDEs) highlights the significant complexity and scope of achieving compliance. This initiative is ultimately part of a broader effort to drive business transparency and align corporate practices with sustainable development goals.

How will CSRD impact UK companies, particularly those with operations or subsidiaries in the EU?

Although the UK is no longer part of the EU, UK-based companies that meet the criteria, (e.g. those listed on EU-regulated markets or with large EU subsidiaries), must still comply with CSRD. 

This means that many UK companies will need to implement systems to collect, manage and report on a wide range of ESG data. 

Compliance will not only involve understanding the regulatory framework but also adopting new practices to ensure transparency and accuracy in sustainability reporting.

It sounds daunting, but for companies looking to stay competitive in the EU market, aligning with CSRD is essential.

What are the main challenges UK companies might face in collecting and managing the extensive ESG data required for CSRD compliance?

Many companies could be caught out in the first round of CSRD reporting. One of the key challenges UK companies will face is the sheer volume and complexity of ESG data required. Sustainability data cuts across all lines of business and extends to wider business operations. 

For instance, the obligation to report on Scope 3 emissions means companies will need to capture data on indirect emissions that occur within third-party supply chains. This includes waste disposal and electricity usage to business travel and even diversity initiatives. With some companies having upwards of 20,000 suppliers, this quickly becomes one big data nightmare, particularly when 90% of companies still rely on manual processes. 

Collecting, reconciling and analysing vast amounts of data is a daunting challenge. Ensuring that data is accurate, up-to-date and accessible across departments and geographies adds yet another layer of complexity. 

What is the role of technology, particularly AI, in helping with CSRD compliance?

AI can bring greater automation to the reporting processes, empowering organisations to create a centralised hub of ESG data, ultimately streamlining the entire process. Integrating data from various sources, such as carbon emissions data, ESG ratings and supply chain performance, into one platform ensures data governance and quality controls are built in, creating a golden source of truth. 

This approach helps companies maintain transparency in their ESG reporting, making them more ‘audit-ready’ and ensures that data used is both accurate and reliable, providing trust among investors, customers and regulators. Crucially, it will also mean ESG can be used as a lever for growth and competitive advantage. 

What are the key pillars of ‘audit ready’ data for CSRD compliance?

To ensure compliance with CSRD, companies must maintain ‘audit-ready’ data that is both accurate and reliable. This involves several critical areas that auditors and regulators will focus on:

• Access and availability: Data will need to be accessible from multiple sources, including databases, spreadsheets, sensors and business applications. This data must be consolidated in a centralised platform for ease of analysis and reporting.
• Quality and completeness: For data to be effective, companies must manage its quality, ensuring it is complete, accurate and consistent. Without rigorous attention to data quality, it can be challenging to trust the data, compromising the reliability of reports.
• Common reference data definitions: Clear definitions of data and business terminology, such as ESG metrics and taxonomies, must be standardised across the company. Companies should also establish data governance rules, standards, and processes.
• Data lineage and transparency: Companies must clarify where data comes from, track its journey through various systems and maintain transparency regarding its origins, changes, and quality.
• Identification, classification and tracking of sensitive data: Companies should adopt best practices for discovering, securing and managing sensitive data throughout its lifecycle. Data protection measures like encryption and tokenisation ensure security and compliance.

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