Q&A: Workiva’s Regulatory Strategy Expert on CSRD

ESG regulations are making the world a better place and businesses more attractive, but they can be tricky to navigate.

With the Corporate Sustainability Reporting Directive’s (CSRD) first reporting cycle due on 5 January 2025, the landscape is evolving again.

Workiva is a software platform that connects financial reporting, ESG, audit and risk to simplify the reporting process.

The software is used by more than 6,000 global companies including Kraft Heinz, Air France KLM Group and Iberdrola. 

Andromeda “Andie” Wood is the Vice President for Regulatory Strategy at Workiva, where she oversees EMEA strategy and regional growth with expertise of the technology and regulation landscape in Europe. 

Andie has worked with XBRL for many years and currently sits on the IFRS Taxonomy Consultative Group alongside being Co-Chair of the XBRL Entity-Specific Disclosure Task Force.

She shares her regulatory expertise with Sustainability Magazine ahead of the first CSRD reporting cycle.  

Why is the CSRD important? 

The CSRD represents a significant milestone, aiming to raise sustainability reporting to the same level as financial reporting. 

This directive requires transparent, comparable and trusted sustainability reporting from more than 49,000 EU-based companies as well as extending a broader impact on many global companies. 

For organisations that need to comply with the mandate, there are some substantial knock-on effects that not only lead to reform of long-held reporting practices but also inject questions of sustainability integration into strategy and risk management.

Overall, the CSRD aims to standardise and increase the quality and reliability of the information being reported by companies, making it a crucial directive reaching beyond just the EU. 

Its implementation has initiated a global shift towards assured integrated reporting, with business leaders in the UK recognising the demand for transparent and credible data that aligns with stakeholders’, peers’ and investors’ expectations across the globe.

How can businesses adapt to the changing regulatory landscape?

Following the adoption of the CSRD, the global drive for accountability, transparency and compatibility has significantly accelerated. 

This, in turn, has substantially increased the reporting expectations of companies, directly and via stakeholders. 

New demands for annual sustainability disclosure have called for new ways of data collection from supply chains to adapt to the evolving market. 

From a business standpoint, this is crucial to maintaining relevance, compliance and understanding the sustainability risks and opportunities.

Navigating this new landscape effectively and efficiently is vital for compliance; through reporting, businesses are required to demonstrate their societal impact and long-term resilience. 

However, the transition period to meet new regulatory compliance introduces its own challenges. For example, expanding the financial reporting process to include ESG data increases pressure on cross-functional teams, already seeing resource and timeline constraints affect daily operations.

Assured integrated reporting has become the global standard for ESG reporting. 

With investors and regulators calling for the integration of financial and ESG data into decision-making, business leaders should prioritise technology that helps them adapt, as it can reduce manual effort and help reveal the benefits of assured integrated reporting. Without it, businesses will struggle to absorb the additional workload required to comply with regulations, such as with the CSRD, CSDDD and SEC climate disclosure rule.

What steps should companies take to ensure effective carbon accounting management?

Carbon accounting, also known as greenhouse gas accounting, is a way for companies to quantify the greenhouse gas emissions (GHGs) for which they are responsible, both directly and indirectly. 

Similar to financial accounting, which measures companies’ financial results, carbon accounting makes climate impact measurable and reportable. It provides the metrics needed to set, manage and report net-zero targets, providing greater transparency in a global market.

Adopting an assured integrated reporting system ensures that GHG data and targets sit alongside the data needed to assess financial impact and other commingled ESG issues, such as environmental and social impact. 

The integrated system enables effective management for businesses and delivers consistent disclosures for regulators, investors and other audit-ready stakeholders. 

To efficiently and effectively manage carbon accounting, use of supporting technology can additionally provide businesses with full data lineage and history, attached evidence and granular permissions that provide assurance readiness.

What advice would you give to leaders approaching CSRD?

New regulations such as CSRD, coupled with demands for assurance and consistency, mean sustainability, financial reporting, risk, audit and controls are converging — each one is reliant on the others. 

All large companies should be transitioning to software that provides assured, integrated reporting as soon as possible. 

Technology is often referred to as ‘an enabler’ in business, but companies will soon discover that good technology is essential. 

Sustainability will always need expert teams, but in a field where expertise is in short supply, most companies will find they need something more. 

The time to act is now; proactive preparation gives businesses a competitive advantage and paves the way for long-term success amidst evolving requirements. 

******

Make sure you check out the latest edition of Sustainability Magazine and also sign up to our global conference series - Sustainability LIVE 2024

******

Sustainability Magazine is a BizClik brand