Welcome to Coffee Talk with Alex, our CSRD Expert
20 september 2024
Coffee Talk: An interview series by The Terrace
By Deike Robotta
Welcome to “Coffee Talk” our interview series at The Terrace, where I (Deike, communication consultant at The Terrace) sit down with my colleagues to explore the sustainability topics that keep us busy and excited at The Terrace.
This week, I’m having coffee with Alex, our managing consultant for strategy, to tackle a topic that’s making waves in the business world: the Corporate Sustainability Reporting Directive—CSRD for short.
Curious to dive into the details with us? Let’s get started!
CSRD and DMA are buzz-words these days... but what do they actually mean?
I totally get why all this jargon sounds complicated. Let’s break it down. The CSRD (Corporate Sustainability Reporting Directive) is a new reporting rule for companies in the EU. It basically requires them to report in detail on environmental, social, and governance (ESG) topics. Then there’s the double materiality assessment (DMA) which is the foundation of CSRD reporting. This is the process companies use to determine which ESG topics are most important for them. And they need to do that from two angles: 1) Impact — ESG topics on which the company has an impact, and 2) Financial risks & opportunities — what risks and opportunities the company faces because of ESG developments. These results help companies decide what they need to report.
And how did you become an expert?
I’ve worked for 10 years at a Big 4 company, where I was mainly involved in auditing and reviewing sustainability information in reports. While checking the information I also had interesting discussions with companies on how they could improve on ESG.
At The Terrace, I’ve learned how to simplify the complex, which is a critical skill when it comes to CSRD. It’s a relatively new directive and can be quite complicated. I love helping companies figure out what it means for them. It’s so important for a company to tell a clear, honest story about their ESG efforts and results. To do that, they need to focus on the most material topics—the ones that matter most to them or have the biggest impact.
Why should companies have a strong focus in their approach when it comes to a sustainable strategy?
Prioritisation! I’ve noticed that many companies do a great job picking the right ESG topics to focus on, but then they kind of stop there. That first step is really important, but it’s just the beginning. The next step is figuring out and narrowing down the actual risks and opportunities around those topics, and aligning them with how the company operates. When they do that, implementing the CSRD becomes a lot easier and makes more sense. Prioritising the right areas not only makes the whole process simpler but also ensures companies are focusing on what’s really matters.
What challenges or questions do companies have and how can we help them?
A lot of the companies we work with either don’t have an ESG strategy yet or haven’t started reporting on their actual results. One of the most common questions we get is how the DMA links to their company’s strategy and, later, to their reporting. Companies want to make sure they’re compliant, but they also want to have enough time to actually work on their ESG initiatives.
People sometimes refer to CSRD as a ‘paper tiger,’ and for the first year or two, that’s going to be somewhat true. But CSRD also helps companies prioritise and gives them a structure to follow. This means they’ll need to spend time gathering data, reviewing processes, and making updates. That’s where we come in. With the help of workshops, e-learnings or internal ESG campaigns we support our clients in translating the complex ESG terminology to company language. Our goal is to make sure their employees and stakeholders—like suppliers and investors— don’t only get what ESG means for the business but also feel inspired to act.
Can you make the CSRD journey a smooth and maybe even more fun process to experience?
We certainly can take over the ‘boring’ pre-work, explain things in an understandable way, and inspire companies to invest more in “doing good”. My team and I make sure we get to know the client, their industry, and their value chain inside and out. We do desk research, identify the impacts, risks, and opportunities, and then run interactive workshops to help companies nail down those definitions even more.
Now, let’s be real—making the CSRD process fun might be a bit of a stretch. Collecting and verifying data is not going to be everyone’s favourite task. But we can definitely take the hassle out of it. We’ll handle the complex and boring stuff and explain it in a way that makes sense to you, so companies can focus on making a positive impact. In the end, a lot of companies and their employees care about reporting on the good they’re doing and building a more sustainable future. At The Terrace, we’re here to support them every step of the way and help them reach those goals.
