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When it comes to sustainability, clarity and actionable insights are key. Yet, despite growing awareness and the undeniable importance of sustainability, many companies have been hesitant in their reporting efforts. This reluctance has been brought to the forefront by the recent delay in the EU’s Corporate Sustainability Reporting Directive (CSRD) standards. But beyond regulatory delays, what drives this hesitancy, and how can companies overcome it to lead the charge in sustainability?
We sat down with Andrew De Rozario, previous Sustainability Director EMEA at Microsoft, to find out more.
Extended Deadlines
The EU’s flagship sustainability reporting initiative, the Corporate Sustainability Reporting Directive (CSRD), is meant to be a game-changer for how companies operating in the EU report on sustainability. It expands the existing Non-Financial Reporting Directive (NFRD) to require more detailed and standardised disclosures on environmental, social, and governance (ESG) factors. By setting higher standards for non-financial reporting, the CSRD aims to push businesses toward more responsible and sustainable practices, ensuring they can meet the demands of a rapidly evolving regulatory landscape.
Recently, the EU extended the deadline for sector-specific CSRD standards and reporting for non-EU companies by two years, now set for June 2026. This extension affects guidelines for industries like oil and gas and mining, but does not delay the overall CSRD implementation. The aim of the delay is to ease the reporting burden and to allow companies more time to focus on initial, broader ESG disclosures. And yet, it seems to have only added to an existing tide of companies slowly pulling back on their sustainability commitments. So why are companies cooling down on cooling the climate?
Formidable Complexity
Sustainability reporting can be daunting. The complexity of tracking emissions, especially Scope 3 emissions that account for the majority of a company’s carbon footprint, often leads to delays and second-guessing. Supply chain intricacies, disparate data sources, and the need for rigorous traceability make the process both resource-intensive and overwhelming.
The ever-changing landscape of regulations, such as the CSRD, adds another layer of complexity. Globally, systems are converging towards the development of a global standard, one that has the same robustness that we currently see in Finance. But that is going to take time. And until then, companies are still facing increased scrutiny from the public on any data they do put forward. While the recent delay only affects sector-specific disclosures and non-EU companies, it also highlights a broader issue: companies often struggle to keep pace with the rapid changes in sustainability requirements.
Staying on Track
Large corporations, like Microsoft, play a crucial role in shaping the sustainability landscape – especially with sustainability and technology becoming increasingly intertwined. Despite delays in regulation, companies must remain committed to their sustainability goals and take the lead, showing independent drive, commitment, and leadership. Not only is this a future-oriented approach to operations, but hesitation in reporting can be seen as demonstrating a lack of both transparency and accountability, which can damage reputation and stakeholder trust. To stay ahead of the curve, companies cannot let the current hesitancy compromise their existing sustainability commitments, and the opportunity to gain competitive advantage.
“Achieving Net Zero is all about the actions that we take to reduce our carbon footprints. The data collection and reporting may feel a bit like getting on a scale – it tells us that we are overweight but doesn’t actually do anything to reduce it. What is clear though is that without that measurement, we can’t tell if we are making progress, or reward organisations that are actually going on ‘a carbon diet’. This is one reason why a good understanding of current carbon footprint and data-driven decisions are so important.”
Andrew shares a few key ways companies can ensure they stay committed to their sustainability objectives:
Implement Internal Carbon Taxes: Andrew suggests that implementing internal carbon taxes can align financial and environmental goals. “By taxing business units based on their emissions, companies can drive reductions and accountability at a more granular level,” he explains.
Invest in Robust Data Management: According to Andrew, investing in a central data platform is crucial. “Creating a central data platform ensures traceability and auditability, helping companies prepare for future regulatory requirements and improve report accuracy. This way, when regulation comes, the company will be ready to tackle it head-on.”
Engage Employees: Andrew emphasises the importance of employee engagement in achieving sustainability goals. “Training programs and sustainability awareness initiatives empower employees to actively contribute to the company’s sustainability efforts. Engaged employees are a driving force behind meaningful change.”
Future-proofing: The delay in regulatory deadlines, offers companies an opportunity to truly embed sustainability in their operations prior to the added scrutiny of regulations. They can harness the opportunities available through innovating and customising business processes to enhance energy efficiency and reduce emissions. Companies can incentivise employees and stakeholders alike to develop sustainable habits without the pressures of compliance through measures such as including sustainability in their KPIs.
This is a chance for companies to refine their sustainability strategies. By improving data accuracy and developing robust reporting practices during this period, companies can strengthen their overall sustainability framework in advance of regulations. This would allow companies to come out swinging when new regulation hits.
The Next Steps
The sustainability reporting landscape is expected to evolve significantly by 2026, when new standards are fully implemented. Advancements in technology, such as enhanced data analytics and reporting tools, will play a critical role in shaping this evolution. During periods of regulatory delay, clear and consistent communication with stakeholders is vital. Companies should transparently share their sustainability efforts, progress, and challenges.
For companies just beginning their sustainability reporting journey, Andrew recommends starting from a foundation of data management and then building on that through aligning the company’s core values with its sustainability plan and engaging employees every step of the way. That is the only way to build a lasting culture of sustainability and ensure long-term success for the company.
TripShift’s Approach
At TripShift, we empower companies with data-driven solutions to overcome some of these challenges. Here’s how we do it:
Data-Driven Decision Making: Numbers translate complex situations into actionable insights. By providing precise data on emissions, we transform the abstract concept of sustainability into clear, quantifiable targets. Our users can see the specific impact of their choices, motivating them to opt for lower carbon alternatives and track their progress, which encourages accountability and continuous improvement.
Real-time Updates and Seamless Integration: We ensure our database is refreshed every two hours, providing users with the most accurate and reliable information. Our platform integrates seamlessly with existing systems, allowing data to flow effortlessly and enabling a streamlined experience.
Customisable Features: With personalisable features, the TripShift platform allows users to register specific vehicles, such as electric cars or bicycles. This customisation ensures tailored recommendations based on individual preferences and modes of transportation.
Looking Ahead
While the delay in sustainability reporting regulations presents challenges, it also offers companies an opportunity to strengthen their sustainability practices. By staying committed to their goals and leveraging this time to refine their strategies, companies can prepare for future reporting standards and continue making meaningful progress toward a sustainable future.
Hesitation is understandable, but action is imperative. Now is the time to lead the charge.
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