1.How about remembering the “why” before getting bogged down in the “how” ?
The Corporate Sustainability Reporting Directive (CSRD), effective January 1, 2024, sets new standards and obligations for non-financial reporting. Affected or soon to be affected companies have started the laborious construction of their dual materiality matrix and the frantic search for reporting indicators.
So much energy spent !
But for what purpose? What added value? Is it simply to comply with new regulations for fear of sanctions (exclusion from public contracts, 30,000 € and 2 years in prison for the manager for failing to certify sustainability information, or even 75,000 € and 5 years in prison for obstructing the certification of this information…)?
We think it’s important to bring some sanity back to this approach and help companies embrace it to get the most value out of it.
What meaning ? What value can we expect from it ?
We believe that dual materiality analysis can be an exercise in the service of a company’s strategic vision and sustainable value creation.
By addressing both the risks and opportunities of ESG issues, the company can focus on protecting and developing its value, considering its entire chain, as well as the people and ecosystems that contribute to it.
While this systemic approach may appear dizzying at first glance, it is a powerful lever for identifying areas of risk and new sources of differentiation and growth from competitors.
It also increases value for customers, investors, and employees, whose expectations in this area are constantly rising.
Our advice: seize this tool and turn it into a lever for your company’s strategic transformation !
2.How to be effective ?
EFRAG has defined sustainability reporting standards, the “ESRS” standards. Based on the 3 pillars of CSR, these break down into 12 themes, including 2 cross-cutting, 5 environmental, 4 social and societal and 1 governance. They are themselves broken down into dozens of sub-themes and sub-sub-themes, 82 disclosure requirements and nearly 1,200 data points 😨
Let’s be honest, it’s enough to get lost !
What approach should be implemented to achieve this? What project organization should be deployed? How can we ensure the relevance of the result and avoid starting from scratch every year?
Given the complexity of the exercise, we feel it is essential to bring pragmatism back into the process as quickly as possible, and to ensure that the company takes full advantage of it to anchor it in a continuous improvement loop.
Which steps ? What best practices ?
Structure a taskforce bringing together the main Departments concerned by the approach in order to validate materiality thresholds, lead contributors and define governance.
Start from risk mapping and its simple materiality analysis, both in terms of assessment reference framework and in terms of approach and stakeholder identification.
Map the value chain, the players, their ecosystems and their locations, building on what has already been done on the key issues of GHG emissions, human rights and environmental impacts.
Collect and analyze data, assessments and studies from your own initiatives, and from work carried out by industry players, NGOs and scientists.
Deploy a bottom-up and top-down approach by mobilizing the various BUs, the COMEX, and internal and external stakeholders.
Our advice: prepare the ground as much as possible by adapting the questions to your business and sharing the state of the art widely to raise awareness and help contributors !
3.What happens next? What do we do with the material issues at stake ?
Once the materiality analysis has been carried out, the work has only just begun. Companies will have to structure themselves to report on their key issues and improve their performance year on year.
More reporting !
What practical use can be made of it? What levers should be activated to generate real added value? How can we animate the entire value chain?
We believe it’s essential to align all approaches, functions and key stakeholders to steer according to relevant indicators.
Which projects ? Which tools to deploy ?
For most companies, several initiatives have already been underway for several years, including reducing GHG emissions, fighting corruption, protecting private data, preserving the environment, eco-design initiatives and employee health and safety.
CSRD poses a double challenge: measuring the results of these actions and their deployment across the entire value chain. Companies that have had to implement the duty of care are aware of the difficulty this can represent in a world where value chains are particularly complex and globalized.
To achieve this, it is necessary to :
-Mobilize operational departments: on the one hand, purchasing to deploy actions in line with CS3D and work to achieve a positive impact on the upstream value chain, and on the other, engineering to design eco-designed products and processes that emit less and increase circularity.
-Deploy a reporting tool adapted to manage the complexity generated by these new requirements: to facilitate the collection and consolidation of large volumes of data, heterogeneous in nature, from a variety of internal and external sources, as well as their traceability, historization and automation of indicator production.
Our advice: make operations and support functions accountable and connect them directly to monitoring tools !
KYU advises the CSR, Finance, HR, Legal, Risk Management, Compliance, Internal Audit departments, etc. to help them reposition the CSRD approach at the right level of challenge with their COMEX, and to support them, from analysis to implementation. in reporting and beyond in the concrete animation of the transformations of their operations which will result from it.
