A recent PwC survey has uncovered that less than half of companies required to comply with the EU’s Corporate Sustainability Reporting Directive (CSRD) by 2024 are “fully confident” in their readiness. This revelation comes as most respondents acknowledge the material impact of CSRD compliance on business areas such as access to financing, employee retention, and company valuation.

Michael Horvath, Advisory Partner and Sustainability Leader at PwC Luxembourg, highlighted the directive’s significance:

“The CSRD is the cornerstone enabling Europe to deliver on the European Green Deal, elevating sustainability reporting over time to the same level of importance and rigour as financial reporting. It puts sustainability at the core of companies’ business models and operations, prompting them to integrate it into their strategic decision-making processes.”

The CSRD, which expands reporting obligations to over 50,000 companies from the previous 12,000 under the Non-Financial Reporting Directive (NFRD), introduces detailed requirements on environmental, social, and governance impacts. Compliance deadlines begin in 2024 for large companies, extending to smaller firms and non-EU entities by 2029.

The survey found that only 4% of companies required to report in 2024 are fully prepared, while 5% have not started implementation. Additionally, just 42% of companies required to report next year feel “fully confident” in their ability to meet the requirements, with confidence dropping to 14% for companies due to report in 2025.

The study also highlighted significant challenges. Companies reporting in 2024 expressed concerns about data quality and consistency, with 55% identifying these as critical issues. Meanwhile, smaller companies reporting in 2025 were more likely to cite resource constraints, with 54% indicating this as a concern.

Olivier Carré, Deputy Managing Partner and Technology & Transformation Leader at PwC Luxembourg, pointed to the importance of leveraging technology:

“The successful implementation of CSRD hinges on leveraging advanced technology solutions that can efficiently manage and integrate vast amounts of sustainability data. While challenges in maintaining data quality and consistency are anticipated, the demands for accurate, real-time ESG reporting present an opportunity for growth. Companies must invest in robust data management and reporting systems to overcome these hurdles.”

The survey found that over 90% of companies have implemented or plan to implement technology solutions for CSRD compliance. However, only 36% of 2024-reporting companies currently have non-financial reporting technology in place. Similarly, all respondents indicated they are either developing or have implemented staff training programs to meet CSRD requirements, with many allocating between three and ten full-time employees to sustainability reporting.

Despite the challenges, most companies recognize the strategic importance of CSRD compliance. Over 85% of respondents stated that sustainability data from CSRD will be used as a material KPI for determining executive compensation.

As the CSRD takes effect, companies face both challenges and opportunities. Investments in technology, training, and human resources will be critical to navigating these new sustainability reporting demands effectively.