Simona Romanoschi 0:11
Hello and welcome to the 10th podcast in our series of podcasts dedicated to the EU Corporate Sustainability Reporting Directive, CSRD.
I am Simona Romanoschi VP of Innovation at Intertek Business Assurance and I am joined today by Sonia Zugel, CEO & Founder of ESG Playbook - a leading SaaS reporting and solution provider bringing in one tool all required data collection, aggregation, and tracking and reporting for ESG.
ESG Playbook was launched four years ago. Sonia is the CEO and Founder and her background prior was investor relations and accounting. ESG Playbook is the leading platform in terms of comprehensiveness currently in the market with over 10 reporting modules. Intertek has partnered with ESG Playbook to offer our clients a one-stop solution for all ESG reporting.
Today we would like to discuss about the challenges that reporting companies are faced with in gathering the required data covering E S and G and preparing their first CSRD report submission according to ESRS (European Sustainability Reporting Standards) , which as we know for some organizations will happen as soon as 2025.
Q: So, Sonia, thank you so much for joining us today. First how is the CSRD regulation different from the other voluntary frameworks currently being used such as GRI, SASB & TCFD?
A: Sonia Zugel 1:39
Thank you for the opportunity Simona. Happy to be here.
To answer your question, The CSRD is a complex regulation to report on. It has over 1178 metrics of which only 174 are voluntary. This is way more than any other framework currently available.
The CSRD differs from the other frameworks in that it is a mandatory regulation to report on with fines for non-compliance. In addition, it is the only regulation currently to stipulate double materiality and requires huge detail on a company’s policies, targets and transition plans per KPI.
Lastly it requires limited assurance for the first two years, and within two years, reasonable assurance. Basically it treats sustainability reporting like a financial statement.
Simona Romanoschi 2:19
Q: A key differentiation in CSRD is the double materiality process which is required to help inform and guide the organizations on the material topics and key risks and opportunities that need to be addressed. How is this addressed in your platform, and can you share your perspective on how companies can best comply with this principle?
A: Sonia Zugel 2:42
With the CSRD it will be the first time companies report on double materiality. For those who do not understand, double materiality looks at how financial information disclosed by a company can be material both in terms of its implications for the company's financial value, as well as the company's impact on the world.
The first step in CSRD reporting is to identify your material topics for both impact and financial materiality. ESG Playbook has scraped the top 2,000 public companies for two years on GRI and SASB. GRI identifies impact materiality and SASB identifies financial materiality. We have mapped all the companies to the 77 industries of SASB and we have given an adoption rating to each industry on each topic. This tool helps each industry pick the topics that are most material to their industry as a starting point. These topics then flow through to the double materiality assessment to be scored and to identify potential impact, risks and opportunities. Once the materiality topics have been identified, they flow through to the report builders so you can report on those topics.
Simona Romanoschi 3:54
Q: So we know the ESRS standards are quite detailed and require both quantitative and qualitative information to be disclosed and there are many KPIs to consider so it can be a daunting task to navigate the disclosure requirements, and as a company to navigate the maze of where or which business functions have the relevant data, collate it in the right format (which also needs to be auditable ready for future assurance needs), analyze it and report it ready for publication.
Can you tell us a bit about your solution and tools and how it is supporting companies on their CSRD journey?
A: Sonia Zugel 4:34
ESG Playbook breaks down each step into digestible pieces. We have the double materiality module which we have already discussed, we have the report builder, to report on the regulation and we also have the carbon reporter and supply chain reporter to understand and aggregate all of scope 1 2 & 3.
To help with reporting, ESG Playbook has done a master mapping of GRI, SASB and TCFD to CSRD. This allows you to pick a topic and get the guidance on all the frameworks for that topic. The platform also tracks policies, targets and transition plans and gives you a gap analysis on what's missing.
ESG Playbook has a library of worksheets to help you report. There is a built in audit trails which tracks every action and allows the report to be audit ready.
As you mentioned Simona, Assurance is a requirement for CSRD reporting. The report builder also has project management to track who did what and when. So, when you go back to the next year to report, you know who to go too for that piece of information. The report builder is a great tool for all teams to work together.
It is impossible to report on the CSRD with spreadsheets.
Simona Romanoschi 5:28
Q: Let’s talk about the expectation of reporting GHG scope 1-3 across value chain. We all agree no matter the size of company it is a challenge not only to collect and analyze the data, engage the supply chain, but to also understand the footprint of your organization and find suitable strategies to lower emissions. Can you share how ESG Playbook addresses this?
A: Sonia Zugel 5:53
Scope 3 reporting is definitely a challenge. I believe most companies now understand that the majority of their carbon footprint is in their supply chain.
The difficulty starts with that most suppliers have not yet done a carbon footprint and do not understand the complexities of carbon reporting. Carbon reporting is tricky. There are a lot of exceptions to understand. ESG Playbook has a supplier module which allows suppliers to report on their carbon report if they do not have a carbon report. The aggregated scope 3 is adjusted by the supplier as a percentage of purchases. We track not only their scope 3 emissions but also their net zero goals as well as year over year to see if any of the suppliers are reducing their carbon footprint. The supply chain module also has a built in knowledge hub and videos to help the suppliers report.
However, our thoughts are it is better to run workshops with a company like Intertek who have a vast understanding of the supply chain to alleviate the lack of knowledge, help suppliers report in a consistent manner and improve performance in various E S G topics. By the way, our supply chain module is not just a carbon reporter for the supply chain, it also deals with due diligence, auditing and understanding the risks in the supply chain. Doing workshops to educate the suppliers will help to alleviate the lack of knowledge and help suppliers report in a consistent manner. As an FYI, our supply chain module is not just a carbon reporter for the supply chain, it also deals with due diligence, auditing and understanding the risks in the supply chain.
Simona Romanoschi 7:13
Q: Can you share how companies are preparing for their first reporting period, any insights, or best practices you have seen?
A: Sonia Zugel 7:23
Absolutely. The CSRD is a complex regulation as I mentioned previously. I believe reporting companies underestimate the amount of work and the time needed to complete both the double materiality assessment and the CSRD report. We are seeing shadow reporting already starting even before the CSRD regulation has been finalized. The CSRD regulation is due to been finalized in late December. Performing the double materiality could take up to 3-6 months. Then doing a gap analysis of policies and targets needed is a lengthy process. Starting sooner is definitely an advantage. The industry leaders have already started preparing.
Simona Romanoschi 8:00
Q: So, I was wondering, regarding companies that already report under other frameworks, like GRI for example, it is great news that GRI and EFRAG have published a joint statement on the high level of interoperability achieved between the European Sustainability Reporting Standards (ESRS) and the GRI Standards. How is ESG Playbook supporting the reporting organizations that choose multiple frameworks?
A: Sonia Zuge 8:3
Companies that are already reporting on SASB and GRI definitely have a good start as both of those frameworks are interoperable with the CSRD. Our report builder has all the frameworks on the report builder. You can mix and match frameworks to create your own specific framework. In addition, we have a master mapping of both GRI and SASB to the CSRD. So if you are already reporting under both of those frameworks we can show you the corresponding topics in the CSRD. Our report builder allows you to report on multiple frameworks at the same time. This saves a huge amount of time
Simona Romanoschi 8:56
Q: I know we focused on CSRD today but do you want to touch upon other regulations and frameworks that can support companies in different sectors and industries with communicating effectively and quantifying progress and achievements on various ESG topics
A: Sonia Zuge 9.12
Of course. There are not a lot of sector specific frameworks currently live. GRI has limited sector guidance. The CSRD has put off sector guidance for at least two years. The only framework currently available for sector guidance is the ISSB framework which has industry specific guidance. The new ISSB is a combination of SASB and TCFD. It goes live in January 2024.
The ISSB framework is being widely adopted worldwide. Modern Slavery and due diligence in the supply chain has also been a focus for regulations globally. Lastly scope 3 emissions including suppliers' emissions is becoming a requirement. ESG reporting is no longer nice to have but important to understand the risks and opportunities for each company. Companies that understand the importance of being resilient will be industry leaders.
Simona Romanoschi 10.03
Thank you very much Sonia for your insights into the CSRD reporting.
As a reminder on how Intertek can help with CSRD. So, there are 4 ways:
• To understand your current CSRD readiness, we can help you to undertake a gap analysis to ensure you have a clear view of your organization's current readiness and will work with you to define clear action plans to address any gaps to prepare you for your first submission.
• Through training to ensure everyone understands what is required to prepare for your submission. This can be delivered to a range of different teams and functions across your organization and will be bespoke to best fit your requirements.
• We can also provide auditing solutions - In some markets we will also be able to act as the auditor of your CSR Directive reports, as one single provider supporting you from your early preparations through to audit of submission.
• And finally, we have also partnered with ESG Playbook as you have heard today, a leading SaaS reporting and solution provider bringing in one tool all required data collection, aggregation, and tracking and reporting for ESG.
For more information visit www.intertek.com/assurance/eu-csrd
So, this concludes today’s podcast.
Thank you for listening, watch out for further CSRD episodes to help with your journey to compliance.
