CSRD in practice: the lessons we learned

Although PwC is legally required to implement the Corporate Sustainability Reporting Directive in its annual report in two years, it has chosen to do so earlier.

What is this decision based on?

Wineke Ploos van Amstel, responsible for strategy and implementation of sustainability goals at PwC, explains: "When we knew that the CSRD was coming, it quickly became clear to us that we wanted to start earlier than required. Firstly, sustainability is an important pillar of our strategy. As we aim to be a leader in sustainability, we follow the motto: practice what you preach. Secondly, the outcomes in terms of sustainability and the implementation process provide valuable insights into our sustainability goals and the transformation that comes with it. By starting the implementation in a timely manner, we gain earlier insight into possible gaps, allowing us to improve more quickly."

Alexander Spek, as the sustainability lead at PwC the Netherlands, focuses on reporting and assurance, where he helps clients translate their sustainability strategy into non-financial objectives and reporting frameworks, such as the CSRD. He explains that the decision to start implementing now is also made from a market perspective.

"When we offer this service in the market, we should have gone through the experience ourselves and be a serious conversation partner. This also means that we can share our own experiences and dilemmas with clients. It also gives us the opportunity to test things and see what works or doesn't work in practice."

Ploos van Amstel: "A fourth reason is the additional opportunity for upskilling. The CSRD is new to everyone, so this was a perfect chance to upskill ourselves and our colleagues in the new requirements and expectations. This allowed us to exchange knowledge both internally and externally. By that, I mean gaining experience with the specific laws and regulations of the CSRD. This was also a fairly new field for us two years ago, so it offered us an excellent opportunity to build knowledge and experience, both within our own organization and with external parties."

What are the key lessons learned?

Ploos van Amstel: "We have identified several key lessons learned from this implementation process. The most important advice - to ourselves and our clients - is to start early. Do not underestimate the implementation of the CSRD. It is a comprehensive process that impacts not only the sustainability or financial department but also various other departments within the organization. It requires a lot of new information to be explained in areas such as strategy, policies, or objectives. This requires alignment between different stakeholders and disciplines. Starting early gives you enough time to get everything in order before the obligations actually come into effect."

The second lesson learned is: involve both your external and internal stakeholders at an early stage, especially to determine the right impact, risks, and opportunities. This process, in which you determine which sustainability topics are most applicable to your organization, also known as double materiality, requires input from multiple internal stakeholders to gain a good understanding of the impact, risks, and opportunities that are relevant to the organization.

Which specific internal departments did you involve in the process?  

Ploos van Amstel: "The most important stakeholder is undoubtedly the management, especially the CFO. Ultimately, the goal is to weigh and integrate non-financial information in the same way as financial information. In addition, the commercial department, the business, where our biggest impact lies in our case, is an important stakeholder. We have the largest impact downstream on the climate and people through our services."

"The strategy, corporate sustainability, and finance departments are the core of the project team. In addition, over the past year, we have worked extensively with our legal, HR, risk, and quality teams, as well as specific ESG experts within PwC. Finally, external stakeholders are also very relevant, as they bring important outside-in perspectives; what matters to stakeholders and society as a whole, and what do we do with that?"

Is this an approach that you also see with other clients?  

Spek: "That varies per client. In some organizations, the responsibility lies with the sustainability department. But in most cases, we see that the finance department is the driving force, in close collaboration with the sustainability department and many others. It can also vary depending on the phase of implementation. With double materiality, I see a role for risk management, while internal audit and IT can later have a role in controls and automation of reporting processes."

What do these new collaborations bring you?  

Ploos van Amstel: "Ultimately, the goal is to fully integrate sustainability. This can only work if other departments are not only involved, but also given responsibilities in the field of sustainability. For example, through department-specific goals for CO2 reduction or diversity goals for all managers. Ultimately, the impact of services, such as marketing and sales, lies with the person responsible for those areas, not with the chief sustainability officer."

"This is not always easy however, as we have experienced ourselves in this process. As you have colleagues from sustainability, finance, HR, risk management, and commerce at the table. They need to collaborate on strategy, reporting, and sustainability. You need all of them to truly integrate, but they don't always speak the same ‘language’. This sometimes led to confusion about what exactly we were talking about or who could do something most effectively. It takes time, but it is essential. A critical look and perhaps a good clean-up of the governance and accountability surrounding sustainability were also consequences of the CSRD process for us."

Can you tell us more about the impact of your services and supply chain responsibility?

Ploos van Amstel: "The CSRD requires a much more explicit disclosure of supply chain responsibility, both upstream and downstream. This also applies to us, of course. However, when it comes to how we influence the climate through services such as tax advice or restructuring advice, there is not always a clear answer. We have had many discussions about this. We are aware of the (potential) impact of our services, but we have not yet made everything measurable or transparent. We are using the "phase in" option, which is a list of reporting requirements that can be phased in gradually. In other words, we are now working hard on developing our vision and action plans within the supply chain."

What would you like to convey to organizations that are starting or already involved in CSRD?

Ploos van Amstel: "I would advise everyone to continue asking themselves the question: in what way does the CSRD process and its outcomes actually add value; to our stakeholders and our organization itself? How do you use this reporting obligation to make a real impact, to work more efficiently, and to better manage risks? For example, when you explain how you approach sustainability strategically, you can indicate how this is currently being implemented. But you can also critically ask yourself: to what extent do the material topics actually influence our investment choices? Are the material topics truly fully integrated into your corporate strategy?"

"Or take the climate topic, for example. One of our new material topics is 'trusted and sustainable service delivery'. This immediately raised questions with us, such as: what does this new topic mean tp our organization concretely? What is going to change? Who takes responsibility? If it is a material topic, it is not just about your impact on the outside world, but also about the risks and opportunities of that topic for your business operations. The real opportunities lie in handling this correctly. Through the CSRD process at PwC, more colleagues are now involved in parts of our sustainability agenda. By integrating the responsibility for sustainability topics, we are making real progress. And personally, that makes me very happy!"

Spek: "PwC hopes this report will inspire and help other organisations in their implementation of the CSRD. Ultimately, we are collectively responsible for creating the transparency needed for a more sustainable world."