Are companies prepared for the new sustainability regulations?

From January 1, 2025 will come into force new European directive on Corporate Sustainability Information (CSRD). And, are companies prepared for these new requirements?

The answer is not easy due to the variety of the business fabric. However, in general terms, there is an igrowing interest in Spanish companies in relation to sustainability. In fact, many of them are adopting a series of measures in order to reduce their carbon footprint, improve working conditions and promote ethical business practices.

However, the situation changes from one company to another if the new requirements for information on sustainability are taken into account, as stated in the study ‘Are companies prepared for the new requirements and information on sustainability?’, presented in Zaragoza by the Spanish Institute of Analysts and the Ibercaja Chair of Sustainable Finance.

The report, prepared by Marta Olavarría and edited by the Foundation of the Spanish Institute of Analysts and sponsored by Workday, reflects that There are companies that are at the forefront of disseminating information on sustainability.. These are cases in which they comply with existing legal requirements and also publish sustainability reports with a wide range of ESG indicators.

On the contrary, there are still companies that face this challenge in part because they do not have the necessary internal resources to collect, analyze and disseminate relevant sustainability information. Added to this factor is the lack of unified standards, which has made comparison between companies and an evaluation of sustainable performance difficult.

“It is essential that the companies recognize the strategic importance of sustainability“, states Marta Olavarría, author of the study. In this way, appropriate measures can be taken to “improve their capacity for disclosure in this matter, so that they respond to the demands of their interest groups, better manage their risks and generate value at the same time”.

“Companies are working intensely on the analysis and implementation of new developments in sustainability information,” adds Cristina Rabal, from the SAMCA Group, who highlighted the importance of this work, especially in a diversified group.

Guadalupe del Buey, director of HR, ORP and sustainability at Certest Biotec, spoke along the same lines. Precisely, this company is adopting sustainability as an environmental commitment and as an opportunity to strengthen the trust of its international partners.

During the event, Miriam Fernández, member of the Chair of Sustainable Finance at Ibercaja and head of Thematic Investment at Ibercaja Gestión, pointed out that “investors must be able to integrate a variety of indicators, increasingly specific, in the managed portfolios.” “.

A premise that Víctor Carbó of Ibercaja has delved into by stating that the financial sector plays a crucial role in being a transmission belt for monetary flows and indicating that it must support companies in their transition towards more sustainable practices.

The key points

And how can a company prepare? According to the report, there are 7 key points when applying CSRD. They are also valid guidelines regardless of the sector of activity and the size of the company that allow companies to implement CSRD. These are the 7 points:

1. CSRD is a management toolsince it involves redesigning the governance structure of companies, reviewing their strategy and business model, as well as their processes and policies.
2. CSRD represents a greater connection between the financial area and the sustainability area. This entails a great effort of internal coordination, but also a great opportunity for cohesion between both financial and non-financial matters.
3. Company Comparability with the companies in its sector taking into account the indicators included in the ESRS from the beginning is premature. According to the study, it will take time for the state of sustainability to acquire a certain maturity and technical quality.
4. He reporting process It collects more than 1,100 data points, but it must be taken into account that CSRD is based on the principle of materiality. This greatly reduces the scope of reporting, since it is limited to those that are considered material for the company. An important aspect is that the information to be reported with this new directive is not so different from what has been reported under NFRD.
5. Some terms and concepts are incorporated basics such as double materiality or IROs (impacts, risks and opportunities). Once they are understood, they become key tools for preparing the report. It is therefore necessary to dedicate an initial effort to understanding these concepts to prepare reporting in a more efficient way.
6. We must not forget that the sustainability statement is prepared to be used by third partieswhether they are users or interested parties of the company. In addition to the quantitative part of the report based on metrics, there is a qualitative narrative or story part through which the company explains what its business model is.
7. It is required to have and report on a climate transition plan in which the company’s decarbonization objectives and the exposure of its assets to physical and transition risks are specified. The transition plan becomes a tool for the accounting valuation of assets, in addition to making it easier for report users to understand the company’s goals and measure their progress.

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