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From Tick the box to Kick the box: Embracing the Potential of CSRD Compliance

By Impact Institute

This article is part of our new Impact Expert Series, where we speak with the world’s leading experts in impact measurement and management – offering solutions to pressing societal, environmental and impact-related challenges.

Understanding CSRD and its importance

For the first time in history, the Corporate Sustainability Reporting Directive (CSRD) requires companies to become transparent on their impact on the environment and society. The directive came into force on January 5th, 2023, and mandates that all large and listed companies in the EU report uniformly on their environmental, social and governance impacts, along with associated risks and opportunities. This leads to transparency and allows for comparison of company performance, accountability and aims to nudge companies to improve their impact on these topics. Impact Institute has been advocating for including environmental and social impact on balance sheets for over a decade.

Dr Reinier de Adelhart Toorop, with publications in prestigious outlets like Nature Food, is a pioneer in this work. At Impact Institute he is mostly involved in impact projects with innovative components. After completing his PhD in physics, he worked at a big strategy consulting firm for 3 years. Then he decided to move his career into impact: “One of the key ideas that convinced me to join True Price (Impact Institute is a spin-off of True Price) in 2015, is that human rights and environmental impacts are seen as two sides of the same coin. Without protecting the environment, we cannot secure human rights. The CSRD takes the same assumption.”

Addressing the initial challenges

Listed companies and large public interest companies prepare to report on their 2024 financial year. The biggest group of companies will have to report a year after, reporting in 2026 over the 2025 financial year. The three primary concerns companies express during De Adelhart Toorop’s training at the CSRD Academyare the workload of CSRD, the clarity of reporting standards and data collection.  “They face significant challenges in data collection and data interpretation”, says De Adelhart Toorop.

“The directive requires companies to report on up to 1144 data points, partly quantitative, partly qualitative. For example, one data point asks to explain a company’s investment budget that will help them reach their sustainability targets.”

Before starting to gather data, De Adelhart Toorop advises starting with learning CSRD basics and with a double materiality assessment (DMA) – both part of the curriculum at CSRD Academy. Double materiality looks at the environmental and social impact on an organisation’s financial performance, as well as at an organisation’s operational activities on the environment and society. A DMA helps companies to identify key data collection areas early on. It shows which sustainability topics are most material to the organisation and its stakeholders and subsequently on which topics data should be collected.

Extensive data reporting into a standardised digital format, required by CSRD, fosters transparency and allows for comparisons on social and environmental topics across industries and companies. This enables all stakeholders to gain valuable insights, driving accountability and encouraging competition on sustainability metrics. For instance, a journalist will be able to compare CO2 emissions data from major oil companies like Shell and BP which allows them to check the sustainability claims these companies make and compare them to each other.

From niche to mainstream

For Reinier and his colleagues at Impact Institute, the directive signifies a shift from niche to mainstream. “We believe that companies can have a positive impact on the world,” he says, reflecting on nearly a decade of work in this field.

“I started measuring impact at Impact Institute 9 years ago, when this work was still a niche. We were seen as idealists, operating far outside of mainstream business. With the coming of CSRD our work and thinking moved right in the middle of nowadays mainstream business.”

In addition, CSRD aligns with Impact Institute’s rights-based approach, treating an array of impact drivers, such as environmental issues and human rights issues with equal importance.

Educating for compliance and beyond

Since its inception a couple of years ago, Impact Institutes’ CSRD Academy has been at the forefront of educating professionals on CSRD compliance. The Academy wants to empower companies and professionals to transform and enable them to comply with the CSRD and addresses challenges. By fostering a culture of possibility and change, the CSRD Academy ensures that organisations extract maximum value from their compliance efforts.

“We had been doing impact measurement and management for over a decade, so educating others and sharing our knowledge seemed like a logical next step”, explains De Adelhart Toorop. The Academy offers various opportunities to learn: “CSRD IN ONE DAY”, an extensive CRSD e-learning program, a Double Materiality Assessment (DMA) e-learning course, and more.

The courses provide a comprehensive overview, highlighting both the challenges and opportunities and cater to a diverse audience, from a small to medium enterprise such as an organic food retailer to a large transportation company, equipping them with the knowledge and tools to start their CSRD journey effectively. Participants leave with a solid understanding and practical templates, such as topic lists and project management frameworks, to streamline their reporting process.

De Adelhart Toorop: “We prepare professionals to tackle the directive with confidence. We first explain them how the bicycle is built, then put them on the bicycle, but eventually they have to cycle themselves.”

About the Expert

Dr Reinier de Adelhart Toorop is Head Researcher at Impact Institute where he leads the development of new impact methodology. He is also Lead Instructor of the CSRD Academy and Lecturer Sustainable Finance at Rotterdam School of Management. Reinier is proud to have published a review article on True Cost Accounting in Nature Food. Previously he was Research Associate at Roland Berger Strategy Consultants. Reinier holds a PhD in Theoretical Particle Physics from Leiden University. He was a world champion in debating (English-as-a-second-language) and a silver medalist at the International Biology Olympiad.

What does CSRD mean? The acronym explained

Corporate: Listed companies and large public interest companies that will have to start reporting on CSRD a simple solution to a complicated problem: from January 1st, 2024, which are companies that are already subject to the Non-Financial Reporting Directive (NFRD). From January 1st, 2025, the large companies that were not yet subject to the NFRD, will also have to start to report on CSRD. And from January 1st, 2026, the legislation will start to apply to listed SMEs, and small and non-complex credit institutions and insurance companies.
Sustainability: CSRD addresses sustainability in the broadest sense. It includes environmental, social and governmental topics. Environmental topics are widely accepted, CSRD is groundbreaking on social topics and human rights.
Reporting: CSRD requires companies to be transparent by reporting on the same topics in the same way. This helps investors, consumers and even journalists to see which companies are frontrunners in sustainability. This brings two incentives: business that are frontrunners will become more visible and attractive to investors, clients, and talent. Business that are not regarded top performers will have an incentive to do better. This way reporting becomes a path to real change.
Directive: It is an EU directive. This means EU member states must incorporate CSRD in their national laws. CSRD fits in the bigger picture of ‘fit for 55’, the goal of the EU to emit 55 less CO2 emissions by 2030. This is a very ambitious goal that cannot be reached by a ‘silver bullet’. It includes the EU’s energy policy (more renewables), transportation policy (more electric), but also requires indirect levers like the CSRD’s transformation through transparency.

The learnings into practice

The knowledge gained from these courses is already making an impact. For example, a participant from a major bank started a CSRD team of 80 people who were also enrolled in Impact Institute’s course afterwards. The entire team now works on reporting with the knowledge and tools gained through the CSRD Academy as a starting point.

Similarly, a professional from a recycling company, though not directly obliged to comply with CSRD, is leveraging his training to enhance his services. After following the CSRD course with CSRD Academy he turned his learnings into a business idea. Before the course he only offered his clients recycling services, after the course he decided to also start offering his customers the data that they need for compliance with CSRD.

Embracing CSRD’s promise

De Adelhart Toorop is excited about the future of the directive, but also notifies that impact reporting presents both risks and opportunities.

“A significant risk for making progress on sustainability is that companies potentially will merely focus on “ticking the box”, that they will only do the reporting and do not work with the results. This could lead to superficial compliance without meaningful change. That is not the intention of CRSD, with this Directive the EU wants to create a greener future for all”, says De Adelhart Toorop.

Impact Institute’s mission transcends compliance. “We wish not to use CSRD as a tick-the-box exercise but as a kick-the-box opportunity,” De Adelhart Toorop emphasises. “Therefore we, and many others with us, see CSRD as an opportunity. The opportunity lies in mapping and understanding where your biggest (most material) impacts lie, and then using this data to drive organisational transformation, to ultimately make more positive impact and reduce negative impact.

The journey has just begun

As the first CSRD reports roll out next year, the potential for convergence and standardisation of data points and reports will become apparent. “When the first reports are published, we can start comparing them and see how companies interpreted and reported on the required data points. This will be a very interesting and possibly also lead to adjustments of the directive.”

In other words, the journey from ticking to kicking the box has just begun, and Impact Institute is leading the charge with the methods, products, services, and in house multi-disciplinary expertise on measuring and managing impact for over a decade. De Adelhart Toorop concludes “Impact is in our DNA and with CSRD Academy want to help others getting there too.”

If you would like to start your CRSD journey, you can have a look at CSRD Academy. Try our free CSRD modules or start a course with a reduced summer price today.


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