Global Financial Service Provider Prepares for New Sustainability Reporting Mandates

For companies operating in the European Union (EU), the Corporate Sustainability Reporting Directive (CSRD) requires those businesses to report on the environmental and social impact of their activities as well as how their environmental, social, and governance (ESG) actions affect their business. Companies subject to the CSRD will have to report according to the European Sustainability Reporting Standards (ESRS), with the new rules applying for the first time in the 2024 financial year, to reports published in 2025. This company, a European stock exchange operator and financial market infrastructure provider, falls in scope of this new regulation and wanted to ensure it would be ready within the required timeframe, while also taking into consideration possible further ESG requirements that may impact the management report.

Building a solid foundation

Working closely with the organization’s Finance Governance and Controls Director, we set out to develop a foundation that would prepare the organization for this first report but would also put it on a solid path to stay ahead of possible future regulatory changes.

The CSRD required the organization to perform a double materiality assessment to identify and assess material topics and related relevant data points. We supported that assessment, which covered a broad range of topics, from climate, biodiversity, and further environmental topics to social and governance topics. To manage these data points and ensure an accurate, comprehensive and timely report, we brought together different departments within the organization to clearly define roles and responsibilities. We helped establish the basis for consistent CSRD program management across different business units and legal entities and provided project management support for coordinating the various stakeholders that needed to provide input for CSRD.

We also:

• Performed a CSRD- compliant double materiality assessment, which included:
  • Identifying a stakeholder representative
  • Conducting impact and financial workshops to identify and assess material topics relevant for the organization
  • Defining materiality thresholds
  • Summarizing the results and presenting a list of material impacts, risks and opportunities and related material topics
     
• Performed a detailed gap analysis and definition of work packages based on the list of identified gaps, including:
  • Assignment of responsibilities to the material topics
  • Preparation of the relevant and material CSRD/ESRS requirements for the responsible departments
  • Developed work packages to close identified gaps (e.g., reporting basics, Internal Control System (ICS))
     
• Analyzed tool requirements for supporting the required CSRD disclosure activities and further ESG requirements, including:
  • Pre-selection of possible tooling vendors
  • Development of a requirements catalogue

A note about the EU’s digital taxonomy: this classification system defines what economic activities can be considered sustainable and is an important part of the EU’s regulatory approach to achieving its sustainability goals. For the CSRD, this taxonomy helps standardize and enhance the transparency of sustainability reports, providing clear guidelines about what constitutes sustainable activities. Both the foundation developed for the CSRD and the further ESG requirements we incorporated into this project were done with the EU taxonomy in mind.

Ready for reporting

As a result of our work over a 10-month period, this client is now well-prepared to file a comprehensive CSRD- and ESRS-compliant management report for the 2024 fiscal year. The organization now has a common understanding of what is required for CSRD program management, along with well-defined responsibilities and accountabilities across the firm.

Together, we laid the foundation for achieving the project goal of creating sustainability reporting that is compliant with CSRD/ESRS as a first step, while at the same time enabling the client to adapt to the increasing legal requirements of the future.