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The Role of Technology in the CSRD Journey

The Impaakt Team

9 min Read Time | October 17th 2024

The Corporate Sustainability Reporting Directive (CSRD) is pushing companies to be more transparent about their environmental, social, and governance (ESG) impacts. But with the growing complexity of reporting requirements, businesses are finding it challenging to keep up. This is where technology plays a vital role.

Impaakt, a leader in impact materiality assessments and stakeholder engagement has developed a SaaS solution that simplifies the entire CSRD journey. The platform is more than just a tool—it’s a comprehensive approach that combines detailed business analysis, stakeholder engagement, and rigorous data checks to ensure companies can navigate the complexities of CSRD compliance with confidence.

1. Building the Foundation with Comprehensive Business Analysis

The foundation of effective CSRD compliance starts with a deep understanding of the business. Impaakt’s process begins with a thorough analysis tailored to the specific needs of each company. Take Company X, for example, Impaakt’s team took the time to analyze every facet of the company—from its products and business streams to its value chains. This detailed examination allowed them to determine the right level of detail required for a robust Detailed Materiality Assessment (DMA).

By breaking down the business into manageable components, Impaakt ensures that the CSRD reporting process is both thorough and focused, capturing all the essential aspects that could impact sustainability.

2. Identifying What Matters: Going Beyond Standard Frameworks

One of the biggest challenges in sustainability reporting is identifying the right issues to focus on. While the European Sustainability Reporting Standards (ESRS) offer a broad framework, they don’t cover everything. Impaakt addresses this by compiling a comprehensive list of ESRS topics, including detailed subtopics that are most relevant to a company’s specific operations—like those at Comapny X.

But Impaakt doesn’t stop there. They also identify unique, entity-specific issues—topics that may not be covered by the ESRS but are still crucial for the business. This ensures that the reporting process isn’t just about ticking boxes but truly reflects the company’s real-world impact.

3. Turning Data into Actionable Insights

Data is at the heart of CSRD compliance, but it’s only valuable if it’s presented in a way that makes sense. Impaakt’s platform allows for companies to upload or input sustainability data points and excels in transforming this raw data into concise, contextualized summaries. This provides clear insights into how each sustainability issue affects the business and its stakeholders. For companies like Company X, these summaries offer a straightforward way to understand complex sustainability challenges and make informed decisions.

This approach also helps in communicating these issues to a wider audience, including internal teams, investors, and the public, engaging them to piece together the heart of the CSRD, the double materiality assessment (DMA).

4. Engaging Stakeholders: Centralized and Systematic

Effective CSRD compliance isn’t just about what the company thinks is important; it’s also about what stakeholders care about through a DMA. Managing this engagement process can be challenging. While many companies use complex and time-consuming methods to engage stakeholders, through surveys, focus groups, interviews, and more. Impaakt’s solution makes it straightforward. First, Impaakt identifies all relevant stakeholder groups—both internal and external—for companies like Company X and determines the right number of stakeholders to engage based on the specific sustainability issues at hand.

Then, Impaakt’s platform centralizes this entire process, ensuring that every stakeholder’s voice is heard and integrated into the materiality assessment. This is carried out by asking stakeholders to assess the impact of the material topics identified. Through the contextualized summaries, stakeholders are asked to assess the different topics based on different criteria. This systematic approach not only strengthens the credibility of the reporting process but also ensures that the company’s sustainability efforts are aligned with the expectations of those who matter most.

5. Streamlining Materiality Assessments

Once the impact assessment by stakeholders is complete, Impaakt supports the company’s internal teams in conducting a financial materiality assessment on their platform.

Moreover, the platform includes data consistency checks, which help identify and remove any outliers or inconsistencies in the assessments. This rigorous approach ensures that the final outputs are reliable and can guide the company’s ongoing sustainability efforts with confidence.

6. Delivering Valuable Outputs

After completing the DMA, Impaakt’s platform generates a range of valuable outputs that are essential for ongoing CSRD compliance. For example, the Corporate-Level Double Materiality Map provides a visual overview of the most significant issues, helping companies like Company X understand where their biggest risks and opportunities lie.

Additionally, Impaakt helps establish materiality thresholds and reporting requirements, ensuring that companies not only meet regulatory standards but also set a high bar for industry best practices.

Technology for Empowering Sustainable Growth

The CSRD represents a major shift in how companies approach sustainability, but it also brings a new level of complexity to reporting. Impaakt’s SaaS solution is designed to simplify this process, offering a comprehensive, streamlined, and accurate approach to sustainability reporting.

By leveraging advanced technology, Impaakt enables companies to not only meet their compliance obligations but also to drive sustainable growth and make a positive impact on society and the environment. In a world where sustainability is no longer optional, Impaakt is helping businesses lead the way.

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