A CSRD software study published by PwC in October 2023 sheds light on whether the Corporate Sustainability Reporting Directive (CSRD) is already having an impact on companies. The consultancy firm also analyzes whether and to what extent dedicated software solutions for CSRD reporting are of companies and provides revealing insights.
Key findings of the PwC CSRD study
- Over 70% of the companies surveyed have drawn up a sustainability strategy and have largely integrated it into their overall strategy. Almost a threefold increase compared to 2021.
- 15% of companies have not yet started implementing CSRD, while 61% are already collecting data for relevant KPIs
- In 42% of companies, there is a sustainability department that is primarily responsible for the technical, strategic and operational implementation of CSRD. Alternatively, Accounting (30%) is usually responsible.
- Every other company plans to use a reporting software solution to fulfill the CSRD reporting obligation. The most popular tool was Excel (27%).
The study provides insights into the extent to which companies consider the topic of CSRD strategically, which implementation measures (e.g. scope analysis or materiality analysis according to double materiality) have already been taken, which challenges lie ahead and which departments and persons within a company are responsible for sustainability reporting.
In this article, we focus on the results of the study regarding the use of software solutions for CSRD reporting in companies.
Most popular CSRD software
The CSRD requirements for companies are set out in the European Sustainability Reporting Standards (ESRS). The ESRS comprise 281 pages. That’s right 281!
A market of CSR tools and software solutions has developed in order to meet this multitude of requirements and to record and optimize sustainability efforts in a structured manner.
As the market for CSRD reporting software is currently developing rapidly, according to the study there is a great deal of uncertainty among companies as to whether and if so which tool should be used for reporting. While slightly more than half of the companies surveyed have decided to use software for CSRD reporting, 20% say that they do not plan to use software. The remaining respondents (28%) did not specify or have not yet decided to what extent they will use ESG and CSR tools.
- Excel is the most frequently mentioned software solution at 27%.
- 19% of companies rely on dedicated sustainability solutions, while a further fifth (also 19%) use ERP systems for this purpose.
- Other tools such as disclosure management tools (7%), consolidation software (5%) and other solutions (4%) are used to a lesser extent.
Source: PwC study Corporate Sustainability Reporting Directive (CSRD) 2023
Excel is the preferred CSRD reporting tool
The high number of companies (27%) that would like to use Microsoft Excel as a tool for their CSRD reporting is particularly surprising. Excel, as a widely used and multifunctional tool, offers various advantages for CSRD reporting:
- Costs: Excel is included in many Microsoft Office company licenses, so there are often no additional costs for specialized reporting software.
- Familiarity and user-friendliness: Many companies and employees are already familiar with Excel, so no training is required.
- Flexibility: Excel offers the ability to organize, filter and analyze data in a variety of ways. Users can create their own tables and formulas to meet specific reporting requirements. Users can also create charts and graphs to visualize data.
- Compatibility: Excel can be easily integrated with other tools such as Word, PowerPoint or even ERP systems, making it easier to create and present reports.
- Availability of templates: There are a variety of available Excel templates for different reporting requirements that can be customized and adapted.
However, according to PwC, Excel is not necessarily the best solution as it does not provide secure documentation and there is no user role management. As Excel can be prone to errors when entering data and sustainability reporting is a report that requires auditing, PwC believes that companies should consider other software solutions.
Dedicated software solution for CSRD reporting
One in five companies in the study plans to use a dedicated tool for managing and reporting on their sustainability activities. Numerous new digital platforms are currently springing up.
Depending on your needs and choice of sustainability software solutions, dedicated ESG tools can offer extensive benefits:
- Specialist functionalities: These software solutions are specially developed for sustainability reports and often contain specific functions that simplify the reporting process.
- Consistency and standardization: Ready-made templates and guidelines can ensure consistency across different reports and time periods.
- Automated data integration: The comprehensive sustainability management platforms can usually import and integrate data automatically from various sources.
- Compliance and timeliness: These solutions are often designed to comply with current standards and regulations in the area of sustainability reporting.
- Access and rights management: Enables differentiated assignment of editing and access rights for different users.
However, a dedicated software solution can also have disadvantages for a company. In addition to the additional costs for such specialized software, employees need to be trained to use the software, which can be inefficient, at least in the short term. Not all CSRD tools are fully compatible or can be integrated with existing company systems, meaning that manual effort is required. In addition, you can quickly become dependent on the software provider.
Categories of CSRD reporting tools
CSR software solutions can be divided into different categories:
- Sustainability management platforms: These platforms offer companies a comprehensive solution for managing and controlling their sustainability initiatives. They support the collection, analysis and monitoring of sustainability data and help companies to define, track and achieve their sustainability goals.
- GHG emissions calculators: Software solutions specifically designed to calculate and analyze a company’s greenhouse gas (GHG) emissions. They enable companies to understand their carbon footprint, identify emission sources and develop reduction strategies.
- CSR rating providers: These are companies or platforms that offer ratings and rankings of companies with regard to their corporate social responsibility (CSR) practices. They analyze and evaluate the social, environmental and economic performance of a company and make this information available to third parties, such as investors or customers.
- CSRD reporting software: Specialized software solutions that help companies to efficiently create, manage and publish their CSRD reports. They often provide templates and guidelines that simplify the reporting process in accordance with applicable standards and regulations.
- CSRD training platforms: Platforms that offer training and educational resources on CSRD and sustainability reporting. They help employees to learn about the requirements, best practices and trends in CSRD reporting.
It is important that companies carefully assess their specific needs and requirements before deciding on a specific sustainability software solution. In another CSRD study by Ubirch, companies were asked specifically which ESG software they use.
Use of existing ERP systems for sustainability report
The CSRD software study by PwC indicates that 41% of companies would like to use the same tools for their financial reporting and CSRD reporting either exclusively (11%) or at least partially (30%). The Enterprise Resource Planning (ERP) system is mentioned most frequently. The advantages of using the existing ERP system could be
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Integration of data sources: ERP systems are usually centralized systems that integrate and aggregate data from different business areas. This means that CSRD-relevant data is often already available or can be easily collected.
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Cost efficiency: Instead of investing in a separate CSRD-specific software solution, companies can use existing ERP systems and thus save costs. However, some ERP providers offer CSRD add-on modules for a fee.
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CustomizabilityMany ERP systems can be customized or extended to meet specific CSRD reporting requirements. Some providers have already developed special ESG modules.
On the other hand, the complexity and cumbersomeness of an ERP system can be seen as a disadvantage. Adding CSRD reporting capabilities can further complicate things and impact usability. Another disadvantage is the Changes or updates in relation to the Corporate Sustainability Reporting Directive. These may require the ERP system to be adapted or updated, which may require additional time and resources. Additional training may also be required if employees who have had no previous contact with the ERP system have to deal with the software.
Advantages and disadvantages of the software options for CSRD reporting at a glance
The following table compares the advantages and disadvantages of the most popular software solutions for sustainability reporting.
| Advantages | Disadvantages | |
|---|---|---|
| Excel |
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| Dedicated ESG software |
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| ERP systems |
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Differences between CSRD software solutions still little known
The CSRD software study by PwC, in which 170 companies from Germany, Austria, Switzerland and the Netherlands took part, confirms that it is a challenge to maintain an overview of CSRD software solutions.
An astonishing 53% of the companies surveyed stated that they still have to deal intensively with the differences between the CSRD software solutions.
While 14% already feel well informed, a third (31%) do not have the topic on their radar at all.
Two percent of respondents did not provide any information.
Source: PwC study Corporate Sustainability Reporting Directive (CSRD) 2023
The main focus for companies should therefore be on understanding the various software solutions and their specific features, particularly with regard to their user-friendliness and level of detail.
How you can find out more about CSRD software
The PwC study reveals that 3 out of 4 companies have already looked into software solutions for their CSRD reporting. Conversely, 26% of companies have not yet looked into possible tools. PwC’s experts recommend that companies “urgently take action” in order to achieve possible efficiency and quality improvements in their sustainability reporting.
To give you a quick overview of the ESG tool landscape, we at CSR-Tools.com have prepared numerous software solutions for you, including their functionalities and a classification into the various software categories.
In addition to the CSR tool overview and our blog posts, companies use the opportunity to take part in events and webinars (46%) to find out about software solutions. According to the CSRD Software Study, exchanges with consultants and auditors (41%) are also very popular. Surprisingly, only 6% of those responsible exchange information with peers on tool selection. Even more frequently, companies stated that they conducted their own research or approached providers directly (8% each).
5 steps to CSRD reporting tool selection
When selecting CSRD (Corporate Sustainability Reporting Directive) reporting software, companies should consider several important steps to ensure they select a solution that meets their specific requirements. Here are the most important steps:
- Stakeholder analysis: Analyze which people need to be involved in the tool selection to ensure that all requirements are taken into account.
- Needs analysis: Determine the specific requirements and objectives of your company with regard to CSRD reporting. What do you want to achieve with the tool? How much budget do you have available?
- Research: Find out about the tools available on the market. Read reviews, get customer references and find out about the functions and features of each software solution.
- Demo and test phaseMany providers offer demo versions or test phases. Use this opportunity to find out whether the tool meets your requirements and whether it is user-friendly.
- Make a decision: Evaluate the CSRD software solutions based on your defined criteria and make an informed decision about the most suitable CSRD reporting tool for your company.
By following these steps, companies can ensure that they select a CSRD software solution that meets their needs and offers real added value.
