CSRD 2024: Challenges and opportunities for medium-sized manufacturing companies

Die Corporate Sustainability Reporting Directive (CSRD) will drastically change reporting requirements for companies in Europe. Small and medium-sized manufacturing companies in particular must prepare for significant challenges, as the new requirements go far beyond what has been required in sustainability reporting so far. Die 2024 PwC Global CSRD Survey provides valuable insights into the current state of implementation and shows which departments should be involved, what problems exist and what opportunities arise as a result of timely preparation.

The biggest challenges for SMEs

Implementing the CSRD poses significant problems for many companies, particularly in the manufacturing sector. According to the PwC study, the biggest challenges include:

1. Supply chain complexity

The supply chain plays a central role in the sustainability report. In medium-sized manufacturing companies, many companies are integrated into global networks, which makes it difficult to collect and evaluate relevant data. 43% of the companies surveyed They called Complexity of the value chain as one of the biggest obstacles to implementing CSRD.

2. Data availability and quality

One of the key requirements of CSRD is the provision of comprehensive data. It is often difficult for companies to collect accurate and comprehensive information about all business activities, especially when they are spread across multiple locations or countries. 38% German companies see the Data availability and quality as a critical challenge.

3. Time pressure and deadlines

Many companies underestimate the time required to prepare for CSRD. 35% of the companies surveyed stated that the tight time limits for submitting reports are a major challenge. The first reports must be presented as early as 2025, based on data from fiscal year 2024, meaning that companies barely have time to implement the necessary processes and systems.

4. Technical systems and software

Integrating suitable software solutions to collect and manage sustainability data is another problem. 31% of companies Cite outdated or missing software as an obstacle. Small and medium-sized companies in particular often do not have the necessary resources to quickly switch to powerful IT systems.

Which departments should be involved?

Implementing CSRD requires a interdisciplinary collaboration across the company. The PwC study shows that the following departments are most heavily involved in many companies:

1. Sustainability and ESG departments

As expected, these departments are the most involved in CSRD preparations. 68% of companies in Germany rely on their Sustainability or ESG teamsto address reporting requirements. They play a key role in data preparation and implementation of double materiality analysis.

2. Financial departments

Surprisingly, they are also financial departments heavily involved in the process. 66% of companies rely on finance departments, as the CSRD covers not only environmental but also financial risks associated with sustainability. The financial assessment of sustainability impacts is becoming increasingly important.

3. IT and technology

IT departments are essential to meet the necessary software solutions and data systems to implement. Efficient reporting is not possible without the right IT infrastructure. 43% of companies In Germany, their IT departments actively involved in the CSRD process.

4. Management and Management

Support from upper management is crucial for successful CSRD implementation. 49% of companies Have their Management heavily involved to make strategic decisions and provide the necessary resources.

Issues and barriers to CSRD implementation

Despite the growing involvement of the various departments, there are still numerous problems that hinder progress, according to the PwC study:

• Staff capacities: 31% of companies are struggling with a lack of qualified personnel who can meet CSRD requirements. The shortage of skilled workers in the area of sustainability is becoming a serious problem.
• expenses: 25% of companies state that the budget is an obstacle. Implementing new systems and hiring experts is cost-intensive, which is particularly a challenge for small and medium-sized companies.
• Link to other regulations: The CSRD must often be implemented in conjunction with other regulations, such as the EU taxonomy. 29% Companies see difficulties in reconciling the various regulations.

The opportunities offered by CSRD implementation

Despite the challenges, CSRD implementation also offers significant benefits, particularly for companies that act early and strategically:

1. Competitive advantage

Companies that successfully implement CSRD can use their Sustainability performance Communicate in a targeted manner and thus secure a competitive advantage. 32% German companies regard this as an important benefit, as sustainability is increasingly becoming a decisive criterion for investors and customers.

2. Minimize risks

The improvement of Sustainability reporting helps companies to better identify and manage risks. 25% Respondents stress that improved risk minimization is one of the biggest benefits of CSRD.

3. Better financing options

Companies that make their sustainability performance transparent have better access to financing options. 22% of the companies stated that they expect lower capital costs as a result of the CSRD.

Conclusion: Act now to take advantage of CSRD opportunities

Implementing CSRD is a complex challenge for medium-sized manufacturing companies that requires intensive cooperation between different departments. At the same time, however, the new directive also offers great opportunities to compete and minimize risks