Switching perspective from compliance burden to opportunity

The Corporate Sustainability Reporting Directive (CSRD) is rapidly reshaping the landscape of sustainability reporting across Europe, presenting unique opportunities and challenges for different sectors, industries, and countries. For Belgian businesses, this journey is characterised by hurdles, but also significant potential for growth. Alice Schmitz and Melchior Poullet, two leading experts from PwC Belgium, provide their insights on the current state of CSRD implementation in Belgium and offer practical advice for companies navigating this new regulatory environment. 

Let’s start by addressing the elephant in the room. Yes, most businesses guided or audited by PwC Belgium are on track to timely compliance. However, this path is not without challenges. The global survey conducted by PwC highlights several obstacles companies face in achieving CSRD compliance, two of which appear to resonate strongly in Belgium: the limited capacity and availability of staff, and the evolving maturity of ESG tools.

Melchior Poullet sheds light on the practical implications of these challenges: “One of the major issues we encounter is the difficulty in assembling a team with the necessary expertise in environmental, social, and governance aspects. Limited staffing on the project can hinder thorough internal validations, slowing down processes that should be more efficient.” 

Could this be a question of prioritisation and understanding the full significance of the CSRD? According to Alice Schmitz, many companies across Belgium and Europe currently view CSRD compliance as a compliance burden, given the significant workload it represents. “The heavy workload and the perception of the CSRD as yet another legal requirement can lead to a lack of buy-in across the company, which is a significant hurdle for sustainability professionals tasked with this initiative,” she acknowledges. “However, companies might find it beneficial to view CSRD as more than just ticking boxes. By seeing it as an opportunity to embed sustainability into their strategic and value-creation processes, they could unlock substantial long-term benefits.”

While the companies Alice and Melchior support are generally aware of their environmental impacts,there has traditionally been a stronger focus on risks rather than the broader impact on people and the environment. This is reflected in the global survey, where companies felt most confident in reporting on workforce and governance issues – areas they have long been familiar with.

Some topics appear to be especially challenging, one of which being none other than biodiversity. “Biodiversity is a complex issue that intersects with many other environmental concerns like pollution and climate change. Companies are often unsure when and how to report on it,” Alice explains. Another area that poses confusion is circular economy, particularly in distinguishing between upstream and downstream impacts within the value chain. The way forward, according to Melchior, is to focus on EFRAG (European Financial Reporting Advisory Group) descriptions and map a company’s entire value chain on that basis.

To address these challenges, the ESG team typically adopts a phased approach, emphasising the importance of upskilling and stakeholder engagement from the outset. Melchior explains, “We start with basic upskilling sessions for key personnel, guiding our clients through the different phases of the CSRD journey. Stakeholder engagement, both internal and external, is also crucial for ensuring robust, unbiased reporting.”

 As Alice underlines, external validation is especially important to ensure a balanced and comprehensive view of a company's sustainability efforts. “Engaging with external stakeholders and topical experts offers valuable perspectives, helping to confirm that the impacts and risks identified are truly reflective of the company’s operations,” she explains. “This collaborative approach can enhance the credibility and accuracy of sustainability reporting.”

Both experts note how Belgian companies are increasingly open to using digital tools to manage their CSRD reporting, yet finding the right tool remains a challenge. PwC Belgium offers tailored support, helping clients navigate the crowded market of reporting software. “Our ESG Technology team assesses the client’s specific needs and presents a curated selection of tools that align with their requirements, whether they need a comprehensive ERP system integration or a more specialised carbon accounting solution,” says Alice.

One key consideration businesses face is whether to first select a tool and shape their reporting accordingly, or to start by setting up a list of available data and KPIs and then choose the most suitable tool. While Melchior highlights a recent shift in strategy, where “we now integrate the technology discussion from the start of our projects,” Alice notes that both approaches can be effective depending on the client and industry at hand.

Despite the challenges ahead, both experts agree that the focus should be on the silver lining. As Alice notes, CSRD compliance can evolve from a perceived burden to a strategic advantage. “Sustainability information under CSRD will be comparable and reliable, offering companies a chance to differentiate themselves in the market. Those that approach CSRD with a strategic mindset, rather than just compliance, will likely see significant benefits, including easier access to funding and a competitive edge.”

However, this shift in mindset is not yet widespread. “Many companies currently approach CSRD reporting as a compliance task rather than a strategic opportunity,” says Melchior. “But as the first wave of CSRD reports comes out, we expect this to change, particularly as the 2030 EU goals approach.”