Assent: Manufacturers Struggling to Meet CSRD Requirements
Assent, a frontrunner in solutions for supply chain sustainability management, has examined just how prepared manufacturers are for the incoming standards set by the EU’s Corporate Sustainability Reporting Directive (CSRD).
Slated to take effect in April 2025, the CSRD mandates that corporations provide insights into how their operations impact the environment and society. The requirement is a crucial element of the European Green Deal, a pivotal movement towards more ecologically responsible governance in the EU.
Focusing intently on supply chain transparency, the directive will notably influence manufacturers who manage complex global networks. They will need to disclose a raft of details concerning environmental and social risks and impacts, including metrics on carbon emissions, human rights, biodiversity, and labour conditions.
Challenges in CSRD compliance
Through its rigorous CSRD Readiness Report, Assent identified a variety of obstacles facing manufacturers today.
Topping the list is the arduous task of compiling, authenticating, and presenting extensive data from an expansive supply chain. As Assent put it, gathering precise data from widespread suppliers is "seriously challenging".
Furthermore, manufacturers must navigate the complexities of aligning their compliance practices across diverse jurisdictions worldwide, each with its own set of rules on data collection and governance.
To pinpoint areas where companies lag, Assent reviewed sustainability reports from over 150 manufacturing firms. These companies span various sectors within the EU, such as industrial equipment, electronics, medical devices, automotives and retail.
The analysis relied on standards aligned with CSRD demands and assessed firms on their ability to handle typical material topics pertinent to their industry. Unfortunately, many companies exhibited "critical gaps in meeting the CSRD requirements".
Key findings on CSRD readiness
Despite these challenges, there exists an evident commitment among companies to incorporate ESG into their business strategies, with a resounding 99% of companies adhering to this practice. However, a mere 24% of these businesses offer biodiversity disclosures that comply with CSRD standards, pointing towards a widespread lack of structured targets or disclosures relevant to biodiversity.
Other statistics reveal that, while 49% of companies set goals for water use and marine conservation, more than half (56%) have targets for Scope 3 emissions. This indicates many companies lack a comprehensive approach to reducing supply chain emissions.
Additionally, only 57% evaluate their financial risks concerning ESG topics—an essential step to meet investor and regulatory expectations.
On a more positive note, 58% recognise their impacts on communities and establish respective targets.
Recognising firms excelling in readiness, Assent cites 15 manufacturers leading the charge, including well-established firms like Brembo, Delta Electronics, Dow, Evonik Industries and Volkswagen.
Urgent transformation required
Assent's research serves as a "wake up call" for the manufacturing sector, urging firms to overhaul their sustainability reporting practices.
Jamie Wallisch, a sustainability expert at Assent, remarks: “Our recent study highlights that manufacturers hold a false sense of security regarding their CSRD readiness.
"It’s imperative for these companies, irrespective of their size or location, to adopt a more comprehensive approach in evaluating ESG topics that are material to their operations and to begin engaging more deeply with entities in their value chain to bridge any gaps in their reporting practices.”
As manufacturers worldwide grapple with these new requirements, Assent’s overview bursts the bubble of complacency and paves the way for more accountable and sustainable business practices impacting both society and the environment.
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