Are organisations ready for the CSRD? Insights from the 2023 Annual Reporting Barometer
We recently published The Annual Reporting Barometer 2023: Facing up to the CSRD—one of our most significant Europe-wide surveys to date. Want to know more? Here’s some background and a few key highlights before you dive in.
What is the ‘Annual Reporting Barometer’?
Every year, Workiva leads an independently-run survey to understand the status quo of corporate reporting and gauge how major organisations across Europe are responding to, and preparing for, current and upcoming challenges surrounding the annual report. The survey is run by strategic insight agency Opinium Research, who gather their data shortly after filing season.
Last year’s survey focused on the impact of the ESEF mandate on reporting teams, and revealed some eye-opening statistics surrounding how the annual report is typically prepared (on average, 50 people working across 227 individual documents).
Who was surveyed—and what were they asked?
509 finance leaders were surveyed from large public companies across six European regions: UK & Ireland, DACH, France, Nordics and Benelux. They were asked about their processes surrounding the annual report, including data collection, team collaboration, audit and risk management, as well as their current concerns and plans for future changes.
With the CSRD now on the horizon for large EU-based organisations, we were keen to learn how affected companies are preparing to meet the upcoming requirements of the ESRS. We also wanted to know how companies outside scope were reacting, to better understand the wider impact and influence of the legislation.
What did the survey find?
The survey revealed some fascinating insights surrounding the current state and future direction of annual reporting processes across Europe.
Firstly, it confirmed that the majority of reporting teams have reached their capacity when it comes to annual reporting, with a significant proportion of respondents—37% across Europe—already over capacity. More pressures are now being felt: 40% of respondents said that the audit process took more time than last year, while 37% found that data collation had become more painful.
Nonetheless, the large majority of respondents stated their continued satisfaction across all aspects of the reporting process. As last year’s survey also highlighted, finance teams are used to dealing with mounting pressures, and remain content as long as the final output is satisfactory. However, the survey also went some way to highlight the scope of changes that lie ahead.
How are things changing?
- The CSRD is fast approaching: 80% of survey respondents said they will be complying with the CSRD in the future, with the vast majority of these working to comply by 2024. Interestingly, 59% of our respondents outside of its scope are still planning to align their reporting strategies with the mandate—a clear sign of its far-reaching impact and influence.
- Companies are continuing to invest in financial transformation: Despite challenging macroeconomic conditions, 43% of our respondents shared that they plan to continue spending the same on financial transformation initiatives over the next 12 months, while a further 37% plan to spend somewhat more.
- Trust in data and timelines are top concerns: When asked about their main concerns regarding ESG entering the annual reporting process, trust in data and impact on timelines were front of mind for most respondents.
- Collaboration is becoming a priority: Between 44-47% of respondents are planning to optimise cross-team collaboration between either finance and sustainability, finance and risk, or across all three departments.
Many companies are now at risk of falling behind
Despite a significant proportion of respondents stating their intention to bring their finance, sustainability and risk departments closer together, only 6-10% are currently making these changes.
More concerning still, when asked to elaborate on their definition of integrated reporting, the majority of finance leaders surveyed said that in their eyes, ‘integrated reporting’ does not extend to a number of areas (including data collection, team processes and cross-functional alignment) which are, in fact, key aspects of CSRD compliance.
So...what can we take from the survey?
Key takeaway #1: The CSRD will affect more than just those who need to comply
A majority of survey respondents who were not in scope of the CSRD (including those based outside of the EU) are still aiming to meet the new requirements being brought in by the directive. What this shows is that the CSRD is the gold standard when it comes to the future of corporate reporting: not just regionally, but internationally.
Key takeaway #2: Organisations aren’t yet moving quickly enough
While the majority of organisations are aware that changes need to be made concerning their processes, tools and approaches to collaboration, only a minority are currently taking action. This could indicate that some business leaders may be taking a ‘wait and see’ approach to evolving challenges—but with a set deadline now in place, many could be leaving things too late.
Key takeaway #3: Finance teams need to be involved more closely in decisions surrounding integrated reporting
Many finance professionals may not yet fully grasp the scope of what CSRD-compliant integrated reporting entails. With their wealth of experience in data management and assurance, these teams will be pivotal in meeting these new reporting challenges. Organisational leaders need to ensure that their finance teams understand what lies ahead and what will be expected of them, and that they are fully aligned with organisational goals surrounding reporting and sustainability.
For more insights, read the full report
To dive into the details and see how companies like yours are responding to the upcoming challenges of integrated reporting, read the full report here.