In July 2022, a global leader in the chemical sector, specializing in coatings, embarked on a sustainability reporting project with the goal of achieving compliance with the CSRD and GRI frameworks.
During this transformative journey from July 2022 to January 2023, project consultants Alexander Van Lil and Kristien Schreurs, along with corporate reporting and sustainability expert Mario Matthys and specialist project manager Vicky Posthumus, explored the landscape of sustainability reporting. They discovered that this endeavor was not merely about compliance, but rather a profound transformational process.
The goals of Phase I
Before the start of this project, the TriFinance experts had a clear idea of what they wanted to accomplish based on the needs of this client. The goal in phase 1 was to:
- create awareness throughout the company and help the organization prepare for the upcoming sustainability reporting duties.
- create a clear overview of the AS-IS situation in comparison with the CSRD framework.
- design a TO-BE situation and the accompanying processes.
- create a user-friendly document to guide the sustainability reporting (Sustainability Reporting Framework).
On top of this, a list of defined actions that needed to be completed was created. This would serve as a roadmap to Phase II, which focuses more on the implementation and embedding of renewed processes and best practices. They also needed to involve the steerco to maximize input and importance throughout the organization.
The adoption of sustainability reporting
The project at hand presented numerous challenges due to its scope, context, and impact.
- Scope: TriFinance experts faced the task of establishing a sustainability reporting framework from the ground up. This involved documenting all existing processes related to data tracking across the entire organization.
- Context: The project was challenged by new regulations, causing uncertainty and requiring careful navigation.
- Impact: The project had a far-reaching impact that extended throughout the entire company. It affected various departments and stakeholders.
The biggest challenge the TriFinance experts faced throughout the project was change management and the creation of awareness.
Starting with sustainability reporting brings a large amount of work on top of the already existing workload for most organizations and their employees. They have to document the AS-IS situation, design the TO-BE situation, and create a roadmap enabling the organization to bridge the existing gaps. It goes without saying that this generates a monumental amount of work. The logical reaction for many employees is change aversion. Properly contextualizing and emphasizing the significance of a project is crucial for this reason.
Sustainability and integrated reporting will drive the most fundamental shift in the way businesses operate in the near future. Sustainability reporting is not an end in itself, but it will prove to be a critical driver of transformation.
Project Manager, Mario Matthys, Corporate Reporting and Sustainability Expert
To put it in simple terms, there will be a clear distinction between the time period before and after the adoption of sustainability reporting. Once an organization fully internalizes this idea, progress truly begins.
Getting the key employees invested
A critical challenge is employee availability, closely tied to change management and awareness. Key employees must be fully engaged for the project to meet its deadlines. The internal project lead and management team bear the responsibility of guiding employees effectively. The management team's involvement, particularly that of the CFO or CEO as project sponsor, is essential. Their swift realignment can address any issues that arise.
Into the unknown
For most companies, gathering and disclosing mandatory non-financial data is a big step into the unknown.
- New processes must be created to track all the required data points.
- New skills and knowledge must be acquired.
- New tools must be implemented to facilitate the reporting process.
This implies that in many instances, all parties involved are operating outside of their comfort zones and cannot rely on a tried-and-true roadmap for direction when unexpected challenges arise. This also holds true for consultants who assist companies with their transformation journey.
“Having a great team and support structure to fall back on will help immensely with navigating this unknown space.”
Project Consultant, Kristien Schreurs
The materiality analysis
For the TriFinance team, the best way to create general awareness among employees is to emphasize the importance of the project for future business success, explaining global developments regarding E.S.G. For many individuals, this is all fairly new information, and they just need a good introduction to get them on board.
Before providing the organization with a roadmap toward compliance with CSRD and GRI, the TriFinance reporting experts needed a clear understanding of where they found themselves with respect to both regulatory frameworks. This meant they had to perform an AS-IS exercise first. To create an overview of the AS-IS situation, they decided to organize multiple workshops with the stakeholders to ascertain the level of compliance with their material topics.
The material topics were the outcome of the double materiality analysis the organization performed before the project kick-off. This materiality exercise is the basis for every sustainability reporting cycle because it shows on which sustainability topics the organization has the most impact and vice versa.
Creating an overview
After conducting the initial interviews, the information was transferred in a special Fit-Gap overview. ‘The goal of this document was to show the progress, owner, workstream, and todos of each disclosure requirement,’ project consultant Alexander Van Lil explains. ‘We applied a color scheme to easily understand the level of readiness per requirement. This was done for both CSRD and GRI at the request of our client.’
The culmination of these efforts was the creation of the Sustainability Reporting Framework, a vital deliverable for the expert team. This living document serves to support the client in their sustainability reporting obligations from 2025 on.
All the above was ultimately going to serve as the basis for the expert team’s most important deliverable, the Sustainability Reporting Framework, a living document to assist the client in their sustainability reporting duties starting in 2025.
To ensure user-friendliness, Alexander, Kristien, and their colleagues designed the framework with a clear structure aligned with the Fit-Gap file. Each disclosure requirement adheres to a consistent format, including:
- Disclosure requirement
- Unit of measurement
- Tools used
- Frequency of reporting
- Processes and/or defined actions
- Responsible department
Preparing for a successful Phase II
The inclusion of defined actions, although not initially agreed upon, was deemed valuable due to the TriFinance team's knowledge of the AS-IS and TO-BE states. This addition provided the client with insights into resource requirements for a successful phase 2 in June.
The client expressed sincere gratitude for this contribution, as it not only facilitated their planning and resource allocation but also highlighted the crucial need for an overall assessment of pending internal tasks.
Project Manager, Vicky Posthumus, Pragmatic Advisory & Implementation
The steering committee remained consistently engaged throughout the project, highlighting the importance of active involvement and motivation from top management. Such commitment inspires other managers and employees and reinforces the project's significance.
Image by aleksandarlittlewolf