Tech firms lag in CSRD audit readiness, says Semarchy survey

A recent study by Semarchy has revealed that only 16% of businesses in the technology and professional services sector are fully audit-ready for the Corporate Sustainability Reporting Directive (CSRD), raising concerns about data readiness among many organisations.

The survey, which included 1,000 senior IT and data leaders, highlights that a significant number of businesses are still finding it challenging to meet the requirements of the forthcoming CSRD. With just 28% of respondents having a centralised tool to effectively govern and monitor mandated Environmental, Social, and Governance (ESG) data, many companies are recognising the importance of being adequately prepared for audit.

Despite the apparent lack of readiness, 35% of the surveyed organisations plan to use CSRD data strategically to enhance their brand reputation, build customer trust, and meet stakeholder expectations concerning sustainability. Furthermore, over half (65%) of eligible organisations aim to become audit-ready and meet the upcoming reporting deadlines within the next 12 months.

However, confidence in ESG data quality and reliability is a concern for a quarter of the respondents, and fewer than a third (27%) believe their current data management systems meet the stringent reporting requirements. This uncertainty is compounded by the anticipation of a simplified package of sustainability directives potentially being announced by the EU.

The survey also sheds light on the accountability for CSRD compliance, with 68% of businesses placing the responsibility on senior data executives such as Chief Data Officers (CDOs) and Chief Information Officers (CIOs). This suggests a new level of responsibility for IT departments as they compile vast amounts of data for crucial stakeholders. Notably, only 33% of respondents reported their Chief Financial Officer's involvement in the compliance process.

Semarchy's findings indicate that many companies are investing in improving their CSRD audit readiness. Around 68% are planning to allocate more than 10% of their annual IT budgets to compliance, with more than a quarter considering investing over 20% to meet the directive's requirements.

Hervé Chapron, SVP for Global Sales & Global Manager EMEA at Semarchy, commented on the situation, "With regulatory uncertainty and rising expectations around sustainability reporting, many organisations view compliance as a significant hurdle. The challenge isn't always a lack of data — it's often about ensuring its reliability and trustworthiness." Chapron further noted that a focus on centralising and automating data management could turn compliance from a burden into a strategic advantage.

Renee Murphy, Principal Analyst at Verdantix, highlighted the importance of a robust data management system, stating, "While most organizations are collecting ESG data, a staggering 83% are still not prepared for CSRD audits, according to Semarchy's new findings." Murphy emphasised the need to address challenges like consistent data collection and data fragmentation.

Joshua Symons, Head of Enterprise Data at UKHSA, emphasised the role of corporate culture in compliance, saying, "Compliance is a complex process that involves people as much as technology, with culture being a key aspect of ensuring records are accurate, consistent, and up to date." Symons advocated for using central tooling for master data management.

Xavier Gardiès, Senior Partner and Head of Consulting at Micropole, remarked, "Beyond its regulatory framework, the CSRD represents a strategic turning point for businesses. It is not merely a reporting obligation but fundamentally redefines the essence of how organisations drive their operational and commercial strategy." He stated that companies focusing on data governance today could gain a competitive advantage.