Navigating Comprehensive Reporting Requirements Under the CSRD: A Guide for IT Companies

All you need to know about CSRD

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The Corporate Sustainability Reporting Directive (CSRD), set to take effect in 2024, marks a significant evolution in corporate sustainability reporting. Initiated by the European Commission in April 2021 and officially published in the EU’s Official Journal on December 16, 2022, the CSRD replaces the Non-Financial Reporting Directive (NFRD). This new directive mandates over 50,000 European companies to publish non-financial reports that comply with European-level standards, known as the European Sustainability Reporting Standards (ESRS). This article explores these comprehensive reporting requirements and offers strategies for IT companies to meet and exceed these expectations, focusing on the critical importance of accurate operational data. We also highlight OxygenIT, a powerful tool designed to streamline this process.

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Understanding the Comprehensive Reporting Requirements

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The CSRD's comprehensive reporting requirements encompass three primary ESG pillars:

1. Environmental Factors: IT companies must provide detailed disclosures on their environmental impact, including carbon emissions, energy consumption, resource use, waste management, and the environmental impact of their products and services.
2. Social Factors: Social reporting includes issues such as labor practices, employee well-being, diversity and inclusion, community engagement, and human rights within the supply chain.
3. Governance Factors: Governance reporting involves disclosing corporate governance structures, policies, ethical practices, and compliance mechanisms.

CSRD - What changes from 2024

• Extended Scope: The CSRD covers 50,000 companies, compared to the 11,700 under the NFRD.
• Dual Materiality: Companies must consider both financial and impact materiality.
• Compliance and Verification: Information must be published in compliance with the SFDR and EU Taxonomy and verified by an auditor or independent third party.
• Mandatory Publication: Non-compliance can result in public or financial sanctions.‍

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Reporting Timeline

• January 1, 2024: Companies already subject to NFRD.
• January 1, 2025: Large companies not previously subject to NFRD.
• January 1, 2026: Listed SMEs with an option to defer reporting by two years.
• January 1, 2028: European subsidiaries of non-European parent companies with significant turnover in Europe.

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Specific Challenges for IT Companies

• Carbon Footprint and Energy Consumption: IT companies, particularly those operating large data centers and offering cloud services, are under intense scrutiny for their carbon emissions and energy usage. The complexity of IT infrastructure makes accurate calculation and reporting of these metrics a challenging task. Data centers consume vast amounts of electricity, often relying on non-renewable energy sources, which contributes significantly to their carbon footprint. Additionally, the decentralized nature of cloud services, which can span multiple geographic locations, adds another layer of complexity to tracking and managing energy consumption and emissions.
• Data Privacy: IT companies handle vast amounts of sensitive data and must demonstrate robust data privacy and security measures. Compliance with regulations like GDPR and proactive data protection are critical.
• Diversity and Inclusion: The tech industry has historically faced challenges with diversity. Transparent reporting on diversity initiatives requires detailed data on workforce demographics, hiring practices, and career advancement opportunities.
• Supply Chain Practices: IT companies often have global supply chains. Ensuring and reporting on ethical practices, labor conditions, and environmental impacts throughout these supply chains is a significant task.

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Overcoming Reporting Challenges with Accurate Operational Data

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Given the complexity of these requirements, IT companies need sophisticated tools to manage their ESG reporting effectively. OxygenIT is a cutting-edge solution designed specifically to address the unique challenges faced by IT companies in meeting CSRD requirements.

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Features and Benefits of OxygenIT

• Precision in Carbon Footprint Calculations: OxygenIT provides precise carbon footprint calculations tailored to IT operations. This includes detailed assessments of specific business applications, data storage, and development teams. Such granularity allows companies to accurately identify areas for improvement and reduce emissions effectively.

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• Comprehensive Reporting Capabilities: OxygenIT offers robust reporting features that cover all necessary environmental metrics. It integrates seamlessly with both cloud-based and on-premises IT infrastructure, ensuring comprehensive data capture and reporting.
• Data Privacy and Security: OxygenIT helps IT companies demonstrate compliance with data privacy regulations by providing clear documentation and reporting on data handling practices. This ensures transparency and builds trust with stakeholders.
• Diversity and Inclusion Metrics: The tool can integrate with HR systems to keep track and report both carbon emissions metrics and diversity metrics from the same dashboard, helping companies monitor their progress and highlight their commitment to inclusive practices.
• Cloud Providers Management: OxygenIT extends its capabilities to supply chain reporting, allowing companies to gather data on their cloud providers’ environmental and social practices. This helps ensure that the entire supply chain aligns with the company's ESG standards.

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Implementing OxygenIT for CSRD Compliance

• Assessment and Baseline Establishment: Conduct a thorough assessment of current ESG practices and establish a baseline. OxygenIT can automate data collection, making this process efficient and accurate.
• Integration with Existing Systems: Integrate OxygenIT with your existing IT infrastructure and HR systems. This integration ensures continuous data flow and real-time reporting capabilities.
• Training and Capacity Building: Ensure that your ESG and IT teams are well-versed in using OxygenIT. Provide training sessions to maximize the tool's potential and ensure accurate data input and analysis.
• Continuous Monitoring and Improvement: Use OxygenIT to monitor ESG metrics continuously. The tool’s forecasting and reduction recommendations can guide your sustainability strategy, helping you make informed decisions to reduce your environmental impact.
• Transparent Reporting: Utilize OxygenIT’s comprehensive reporting features to create transparent and detailed sustainability reports. These reports not only meet CSRD requirements but also demonstrate your company’s commitment to sustainability.

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Conclusion

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The CSRD’s comprehensive reporting requirements present significant challenges for IT companies, demanding detailed disclosures across a broad spectrum of ESG factors. However, with accurate operational data and the right tools, these challenges can be effectively managed and turned into opportunities for positive impact.

OxygenIT stands out as a powerful ally in this journey, offering unparalleled accuracy, accessibility, and granularity in ESG reporting. By leveraging such advanced solutions, IT companies can not only ensure compliance with CSRD but also drive meaningful sustainability initiatives, ultimately contributing to a greener and more equitable future.

Ready to make an impact? Explore how OxygenIT can help you achieve your sustainability goals and turn CSRD compliance into a competitive advantage. Let’s talk about how we can make a difference together.