Case study: Dedalus Group’s CRO explains how the company is tackling CSRD disclosures

We are running full steam ahead as we prepare our organisation to make our first disclosure under the EU Corporate Sustainability Reporting Directive (CSRD).

This is a complex exercise for all businesses, whether big or small. It is likely that most organisations will need to make some level of change in order to comply with the directive. And there is no ‘one-size-fits-all’ blueprint that applies across the board on what to do and how to do it.

The actions that each company may need to take will be unique for that specific organisation. These will be dependent on, for example, the dimension of the business and the extent to which their existing sustainability provisions already align with the CSRD.

For small enterprises that have never had to comply with similar regulations, the effort required will be greater – also considering that they are typically not as structured as larger organisations and may not have dedicated resources to manage regulatory compliance.

WHERE TO START?

So, the very first step is to understand the directive’s requirements and translate them into the context of the individual company.

For my organisation, for example, we are required to make our first disclosure by the end of fiscal year 2026 (reporting deadlines will di  er depending on your company’s size).

As such, we began preparing our business 12 months ago in terms of structure and processes. We kick-started the journey with a thorough review of the CSRD requirements. This was followed by a gap analysis of our sustainability service provisions, which then formed the basis of the roadmap we designed to meet our CSRD obligations.

This gap analysis and associated roadmap will help many organisations crystallise an action plan – whether that is to design new procedures or adjust existing methodologies and key performance indicators. Through this process, we found where our strengths lie and what challenges we needed to prepare for.

WORKING ON DOUBLE MATERIALITY

Conducting double materiality assessments was one area of focus for us.

Double materiality refers to the evaluation of the material impact and/or financial impact from two perspectives: the organisation’s impact on people and the environment (the ‘insideout view’); and new risks and opportunities for the organisation (the ‘outside-in’ view).

We recently completed an assessment of our ERM process. We found that our risk management practices in identifying and assessing risks align closely with financial and impact materiality requirements.

The CSRD provides a defined list of potential impacts that must be evaluated and classified in terms of positive or negative. Consideration of the scope and scale of the impact should also be made.

”I see this as a collective challenge for the risk management community.”

Our existing risk management identification, assessment and scoring methodologies apply well to the process of assessing double materiality.

The aims of ERM and double materiality may differ (the latter relating more to reporting) but the activities that need to be undertaken to achieve the goals of both are very similar, if not the same. As such, we are formalising the integration of CSRD and ERM assessments within our organisation.

However, the part that many organisations may need to build into their assessment processes is the opportunity side. So often, the risk side (or downside) of our assessments takes prevalence over the opportunity side (or upside) – if they feature as part of our evaluation processes at all, of course.

I see this as a collective challenge for the risk management community. That is, working to ensure that our ERM frameworks extend to opportunity assessments. For me, this means creating a scoring system for opportunities and making them visible on risk registers.

THIS IS OUR WHEELHOUSE

It is also worth noting that companies that are subject to the CSRD will also have to report according to European Sustainability Reporting Standards. This may have an impact on the indicators used to demonstrate compliance to the standards.

In practical terms, it means adjusting existing indicators or establishing new ones altogether. And this is an area we are currently reviewing.

Indeed, working towards CSRD represents a big effort for most companies. But what is clear to me from my journey so far is how well ERM methodologies dovetail with large parts of the CSRD requirements, most notably double materiality assessments.

This is an area in which risk managers have the knowledge and expertise to take full ownership. We have an opportunity here to demonstrate our strengths, make a valuable contribution and fly the flag for risk management. SR

Valentina Paduano is chief risk & compliance officer at Europe’s leading healthcare and diagnostic software provider, Dedalus Group; and vice-president of FERMA.