CSRD: How People Analytics Drives Workforce Sustainability

HR and CSRD Compliance

The Corporate Sustainability Reporting Directive (CSRD) revolutionizes how organizations report on sustainability. So what, you say? What does this mean for HR leaders and People Analytics teams?

With the rise of environmental, social, and governance (ESG) expectations, the CSRD pushes for more transparency in how organizations report on these initiatives and their impact. For HR departments, this represents both a compliance challenge and a massive opportunity to drive strategic conversations around the workforce’s impact on sustainable business practices.

Crunchr recently hosted a webinar on this topic and thought it would be worth putting some of this information down in writing. So, this blog post explores how People Analytics can help organizations meet compliance and answers some important questions around CSRD.

What is the CSRD?

The Corporate Sustainability Reporting Directive (CSRD) is a new mandate from the European Union (EU) designed to standardize and expand the scope of sustainability reporting.

By replacing the previous Non-Financial Reporting Directive (NFRD), the CSRD broadens the scope to over 50,000 companies globally. These companies are now responsible for reporting on workforce metrics such as diversity, employee engagement, and wage equity.

In short, the CSRD aims to ensure that organizations track and disclose their social and environmental impacts. This new directive will also help stakeholders and investors make informed decisions about the companies they invest in.

What are ESRS?

The European Sustainability Reporting Standards (ESRS) are the specific guidelines that companies must follow under the CSRD. In short, the CSRD sets the legal framework and reporting obligations, while the ESRS outlines the compliance methodologies.  

If you’re looking for a deeper dive into ESRS, specifically S1 Own Workforce, check out this post.

Who Needs to Comply with the CSRD, and What’s the Timeline?

Compliance with the CSRD depends on the size and structure of your company. Here’s a quick breakdown:

• Large public-interest companies with 500+ employees already subject to the NFRD will need to comply starting January 1, 2024, with reports due in 2025.
• Large companies not previously subject to the NFRD (250+ employees, €40 million turnover, or €20 million in total assets) must comply starting January 1, 2025, with reports due in 2026.
• Listed SMEs must comply by January 1, 2026, but can opt out until 2028.

As these new regulations impact the most prominent and influential companies globally, the way the directive is implemented is ever-evolving. Luckily, we’ve compiled a list of all the latest news that provides insights into CSRD, its implementation, and any changes, ordered chronologically by date.

📰 Read: The Latest Updates on the Corporate Sustainability Reporting Directive (CSRD) and Why HR Should Pay Attention

Why Does ESRS S1 Own Workforce Reporting Belong to HR and People Analytics?

Workforce-related reporting under ESRS S1 involves detailed information about your employees, including their rights, benefits, and well-being. HR, the drivers of cultural and social innovation at work, must manage and own this data.

For HR leaders, this is more than just a compliance matter. It’s an opportunity to elevate HR’s role within the organization by showing how workforce policies contribute to broader sustainability goals.

What Other Departments Are Responsible for This?

Although HR oversees workforce-related metrics, CSRD compliance involves multiple departments working together. The finance department, ESG/sustainability teams, IT, procurement, and legal all play critical roles in gathering and verifying data for the report.

Collaboration among departments is essential here.

How Can HR Drive Effective Own Workforce Reporting?

To meet CSRD requirements, organizations need to act quickly. People analytics teams are central to this process, ensuring that workforce data is clean and accessible. Here are the key steps HR should take to prepare for compliance:

1. Confirm Your Timeline: Work with your finance team to determine when your first CSRD report is due.
   
2. Assess Current Data: Start by pulling 2023 data, ensuring alignment with ESRS S1 requirements. Then, conduct a gap analysis of your current workforce data. Identify which key metrics (such as the gender pay gap or adequate wage) are missing or incomplete and establish a plan to fill these gaps. 🖱️Download our free ESRS S1 Own Workforce Checklist to start your gap analysis today.
   
3. Align Stakeholders: Ensure collaboration between HR, finance, and legal teams. Consistent communication among the team will prevent any last-minute headaches.
   
4. Leverage Technology: Using a people analytics platform like Crunchr consolidates and cleans data in real time, ensuring your workforce metrics are accurate and auditable.
   
5. Craft a Narrative: Use data storytelling to create a narrative linking workforce metrics to broader ESG goals. This will demonstrate HR’s strategic role and commitment to building a sustainable workplace.
   
6. Prepare for Audits: Prepare your team for limited assurance, where a third-party auditor reviews and validates your reported data for accuracy. This process helps instill stakeholder confidence and ensures compliance. Remember, auditors will need documentation and validation of your data, similar to financial metrics.

Again, the key to effective CSRD and Own Workforce reporting is preparation. HR teams need to start collecting relevant workforce data now to streamline the process and ensure accuracy. People analytics platforms like Crunchr can aggregate data from various systems, ensuring compliance and giving HR leaders valuable insights into their workforce reporting.

Opportunities Ahead

While the CSRD presents a compliance challenge, it also offers HR leaders a huge opportunity to elevate their role. By using People Analytics to meet the reporting requirements under ESRS S1, HR can highlight the strategic value of the workforce and its impact on the company’s sustainability efforts.

With a solid plan in place and the right tools, HR leaders can ensure their organizations comply with the new regulations and leverage them to drive business success.

Ready to see how Crunchr can help? Watch the full webinar on-demand here, or contact us to see our CSRD Own Workforce tools in action.⬇️