CSRD: a game changer for sustainability reporting, with challenges for the financial sector

New European regulations require companies to integrate non-financial information into their annual reports, shifting the focus toward sustainability. As of this year, ‘integrated’ reporting becomes the new norm. Julien Thiry from KPMG and Jo Wuytack from Degroof Petercam explore what this means for the financial sector.

The introduction of the Corporate Sustainability Reporting Directive (CSRD) is a game changer for how companies communicate about sustainability, much like standardized accounting frameworks once did for financial reporting. Transposed into Belgian law in December 2024, this EU directive compels organizations to be more transparent about their environmental and social impact. The CSRD applies across industries, requiring all eligible companies to comply, regardless of their sector. “That doesn’t mean every company will report on the same issues,” says Julien Thiry, Director at KPMG.

"For banks, climate is naturally a key focus, given Europe’s ambitions in this area and the pivotal role banks can play in the transition," Thiry explains. "Banks see their biggest climate impact within their value chain, as they have the ability to redirect financial flows toward climate-friendly initiatives. In recent years, we’ve seen major developments in ‘climate finance,’ with banks increasingly integrating climate considerations into both their investments and the financial products they offer clients. However, in its current form, the CSRD provides only limited guidance on how to report value chain activities, and the measurement standards outlined in the legislation aren’t necessarily tailored to the financial sector. This has posed challenges for banks in preparing their reports and may lead to variation in the type of information disclosed."

Thiry emphasizes that sustainability extends beyond just climate concerns. Banks have a major role to play on the social front as well. “Given their vast workforce and customer base, poor governance, lack of inclusivity, or data security failures can have serious consequences. Fortunately, Belgium as a whole - and the financial sector in particular - has already made significant progress in these areas.”

Belgian investment house Degroof Petercam also falls under the scope of the CSRD. “Of course, we already have an ESG clause in our policy to meet our clients' ESG requirements, but the CSRD takes things a step further,” says Jo Wuytack, Group Sustainability Manager at Degroof Petercam.

"Gathering data across the value chain, such as calculating climate impact, is a long-term effort," Wuytack notes. "Climate risks are a reality and the CSRD helps us to map them out. By being more transparent about the impact of investments, we can better guide our clients. Some clients still aren’t fully aware of sustainability, but sooner or later, they’ll face it - either in their business or personal lives. The CSRD strengthens our credibility and provides the data needed to engage in these crucial conversations with our clients."

Degroof Petercam is putting the finishing touches on its first CSRD report, a 150-page document. “We’re still learning how to map out certain topics,” says Wuytack. “With additional data, the second report will improve upon the first. It’s a continuous process of learning.”

Wuytack first encountered the CSRD in early 2023 and immediately decided to take a closer look. “Our management quickly understood the importance of this regulation. The hardest part was getting started, as we couldn’t tackle it alone. Through a tender process, we partnered with KPMG. Soon after, we became the first Belgian bank to successfully conduct a double materiality analysis. The fact that Degroof Petercam had already been focused on sustainability for some time undoubtedly helped, as we had a solid foundation in place, with sustainability already integrated into various processes, policies, and our overall strategy."

Thiry also emphasizes that the first report primarily serves as a foundation for further refinement. “By 2025, companies will certainly learn from this initial report and adjust their processes to shift from a project mode to ‘business as usual’. This will allow for the automation of various processes and the use of technology to simplify reporting. Of course, changes are expected in the coming years, particularly considering the new ‘EU Omnibus Package’, which will simplify the reporting requirements (expected to reduce both the size of these reports and the associated workload from 2026 onwards). Regardless of the outcome of future regulatory developments, in my opinion, the CSRD has already achieved a crucial goal that goes beyond just reporting or compliance: it has placed sustainability at the forefront. In addition to the compliance burden and challenges of generating this report, it can be seen as a strategic tool to drive businesses toward greater sustainability.”

This article was created in collaboration with De Tijd and L'Echo.