Your entire ESG journey consists of a number of major milestones. Your materiality analysis is the basis of your ESG strategy, and consequently of your report. During that analysis, you identify your relevant sustainability topics. When you have an overview of your material impacts, risks and opportunities, it is time for the next step: the CSRD gapanalysis.
In your gap analysis, you determine your current status in relation to each of the material topics. For each topic, you examine your maturity in terms of both policy (have actions or targets been set?) and data (are there measurable KPIs, and do you have data available?). Note: it is not because a strategy has already been determined internally for a topic, or because figures arecollected, that you are allowed to add check marks. All these elements must also be published externally in your report. So it is possible that a gap is also a policy you already have in place, but which is not yet properly described in your sustainability report.
The result is an overview of what information is already available, and what may still be missing, for each material topic. More than a checklist, the gap analysis is a real working document. It identifies ‘quick wins’, but also larger development areas, and offers insight into which steps to take towards a compliant report.
Your gap analysis starts from your latest sustainability or annual report. Of course, you can also include other relevant documents, such as policy documents or strategies. Especially if you have never reported before, or your report is still a long way from Europe’s reporting requirements, it makes sense to base your gap analysis on other documents as well. At Pantarein, we often conduct interviews with management and with experts within the company to get a good idea of the current sustainability policy.
You test each material topic against the ESRS standards. Initially, you utilize the overarching ESRS 2 (General Disclosures). This contains general disclosure requirements that every organization must meet. You assess each material topic against the so-called Minimum Disclosure Requirements:
After this, you put your material themes alongside the thematic ESRS. These standards, clustered into environmental, social and governance topics, provide additional requirements on how to report for each ESRS topic. For example, the thematic standards may require additional reporting concerning specific indicators. An example: if ‘work-life-balance’ is a material topic, ESRS S1 requires you to indicate what percentage of your employees are entitled to take family leave.
Based on your gap analysis, you draw up your CSRD action plan and timeline. These make clear which gaps you want to close as a priority (i.e. within the next year), which gaps you want to postpone to the following year, which actions are necessary each time, and who is responsible for each action. Examples of actions are: drawing up a CO2 reduction plan, developing additional policy on biodiversity, or setting up additional HR-related measurements. In other words, the action plan forms your detailed roadmap to CSRD compliance.
It is also a good idea to be transparent about your gaps in your report. For instance, for the general disclosures from the ESRS, it is very important that you indicate which domains or topics are not yet covered by policy and/or data. In each case, also describe when and how you will close these gaps. In this way, you work step-by-step and transparently towards full CSRD compliance.
Obviously, the key is to get your report up to standard as soon as possible. Therefore, consider allowing Pantarein to guide you through your CSRD gap analysis or full ESG journey. Contact us at mail@pantarein.be.
