By now, many directors have heard enough theoretical Corporate Sustainability Reporting Directive (CSRD) advice from the various firms. They want action. But how do you get out of the advice corner and take the first concrete steps toward CSRD compliance? We explain in this blog. Tip of the hat: start small, but then get right down to the specific reporting topic. An agile ESG data foundation is always required anyway.

What are the first steps?

The Corporate Sustainability Reporting Directive (CSRD) requires many large listed companies to report on their environmental and social performance as early as calendar year 2024. In many cases, the reporting pressure resulting from this works its way down to (smaller) suppliers. After all, they have to provide the necessary reporting data. As of calendar year 2025, the obligation also goes into effect for non-listed companies. This puts the necessary pressure on these companies and, as a result, they are fully investigating what it takes to become compliant.

We see it often: directors seek assurance and comfort from the larger consulting firms. After performing functional materiality analyses, they present a list of recommendations. This often includes the promise that a tool will help identify all CSRD aspects and thus ensure compliance.

Nice, those advices. But how do you actually go about accounting and governance from ESG data?

A CSRD tool without a good data foundation: (un)sensible?

If your company falls under the CSRD, you have to report on typically hundreds of data points. Many data are hard to come by. If you can get the data, the quality and measurability are often problematic. Ideally, you collect the data in such a way that you can make various cross-sections from it. These cross-sections must meet the requirements and wishes of your most important target groups: the regulator, financiers, your internal organization and other parties in your value chain.

Each of these target groups wants different types of information - and at different levels of detail. The challenge: all the reports you generate for these groups must be exactly in line with each other. This requires a good foundation for data storage and processing (or your "data foundation"). Consulting firms often recommend a CSRD tool, but such a tool an sich never leads to CSRD compliance. That's where consistency with a good data foundation is needed.

Most companies covered by CSRD have reached a dead end. They still manage to define a sustainability strategy based on the materiality analysis. What are they getting stuck on? Finding a solution that aggregates the data in such a way that all stakeholders can be served with it. They often approach Hot ITem with a request to jointly take the first concrete steps. How can the data they need actually be aggregated, organized and used?

Correct and agile ESG data foundation

A CSRD tool is only as good as the data you put into it - a point that tool vendors also emphasize. Often, links to all source systems are built or Excels have to be uploaded to feed the tool. This is error-prone, time-consuming and not future-proof. Far better to create a correct and agile foundation for environmental, social & governance (ESG) data. This allows you to use the data more broadly for your own analyses, in addition to the mandatory reporting.

Report periodically and answer ad hoc questions

A great aspiration is to set up your data foundation so that it can deliver value on several fronts: ESG, finance, customers and products. From a so-called "star model," the various types of data are interrelated logically for efficient and effective analysis and reporting. Result: you can answer every question much more easily. Not only does this enable you to periodically provide accountability, it also allows you to answer ad hoc questions from stakeholders substantiated with data.

Technically, you need an agile, well-structured data environment. You must be able to store and maintain both financial and non-financial data together. You can realize this, for example, in the form of a lakehouse concept, which includes a data warehouse solution. On top of that, you can always deploy a reporting tool.

Exactly how a company sets this up is of no concern to us. We are vendor-agnostic and simply work with the tools and resources that customers have in-house. We can make any standard data environment setup work from the functional specifications. As a result, you can bring financial and non-financial aspects together, greatly enhancing the reporting potential of your platform.