The first wave of reports under the EU’s Corporate Sustainability Reporting Directive (CSRD), submitted in June 2023, has drawn both praise and criticism in policy and financial circles. What’s striking—perhaps more than the content itself—is the diversity in the approaches large enterprises have taken, particularly in supply-chain disclosures. Some firms appear to have embraced the spirit of the directive, offering detailed narratives on supplier impacts, risk assessments, and material sourcing footprints. Others, to put it gently, have kept things surface-level, relying heavily on boilerplate language that ticks regulatory boxes but offers little insight. And that variability has, predictably, caught the eye of both regulators and investors who are eager for more meaningful transparency.
For compliance officers tasked with preparing their next CSRD submissions, one lesson stands out: alignment with the European Sustainability Reporting Standards (ESRS) is no longer just good practice—it’s fast becoming essential. These standards, still evolving in some respects, provide a clearer framework for structuring supply-chain data in ways that meet both regulatory expectations and market demands for comparability. Yet, adopting the ESRS isn’t simply a matter of formatting reports differently. It requires a deeper rethinking of how supply-chain data is collected, verified, and linked to the broader ESG narrative a company wishes to present. That’s no small task, particularly in organizations where sustainability reporting remains somewhat siloed from core procurement or operational teams.
What complicates the picture is the technical side of compliance. Many firms are still grappling with how best to integrate their reporting processes into existing ERP platforms—whether SAP, Oracle, or another system entirely. The promise of using open ESEF (European Single Electronic Format) templates to streamline submissions is real, but, in practice, connecting these templates with live data feeds from complex ERP modules can be daunting. Some early adopters have opted for semi-manual approaches, pulling data extracts into custom-built reporting tools before uploading final outputs in ESEF-compliant form. Others are working more aggressively to automate the process, embedding ESRS data points directly into their procurement and supply-chain management modules. Neither path is without friction, but the latter clearly holds more promise for those seeking to future-proof their reporting practices.
The reality, though, is that no single roadmap fits all. Firms are experimenting, often blending off-the-shelf software features with bespoke workflows to bridge gaps between regulatory requirements and operational realities. There is, at least for now, a certain amount of trial and error at play. Some teams have reported unexpected difficulties in mapping supplier-level data to ESRS categories, especially where upstream transparency is limited. Others find themselves wrestling with legacy systems that weren’t designed with sustainability metrics in mind. There’s also a degree of hesitancy in some quarters—an understandable caution—as firms weigh how much detail to disclose in areas where supply-chain risks are still being assessed internally.
What has emerged, almost by accident, is a richer dialogue between compliance teams, IT departments, and supply-chain managers. The process of aligning CSRD reports with ESRS and integrating these with ERP systems has, in many cases, forced conversations that had been deferred for years. How, for instance, should Scope 3 emissions data from suppliers be verified and updated? Who, exactly, owns the data on supplier human rights audits or biodiversity impacts? These questions, while not new, have gained urgency in the face of tighter reporting deadlines and sharper stakeholder scrutiny.
One senses that the next wave of CSRD reports will likely show more consistency as firms settle into clearer processes. But challenges remain. The tension between transparency and commercial sensitivity continues to shape how supply-chain disclosures are framed. There’s also the not-insignificant issue of data quality. Even the most sophisticated ERP integrations or ESEF template alignments can only go so far if the underlying supplier data is patchy, outdated, or unverified. It’s here, perhaps, where policy developments and market pressure may need to work hand in hand to drive improvements. Until then, compliance officers are left navigating a landscape that is evolving quickly but not always coherently.