The Corporate Sustainability Reporting Directive – What You Need to Know

The Corporate Sustainability Reporting Directive – What You Need to Know

The Corporate Sustainability Reporting Directive (CSRD) is a significant regulation aiming to improve the quality and relevance of sustainability reporting by European Union (EU) companies. The CSRD was proposed by the European Commission on April 21, 2021, and entered into force on January 5, 2023. The CSRD requires companies in Europe to report on their sustainability practices, including environmental, social, and governance (ESG) performance, using standardized sustainability reporting requirements.

A new EU legislation requires all large companies to publish regular reports on their environmental and social impact activities. Compliance is happening soon, as companies are required to submit their report aligning with the CSRD on 1 January 2025, for the 2024 financial year.

Although the CSRD primarily targets larger companies, smaller companies will also be affected indirectly. This is because many small and medium-sized enterprises (SMEs) function as suppliers or service providers to larger companies, which are obliged to provide sustainability reports. Consequently, smaller companies will have to be prepared to respond to such requests and exhibit their commitment to sustainability.

The demand for sustainability reporting is not confined to the EU but is a worldwide phenomenon. Many multinational corporations have made sustainability a central aspect of their business strategy and anticipate their suppliers and service providers to do the same. As a result, sustainability is increasingly becoming a criterion for supplier selection and procurement decisions.

Smaller companies that do not prioritize sustainability may face a disadvantage when competing for business against larger, more sustainable rivals. Sustainability reporting, on the other hand, can assist smaller companies in developing their reputation, increasing their visibility, and enhancing their competitiveness.

It’s important to note that the CSRD is a directive of the European Union and may be applied differently in other countries. For instance, in Germany, a national law called Lieferkettengesetz has already been implemented, requiring companies to take responsibility for the social and environmental impact of their supply chains. Other countries may choose to adopt similar regulations or develop their own reporting requirements. Companies that operate globally may need to comply with multiple reporting frameworks, which can increase the complexity and cost of their sustainability reporting. Therefore, it’s crucial for companies to stay informed about the regulations and reporting requirements in the countries where they do business.

The regulation will impact the following types of companies:

  • Companies with more than 250 employees
  • Companies with a net turnover exceeding €40 million
  • Companies with a balance sheet total greater than €20 million

NFRD versus CSRD: Differences and Action Points

The Non-Financial Reporting Directive (NFRD) is a European Union directive that requires certain companies to report on their environmental, social, and governance (ESG) performance. Specifically, the NFRD requires “public interest entities” to disclose information on their ESG policies, risks, and outcomes.

NFRD versus CSRD: Differences and Action Points

What specific information will companies be required to reveal?

Additional to the NFRD Under Directive 2014/95/EU, large companies are required to publish information related to the:

  • Environmental protection
  • Social responsibility and treatment of employees
  • Respect for human rights
  • Anti-corruption and bribery and
  • Diversity on company boards

Also, the CSRD is adding additional requirements on:

  • Double materiality concept: Sustainability risk (including climate change) affecting the company + companies’ impact on society and the environment
  • Process to select material topics for stakeholders
  • More forward-looking information, including targets and progress
  • Disclose information relating to intangibles (social, human, and intellectual capital)
  • Reporting in line with Sustainable Finance Disclosure Regulation (SFDR) and the EU Taxonomy Regulation

    Obligation to Report

    Under the directive, non-EU companies with EU subsidiaries meeting specific annual revenue thresholds are obligated to disclose their environmental, social, and governance (ESG) impacts.

    It is crucial to note that failure to comply with the CSRD reporting requirements may result in severe consequences. Companies that fail to report and comply with the CSRD face fines of up to 10 million Euros or 5% of their annual revenue. This significant penalty reflects the importance of transparent ESG reporting and encourages companies to prioritize their sustainability efforts.

    Benefits and Consequences of CSRD Compliance

    Investing in CSRD initiatives has many benefits for businesses.

    Cone Communications found that 88% of consumers are more likely to buy from companies that prioritize social and environmental issues.

    In addition, a study by Glassdoor found that 75% of employees expect their employers to take a stand on social issues, which includes sustainability. Furthermore, the Harvard Business Review found that companies that prioritize sustainability are more likely to outperform their peers in the long term.

    Companies with strong ESG practices have a lower cost of capital, which leads to higher profitability and stock returns. The benefits of CSRD initiatives are not just financial. A study by PwC found that diversity and inclusion initiatives can improve employee engagement, increase innovation, and improve decision-making. Companies that prioritize diversity and inclusion also have a better reputation and are more likely to attract and retain top talent.

    However, companies that fail to comply with regulations can face significant penalties. Under the CSRD, companies that fail to comply with reporting requirements can face fines of up to 1% of their annual turnover. For example, French oil and gas company Total was fined for failing to adequately prevent a gas leak at one of its North Sea platforms, releasing nearly 50 tons of gas. Furthermore, Total is currently facing legal action in France over allegations of human rights and environmental violations related to its operations in Uganda.

    How CSRD Addresses the Problem of Quality Reporting

    The CSRD comes into play as Environmental, Social, and Governance (ESG) reporting gains momentum. There is evidence that companies’ information is not sufficient in the reporting. According to the European Commission, “reports often omit information that investors and other stakeholders think is important.” Reported information can be difficult to benchmark from company to company, and users are often unsure whether they can trust it. With its new requirements, the EU is tackling the problem of quality reporting by establishing a common reporting framework. The CSRD aims to ensure that businesses report reliable and comparable sustainability information to re-orient investments towards more sustainable technologies and companies.

    HR professionals play a vital role in enhancing their organization’s strategic impact through CSRD initiatives. By complying with regulations and investing in sustainable practices, companies can improve their reputation, attract, and retain top talent, improve financial performance, and promote diversity and inclusion within their organizations.

    EDLIGO Talent Analytics can support HR departments with a constant flow of data to predict and measure the impact of key strategic decisions and determine the future readiness of the organization, supporting HR departments in their strategic role as a foundation for sustainability.  EDLIGO helps organizations achieve their sustainability goals by providing data-driven, unbiased insights into workforce diversity, employee career aspirations, and mobility opportunities, and supporting the development of individual career paths and training opportunities.

    More about CSRD read here European Commission Portal.


    Talent Analytics: Definition, Use Cases, AI for Talent Management

    Talent Analytics: Definition, Use Cases, AI for Talent Management

    Talent analytics, often referred to as People Analytics or Workforce Data Analysis, is the systematic application of data analysis techniques to extract actionable insights, enabling informed decision-making in talent management. This encompassing approach involves the evaluation of skills, performance, potential, and workforce planning to enhance human capital strategies.

    EDLIGO Talent Analytics Employee Career Aspirations

    Talent Analytics is a powerful and cutting-edge approach that leverages advanced analytics to strategically enhance talent acquisition, management, retention, and development in organizations. This methodology employs data-driven techniques to efficiently collect, analyze, and interpret a wealth of talent-related information.

    A wide range of data sources can be utilized, including employee performance reviews, training records, recruitment data, surveys, and even external data sets such as industry benchmarks. By harnessing the power of Talent Analytics, organizations can make informed decisions, improve their talent management processes, and achieve remarkable results.

    With the help of artificial intelligence and by applying statistical models, machine learning algorithms, and predictive analytics, Talent Analytics aims to uncover valuable insights and patterns that can inform strategic decisions related to talent management. This approach enables organizations to identify the most promising candidates, improve recruitment strategies, enhance employee engagement and satisfaction, and align development programs with individual and organizational goals.

    AI and Talent Analytics

    AI technology has revolutionized Talent Analytics by providing real-time, predictive analytics that helps organizations identify, engage, and retain top talent. By leveraging AI, organizations can analyze vast amounts of data, including employees’ data and CVs, data from employee surveys, social media, job sites, and employee feedback, to gain insights into talent acquisition trends, employee performance, and skills gaps.

    One of the primary benefits of AI-powered Talent Analytics is its ability to predict workforce trends and identify patterns that may have otherwise gone unnoticed. For instance, organizations can use AI to analyze employee data and predict which employees are at risk of leaving the company. They can then take proactive measures, such as offering career development opportunities or adjusting compensation, to retain these employees.

    AI also makes it possible for organizations to personalize talent development programs by analyzing employee skills, career aspirations, and learning styles. With this information, organizations can create customized training programs that meet the unique needs of each employee, which can lead to improved performance and employee satisfaction.

    AI and Talent Analytics Use Cases

    AI and Talent Analytics have significant potential to improve decision-making in HR departments. Here are some of the ways AI and Talent Analytics can support talent management processes:

    • Increasing Retention

    By analyzing employee data, AI and Talent Analytics can identify the factors that contribute to employee retention. This information can be used to create retention strategies that address the unique needs of each employee and improve overall employee satisfaction.

    Predictive analytics plays a crucial role in retention management by leveraging data to forecast and identify potential employee turnover risks, enabling organizations to proactively implement targeted strategies for employee engagement and retention.

    • Personalizing Learning and Development

    AI and Talent Analytics can help organizations create personalized learning and development programs that meet the unique needs of each employee. By analyzing employee data, including performance metrics, skill gaps, career aspirations and learning styles, organizations can create customized training programs that improve employee skills and engagement.

    • Improving Performance Management

    By analyzing performance data, AI and Talent Analytics can identify the factors that contribute to high performance. This information can be used to create performance management strategies that focus on developing employees’ strengths, addressing their weaknesses, and providing ongoing feedback and coaching.

    • Preparing for the Future of Work

    AI and Talent Analytics can play a crucial role in preparing organizations for the future of work. By analyzing market trends, industry changes, and emerging skills, AI can provide insights into the skills and competencies that will be in high demand in the future. HR departments can use this information to develop targeted training programs and succession plans to ensure a skilled workforce that can adapt to changing job requirements.

    • Saving Costs by Automating Processes

    AI and Talent Analytics can help HR departments save costs by automating time-consuming and repetitive processes. For example, AI algorithms can streamline recruitment processes by analyzing resumes, screening candidates, and identifying top talent, thereby reducing the time and resources spent on manual resume screening.

    • Creating Targeted Plans

    AI and Talent Analytics can assist HR departments in creating targeted plans for talent acquisition, development, and retention. By analyzing data on employee performance, skills, and career aspirations, AI can provide insights into the areas where additional training or development opportunities are needed. This enables HR professionals to create targeted plans that address individual employee needs, foster engagement, and promote career growth.

    EDLIGO Talent Analytics

    EDLIGO Talent Analytics is an AI-powered solution that provides organizations with insights into workforce trends, skills gaps, employees career aspirations, performance metrics, and employee engagement levels, enabling them to make data-driven decisions and improve HR strategies.

    EDLIGO’s AI-powered Talent Analytics platform enables organizations to:

    • Identify high-potential employees and develop personalized career paths for each employee
    • Predict which employees are at risk of leaving the company and take proactive measures to retain them
    • Analyze the effectiveness of learning and development programs and adjust them to meet employee needs

    The platform provides HR managers and company leaders with real-time data visualization that can be customized to fit the needs of each organization, making it easier to identify skills gaps and analyze workforce trends.

    Employees are the Greatest Assets: New Priorities of CFO in 2023

    Employees are the Greatest Assets: New Priorities of CFO in 2023

    EDLIGO Talent Analytics - Employees are the Greatest Assets: New Priorities of CFO in 2023

    The CFO’s role has undergone a significant evolution, shifting from a primary focus on financial management and reporting to a more strategic responsibility in shaping a company’s culture and strategy. This transformation reflects a change in the CFO’s function. Today’s CFOs are expected to be more than just number crunchers; they are expected to be advocates for employees and drive employee development, diversity, and inclusion initiatives as well as to shape the company culture and strategy.

    The Importance of Employee Development for Business Growth

    In 2023, CFOs are recognizing the significance of prioritizing employee development. They understand that investing in the growth of employees can not only foster personal and professional advancement but also enhance the overall performance of the business. Through the provision of training and development opportunities, employees have the chance to enhance their skills and knowledge, leading to improved job performance and increased engagement.

    Furthermore, CFOs understand investing in employee development serves as a valuable strategy to attract and retain top talent. By offering avenues for employees to learn and grow, companies can cultivate a workforce that is both skilled and highly engaged. This, in turn, can result in higher job satisfaction and lower turnover rates, ultimately leading to cost savings for the company.

    As a result, CFOs are prioritizing employee development as a key approach to building a skilled and engaged workforce. They understand that by investing in their employees, they can drive better business performance, creating a win-win situation for both the company and its employees.

    A concrete example of a company that has successfully embraced employee development is Accenture. This organization offers personalized learning experiences to its employees through its digital learning platform. As a result, they have observed a remarkable 22% increase in employee productivity and an impressive 21% reduction in attrition rates. This shows the positive impact that investing in employee development can have on both individual growth and overall company success.


    Embracing Diversity and Inclusion in the Workplace

    In 2023, CFOs are placing increased emphasis on diversity and inclusion.

    Gartner’s research indicates that 75% of CFOs view diversity and inclusion as essential to their company’s success.

    Additionally, a study published in the Harvard Business Review suggests that diverse organizations have achieved a 19% increase in revenue from innovation. Consequently, CFOs are proactively fostering diverse and inclusive workplaces, aiming to create an environment where everyone feels appreciated and treated with respect.

    Companies that have successfully embraced diversity and inclusion have seen a positive impact on their bottom line. For instance, Microsoft has reported a 20% increase in employee satisfaction and a 27% increase in innovation after implementing its diversity and inclusion initiatives.

    CFOs are prioritizing diversity and inclusion because they know that a diverse and inclusive workforce can lead to better decision-making, increased creativity, and innovation. Moreover, it can help companies attract and retain top talent, which is critical for business success.


    Prioritizing Employee Engagement

    Employee engagement is also a key focus for CFOs in 2023. Employee engagement is essential for maintaining a positive and productive work environment. CFOs are prioritizing fostering a culture of inclusion, collaboration, and recognition to promote employee engagement.

    CFOs understand that employee engagement is critical because engaged employees are more productive, more likely to stay with the company, and more likely to provide excellent customer service. Companies that have successfully prioritized employee engagement have seen significant benefits. For example, Cisco’s “People Deal” program has increased employee engagement by 10% and has resulted in a 2% increase in customer satisfaction.


    Advocating for Employees

    As CFOs increasingly focus on promoting employee well-being, development, and inclusion in the workplace, they are emerging as strong advocates for their employees. They recognize that prioritizing employees’ well-being is a critical component of achieving success as a company. By investing in their employees’ well-being, development, and inclusion, they are driving business success.

    A Gartner survey reveals that 80% of CFOs consider employee well-being to be a crucial factor in their company’s success.

    Additionally, Forbes reports that 89% of CFOs believe that their company’s culture and values play a vital role in driving financial performance.

    CFOs advocate for their employees because they know that happy, healthy, and engaged employees are more productive and provide better customer service. Companies that prioritize employee well-being and engagement tend to experience higher employee retention rates, lower turnover costs, and improved financial performance. As a result, CFOs are taking an active role in creating a workplace that fosters employee well-being, development, and inclusion.


    How EDLIGO Can Help

    EDLIGO is a comprehensive Talent Analytics platform that enables CFOs to focus on key employee priorities, such as employee development, diversity, inclusion, and engagement.

    Using the platform, organization leaders can gain valuable insights into their employees’ skills, competencies, and potential, enabling them to make informed decisions about career growth and development opportunities.

    Additionally, EDLIGO‘s Talent Analytics capabilities can help identify and address any potential biases in their promotion processes. With EDLIGO, CFOs can foster a culture of continuous learning and growth, leading to a more diverse and inclusive workplace. The platform offers training and development programs that focus on diversity, equity, and inclusion, empowering employees to contribute to a more inclusive and diverse work environment.


    EDLIGO Partners with msg group for AI-Powered Talent Transformation to Build a Future-Ready Workforce

    EDLIGO Partners with msg group for AI-Powered Talent Transformation to Build a Future-Ready Workforce

    EDLIGO, a leading provider of AI-powered Talent Analytics solutions, one of Germany’s 3 most innovative medium-sized companies in software and hardware has announced a strategic partnership with msg, a Germany-based IT consulting and services company that offers a range of digital solutions to businesses worldwide. The partnership aims to provide organizations with data-driven and AI-Powered talent transformation solutions to optimize workforce operations, align people competencies to corporate strategy, and improve employee engagement.

    This collaboration will involve integrating EDLIGO‘s award-winning Talent Analytics platform with msg’s innovative AI-powered solution msg.ProfileMap. msg.ProfileMap is a state-of-the-art Workforce & Competence Management platform that automates the collection of personnel information from various data sources and leverages artificial intelligence to identify staffing options and teams for specific tasks. Based on market information scraped from the internet competence models and skill sets can be designed and mapped to employee skill information. Skill gaps are identified, and individual learning paths get recommended.

    By integrating EDLIGO‘s Talent Analytics solution with msg.ProfileMap, organizations will be able to establish a competency-driven HR ecosystem that helps make organizations to be future-ready. Use cases vary from efficient project assignment, employee development up to strategic workforce planning and competency transformation. This partnership will enable businesses to make more informed decisions when it comes to employee management, leading to increased productivity and an overall positive impact on company performance.

    “We believe that combining EDLIGO‘s advanced Talent Analytics platform with msg’s msg.ProfileMap platform, will provide a powerful solution to help organizations optimize their workforce and improve business performance and catalyse transformation,” said Lassaad Essafi, CEO of EDLIGO. “Our partnership will enable organizations to identify, hire and retain top talent, improve their development planning, enrich their career progression with agile assignments, job rotations, timely succession planning, and optimize HR investments.”

    “At msg, our dedication lies in delivering innovative solutions that empower our clients to accomplish their business objectives.  Our mission is to enable our customers to master the digital transformation,” expressed Recardo Jackson, Executive Vice President & Managing Director of the msg company. “Collaborating with EDLIGO, we will equip our clients with state-of-the-art Talent Management tools, fostering the optimization of HR processes and the enhancement of overall business performance.”


    About EDLIGO

    EDLIGO is a leading provider of AI-powered Talent Analytics solutions, specializing in data-centric Talent and Skills Management. EDLIGO‘s offerings empower organizations to gain deeper insights into their workforce and fine-tune their HR approaches, ultimately fostering enhanced employee engagement and bolstering business performance.

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    About msg

    A Germany-based IT consulting and services company msg offers a range of digital solutions to businesses worldwide. The company provides services in various areas, such as digitalization, big data, cloud computing, cybersecurity, and SAP consulting. msg has developed called minnosphere, a cloud-based platform that offers customer engagement, sales management, and project management tools.

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    Learning Analytics and AI to Improve Decision-making in Education

    Learning Analytics and AI to Improve Decision-making in Education

    Learning Analytics is the process of collecting, measuring, analyzing, and reporting data about learners and their contexts to improve learning outcomes. It involves using data to understand how learners are engaging with learning materials, identifying areas where learners may be struggling, and identifying opportunities for improvement in teaching methods and materials.

    Learning Analytics draws on a variety of data sources, including student performance data, learning management system (LMS) data, and other forms of digital data generated by learners. This data is then analyzed using various techniques, such as predictive modeling, machine learning, and data visualization, to uncover patterns and trends in learner behavior and performance.

    The goal of Learning Analytics and AI is to help educators and institutions make data-driven decisions about how to optimize the learning process and improve student outcomes. By leveraging the insights provided by learning analytics, educators can better understand how students learn and tailor their instruction to meet individual needs, ultimately leading to improved learning outcomes for all learners. Learning Analytics allows educators to gain insights into student behavior, performance, and engagement, which can then be used to make informed decisions about curriculum design, teaching methods, and individualized learning support.

    By analyzing data from various sources, such as learning management systems, student records, and online learning activities, Learning Analytics can identify patterns and trends that help educators understand how students learn and how to optimize their learning experiences.

    Artificial intelligence (AI) plays a crucial role in Learning Analytics, as it enables the processing of vast amounts of data in real-time. AI algorithms can analyze and predict student behavior, identify areas of weakness and strengths, and even generate personalized learning paths for students. By integrating AI with Learning Analytics, educators can gain actionable insights that support data-driven decision-making in education.

    One significant benefit of AI and Learning Analytics in education is the ability to identify and support struggling students. Early identification of at-risk students allows educators to intervene and provide targeted support, which can improve student outcomes and prevent dropout rates. For example, AI-powered Learning Analytics can identify students who are falling behind in a particular subject or struggling with specific concepts and recommend additional resources or personalized learning plans to help them catch up.

    Another benefit of AI and Learning Analytics is their ability to support personalized learning experiences. With data analytics, educators can tailor learning activities to individual student needs, preferences, and learning styles. This approach helps to ensure that students receive the right level of support and challenge, which can boost engagement, motivation, and achievement.

    Learning Analytics and AI have significant potential to transform education by enabling data-driven decision-making and personalized learning experiences. By harnessing the power of data and machine learning, educators can identify patterns, predict outcomes, and improve student success. The integration of AI with Learning Analytics has the potential to revolutionize education and create more equitable and effective learning experiences for all students.

    EDLIGO is one of the prominent players in the field of Learning Analytics, offering advanced analytics tools and solutions to educational institutions worldwide. With EDLIGO’s Learning Analytics platform, educators can gain actionable insights into student learning patterns, engagement, and performance. 

    The platform utilizes machine learning algorithms to generate personalized learning paths, identify at-risk students, and measure the effectiveness of teaching methods. By leveraging EDLIGO’s Learning Analytics solutions, educators can make data-driven decisions to optimize the learning process and improve student outcomes.

    Overall, EDLIGO’s Learning Analytics solutions are an invaluable tool for any educational institution looking to improve student outcomes and stay ahead in the ever-evolving landscape of education technology.

    Discover how Educational Institutions and Ministries of Education Utilize the Power of AI and Learning Analytics

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