Bendt Ransborg Hejerholt
November 13, 2024
The Ultimate Guide to CSRD Software: Pros, Cons, and what to think about
As new markets emerge, it can be almost impossible to maintain an overview. This is precisely the case right now with CSRD software. This article helps you get on top of things, providing the pros and cons of four types of software, all of which can be used to support a company's CSRD process.
Thousands of employees from many different departments are currently struggling to get a handle on CSRD work. They aim to understand the requirements for CSRD reporting and the standards underlying the directive.
On top of that, questions pop-up regarding how to collect data, involve organisational and management layers, and not least, how to keep track of the process with the necessary documentation. Should one invest in a digital tool? Can it be done in-house?
I am discussing exactly this with companies, organisations, trade associations, banks, auditors. They ask themselves, each other – and me – what to do. I believe I know what's going on out there. This in terms of what I have on the shelf myself and in terms of what is generally available out there.
And what can one get then?
I acknowledge that it's difficult to get an overview.
Broadly speaking, there are four different product categories:
- :
1.The Excel sheet
- :
2.ERP software
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3.Specific CSRD software
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4.'All inclusive' ESG software
It is my impression that these categories look pretty much the same from geography to geography. Some countries will likely have more local providers than others but typically software of a certain maturity is ‘country-agnostic’.
Each solution has its own pros and cons, which the company must consider and do the math. The different solutions must be weighed against the company's ambitions, finance, competencies, systems landscape, legislative requirements, etc. This article is not about individual suppliers. That would be too complex. It deals solely with the pros and cons of the four solution categories – and that's already plenty.
So, let's get to the point.
When something seems new and overwhelming, it is deeply rooted in human nature to fall back on what is safe. The easy option. Perhaps a number of finance directors, ESG specialists, and others responsible for the company's CSRD process recognise these mechanisms – maybe with a bit of thrift – when they choose Excel to assist in their CSRD work? Excel is indeed the easy choice - until it isn't anymore, one might add.
In nine out of ten cases, Excel to me is equal to a non-decision. For most, at least. Those who can't quite bring themselves to make a decision or are so unsure of what the right choice will be that the best thing to do is to delay the decision. However, a few companies I talk to have really made an informed choice with pros and cons. That choice turned out in favour of Excel, and for that, I have great respect.
The important thing is to check in maybe every six months to evaluate whether a large spreadsheet is still the right solution. It may well be, but you probably should be clear about what things and types of disadvantages could tip the balance toward another solution.
Excel is fit for purpose just now because we know the system, and our own management consultants, for example, have used Excel very effectively – also for CSRD work. But it is not a future-proof choice, as you will have to update your 'system' yourself with the latest formalities and legal requirements. That's hard work, I can tell you.
Here is my (not exhaustive) list of pros and cons:
| Pros | Cons |
| Easy once you've designed your sheet | Difficult collaborating with others |
| Free | Doesn’t update with new legislation |
| Familiar and simple interface | Cannot be scaled |
| Flexibility | High risk of errors |
| Potentially high time consumption overall |
Let's move on to option number two.
This type of solution probably lies between the Excel sheet and the more specialised CSRD/ESG solutions in the sense that it is a system that the company typically already has and feels relatively comfortable with. But – one must remember – it is actually quite a complex system when it comes down to it.
Often, it will ultimately be a company's Finance Director who is responsible for CSRD work, so some will choose the known option since most ERP systems 'live' with precisely finance or accounting departments. ERP, Enterprise Resource Planning, essentially covers many possibilities, even if the financial part weighs heavily with most companies. Therefore, several ERP providers also offer the ability to work with ESG data and processes within the same platform. If you've already committed to 'accounting', for example, it’s easy to move on to 'carbon accounting'. Two essential accounts for any larger firm.
Thus, the ERP path has the clear advantage that some of the data you want to work with are already in the system. In this way, I assess that the ERP path is both easy and difficult at the same time. That sounds paradoxical. The issue is that you can get started quickly in an environment you might know, especially if you work in finance, but ERP systems are simultaneously really complex, and experience has shown, for example, that it can be difficult to get a 'simple' CRM system if you go with a large system that is actually built for something else. I believe the same will prove true with the CSRD process.
But... then there's the possibility of keeping the complexity down by looking for option 3, namely the specially designed CSRD systems. They can typically be integrated with the ERP system and will be easier for many, even though you then have to deal with two suppliers.
Option 2 includes among others these pros and cons in my book:
| Pros | Cons |
| Almost free or maybe an extra fee | Not at all built for CSRD |
| Known interface for certain employees | Complex system landscape |
| Easy to pull certain data into the CSRD process | Often an outdated user interface |
In this category, we are dealing with a very new type of software, not on the market just a few years ago. They are indeed created specifically to support the CSRD process. That is the system's clear advantage.
Some systems are purely on CSRD, while others offer CSRD modules as part of a package solution. However, it is not given that you can only buy the CSRD module. In that case, we are in category 4 – I will return to that.
Most of these software systems are small, intuitive, and help drive the CSRD process forward, step by step. Therefore, they are attractive for medium-sized companies without deep knowledge of CSRD - but many large companies would also - just for once - like to have an easy system. Work smarter, not harder, as it goes.
I mentioned ERP integrations before, and the small CSRD systems can typically be tailor-made with some sort of data warehouse and API integrations, so you can link up to the platforms you find necessary, without the core product becoming more complex for that reason.
The disadvantage here is that no-one in the company really knows the system yet which - unlike options 2 and 4 - have not had a natural owner in the company. Therefore, one must clarify who 'owns' the process and thus the system, although it is always a good idea to make a system specification across the relevant departments. You can then compare this with the features that software suppliers can present.
Most suppliers will respond to that challenge by designing a system that is intuitive and follows the CSRD process with, for example, double materiality analysis, gap-fit analysis, reporting, etc. These slightly smaller systems will often have an attractive price point where you pay a license unlike the Excel sheet, but not a license that will require extra funding and internal approvals.
Pluses and minuses will include some of these:
| Pros | Cons |
| Intuitive and fully CSRD supportive | Not born with supplementary data |
| Auto-updates when legislation changes | Comes with a fee unlike Excel |
| Typically comes with API-integrations | Can typically be integrated for full-scale ESG software but built with a narrower focus |
| Shareable and safe re data og GDPR | |
| Cost effective |
Finally, we have reached the last option when you want software support for your CSRD work. The big 'all-inclusive' systems, as I like to call them.
These systems typically grew out of the need to measure and report on ESG data in a broad sense. They will probably call themselves ESG software more than CSRD software. But with the latest directives, these suppliers have of course also developed solutions that help companies through the CSRD process. Thus, these suppliers typically have a name especially in the sustainability departments of ESG-ambitious companies, where they have supported ESG work for several years. Not just with software but also with detailed knowledge built into the solution. Now you can purchase CSRD modules, and the task is typically to convince other departments that this type of software would be the right way to go.
It can be a considerable cost to go 'all-inclusive,' but you also get a lot in the package. Some companies, despite a significant size, do not yet have an ESG software system, and the CSRD work may be what triggers the need. Thus, the companies can get an ESG system, offering ESG management for the entire group. Such a system requires a large commitment in terms of resources and finance, so here you must create a strong alliance across the affected departments and make a solid business case and use case, so you get the most impact out of your investment.
Suppliers in category 4 are typically Software-as-a-Service companies with a start-up vibe but are beginning to mature and branch out. This also means that certain suppliers offer ad-on services such as ESG experts to help drive the implementation. This also applies to certain suppliers in category 3.
The last pro/con chart in this article looks like this: Pros Cons
| Pros | Cons |
| System supports the entire ESG palette | Expensive if the real need is CSRD compliance |
| Can boost the entire organisation's maturity on ESG management | Typically, good interfaces but still more complex than pure CSRD solutions |
| Built-in ESG expertise and ESG data | Potentially unclear who is the system owner |
| Shareable and safe re data og GDPR | Needs a very strong business case and internal collab before/during/after purchase |
And there you have it. Four categories and my take on the ultimate guide to CSRD software - of which not everything is really CSRD software. But that's the way it is.
I could make quite a lengthy list of things you should ask your supplier before buying. It has already been a lot, so let me stay true to the article here and only go deep on three matters you should discuss with a potential software supplier:
A) What reference customers have already implemented the system, and how has it helped them? Ask for examples of customers like your company and hear about their experience with the implementation and use of the software. This can give a realistic picture of how the system works in practice and what results others have achieved.
B) How does the system ensure that CSRD data are securely stored and support the company's responsibility for storage for at least five years, also in the event of bankruptcy or sale of the supplier company? This question covers data security, storage period, and contingency plans in situations where the provider of the system goes bankrupt or is sold (yes, that can happen). Ask about the mechanisms and conditions in place to ensure that your company can still access your data and meet the storage obligations, even if the system supplier no longer exists or changes ownership. This may include backup solutions, data export options, and warranties in the delivery agreement.
C) How does the system support the possibilities for the more flexible phasing in of CSRD data points for companies with up to 750 employees, including the option to omit or partially include certain data points for the first three years? This question focuses on how the system helps companies handle the gradual phasing opportunities in CSRD reporting. Ask whether the system can be adapted to omit or partially include specific data points in compliance with the standards’ requirements, and how it differentiates between different company sizes - especially the smaller companies that have the option for a longer phasing period. This ensures the system is flexible and can support the company's compliance strategy over time.
Please do not hesitate to reach out to discuss if CSRD Navigator can deliver on your company’s needs.
Bendt Ransborg Hejerholt is well-versed in the Danish/Nordic software landscape with experience from SaaS companies and years of contact with both suppliers, auditors, and ERP houses as well as not least the business-responsible on the customer side. Bendt is currently working at Ramboll with partnerships, relationships, and sales of CSRD Navigator (which is among Denmark's preferred systems in category 3).
Want to know more?
Thomas Hagen Holten
Director SI
+45 51 61 78 17
Bendt Hejerholt
Manager of ESG Solutions Sales
M: +45 60 36 21 45
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