7 Common CSRD Pitfalls (And How to Avoid Them)
As companies scramble to meet CSRD deadlines, we're seeing the same mistakes happen over and over. Here are the seven biggest pitfalls – and more importantly, how to avoid them.
1. Starting Too Late
The Mistake
"We have until 2025/2026/2027 to report, so we'll start next year."
Why It Hurts
CSRD requires historical data. If you're reporting in 2025 on 2024 data, you needed to start collecting that data in January 2024. Many companies realize too late they don't have the required baseline data.
How to Avoid It
- Start data collection NOW, even if reporting is years away
- Build systems today that capture data going forward
- Document current state as your baseline
- Create a reverse timeline from your reporting deadline
Rule of thumb: Start preparing 18-24 months before your first report is due.
2. Underestimating Double Materiality
The Mistake
"We'll just report what we think is important, like we do for ESG."
Why It Hurts
Double materiality isn't optional or subjective. It requires systematic assessment of both:
- How sustainability issues impact your business (financial materiality)
- How your business impacts the world (impact materiality)
Missing material topics can result in non-compliance and required restatements.
How to Avoid It
- Use a structured methodology for materiality assessment
- Document your process thoroughly
- Engage stakeholders (employees, customers, suppliers, investors)
- Get external validation of your assessment
- Review annually – materiality changes over time
3. Treating It Like a Finance-Only Project
The Mistake
"The CFO owns financial reporting, so they'll handle CSRD too."
Why It Hurts
CSRD data comes from everywhere:
- HR (diversity, training, safety)
- Operations (emissions, waste, water)
- Supply chain (Scope 3 emissions, supplier practices)
- Legal (governance, policies)
- IT (security, data protection)
Finance alone can't access or validate all this data.
How to Avoid It
- Create a cross-functional team from day one
- Assign data owners in each department
- Establish regular coordination meetings
- Build integrated workflows across departments
- Get CEO sponsorship to ensure cooperation
4. Ignoring Scope 3 Emissions
The Mistake
"We'll focus on our direct emissions (Scope 1 & 2) and figure out Scope 3 later."
Why It Hurts
For most companies, Scope 3 represents 70-90% of total emissions. It's also the hardest data to collect, requiring supplier engagement and estimation methodologies. You can't build this overnight.
How to Avoid It
- Start supplier engagement NOW – send questionnaires early
- Use spend-based estimates initially, refine over time
- Focus on material categories first (usually top 5-10 suppliers)
- Build data collection into contracts with new suppliers
- Consider software solutions designed for Scope 3 tracking
5. Manual Data Collection Chaos
The Mistake
"We'll use spreadsheets and email to collect data, just like our financial reporting."
Why It Hurts
CSRD requires 1,000+ data points across dozens of stakeholders. Spreadsheet sprawl leads to:
- Version control nightmares
- Data quality issues
- No audit trail
- Massive time investment
- High error rates
How to Avoid It
- Implement ESG software early (even basic solutions help)
- Standardize data formats across the organization
- Automate collection where possible (IoT sensors, API integrations)
- Create clear workflows with deadlines and responsibilities
- Build in validation rules to catch errors early
6. Skipping Internal Controls
The Mistake
"We'll worry about controls once we have the data."
Why It Hurts
CSRD requires the same control rigor as financial reporting. Auditors will test your controls, not just your data. Retrofitting controls is 10x harder than building them in.
How to Avoid It
- Design controls alongside processes from the start
- Document everything: who collects, reviews, approves
- Implement maker-checker principles for all data
- Create audit trails for every data point
- Test controls quarterly before the auditor arrives
7. Choosing the Wrong Assurance Provider
The Mistake
"Our financial auditor will handle CSRD assurance too – easy!"
Why It Hurts
Not all auditors have sustainability expertise. Choosing wrong means:
- Last-minute scrambles to find qualified providers
- Higher costs due to learning curves
- Potential conflicts of interest
- Delayed reports
How to Avoid It
- Check sustainability credentials specifically
- Ask about CSRD experience (it's new, but ESG experience counts)
- Start conversations early – good providers book up
- Consider independence rules – some services create conflicts
- Get proposals from 2-3 providers to compare approaches
The Meta-Pitfall: Thinking Small
Beyond these specific pitfalls, the biggest mistake is treating CSRD as just another compliance exercise.
Smart companies are using CSRD as a catalyst to:
- Improve operations (efficiency gains from measurement)
- Enhance reputation (transparency builds trust)
- Access green financing (better rates for sustainable companies)
- Attract talent (employees want responsible employers)
- Drive innovation (constraints spark creativity)
Your Action Plan
To avoid these pitfalls:
- Week 1: Assess your timeline and start date
- Week 2: Form your cross-functional team
- Week 3: Begin materiality assessment
- Week 4: Evaluate technology needs
- Month 2: Start supplier engagement for Scope 3
- Month 3: Design data collection processes with controls
- Month 4: Begin assurance provider selection
The Bottom Line
CSRD compliance isn't just about avoiding penalties – it's about building sustainable business practices that create long-term value. Every pitfall avoided is an opportunity captured.
The companies that thrive under CSRD won't be those that do the minimum. They'll be those that see it as a chance to build better businesses.
Start early. Build robust systems. Think strategically. Your future self (and auditor) will thank you.
Need help navigating CSRD pitfalls? ClearComply provides expert guidance, practical tools, and AI-powered assistance to keep you on track. Start your compliance journey →