Upright Launches Database for CSRD Double Materiality

Data impact company Upright revealed the release of a pioneering database that features 50,000 companies and will help businesses and investors carry out double materiality evaluations under the Corporate Sustainability Reporting Directive (CSRD). This development aims to overcome some of the major obstacles with which organizations are struggling to adapt to the changing sustainability reporting regime in the EU.

Double materiality is a key foundation of the CSRD that differentiates it from earlier frameworks on sustainability reporting. According to this methodology, firms are required to report not only on the financial opportunities and risks created by sustainability problems for their enterprise but also on how they affect the environment and society. This dual materiality perspective guarantees that sustainability is built into business decision-making more thoroughly than ever. However, implementing these assessments has proven to be complex, with significant variations in methodology, materiality thresholds, and comparability across different companies and sectors.

Identifying these issues, Upright created a data-driven solution to simplify the process of double materiality assessment. The firm mentioned that though the CSRD framework is well-intentioned, its implementation has been plagued with interpretation complexities that resulted in inconsistencies and inefficiencies in the reporting process. Additionally, companies and investors have to navigate an oscillating regulatory environment, including the EU's Omnibus proposal, which seeks to alleviate the reporting burden through a narrowed scope of businesses falling under the CSRD.

Annu Nieminen, Upright's Founder and CEO, stressed that reversing sustainability goals in light of the laboriousness of legacy, manual reporting procedures would be a mistake. She noted that the CSRD's objective of enabling comparable, decision-useful information was not at fault—instead, the implementation had to be better. With the release of this new database, Upright is working to illustrate how third-party data providers can lighten the manual load while improving report quality at the same time.

The database analysis is fueled by Upright's own data engine, which aggregates data from a broad variety of sources. These sources span more than 300 million scientific papers, public databases, and direct company input. Using this large dataset, Upright's assessments are built to be strong, data-driven, and aligned with actual world sustainability impacts.

For companies, the new instrument is expected to streamline the process of making double materiality analyses more manageable through the offering of systematic, comparable data. Firms are able to compare their material risks, opportunities, and impacts to peers, and learn useful insights on how their sustainability performance compares to their peers within their sector. Investors, alternatively, can utilize the database for benchmarking sustainability-related risks and opportunities within their portfolios, facilitating more informed decisions.

There is a need for such an organized framework in sustainability reporting. Nieminen pointed out that ESG researchers and sustainability directors have been circulating Excel tables with comparisons of less than 20 published European Sustainability Reporting Standards (ESRS) reports that they have been able to source online. This is symptomatic of a larger need for centralized, comprehensive, and accessible sustainability data. By providing data-driven double materiality reports for over 50,000 firms, Upright aims to revolutionize how companies and investors approach sustainability reporting under the CSRD.

The CSRD marks a major change in the way firms report sustainability-related information, going beyond the voluntary ESG reporting towards a more formal and obligatory framework. Though the directive seeks to make the disclosure process more transparent and accountable, the compliance process has been intimidating to most organizations, especially those beset by a lack of standard methodologies. The new database offered by Upright is just what was needed, facilitating firms to achieve CSRD requirements faster while guaranteeing that the disclosures on sustainability continue to be action-oriented and informative.

As sustainability reporting increasingly becomes the norm, data-driven methods such as Upright's will only serve to be more important in helping close the gap between requirements and reality. By enabling companies to have at their disposal the means to make thorough and like-for-like double materiality calculations, the database has the potential to greatly facilitate the burden of reporting while assisting organizations in aligning themselves with the wider goals of sustainable and responsible corporate governance.