Now that the first CSRD reports have been submitted, many financial institutions face a new challenge: how can a one-off effort be embedded into a sustainable, annual process? Research by ACE + Company shows that financial institutions are grappling with recurring bottlenecks such as data issues, increased workload, and legal uncertainty. At the same time, innovative solutions are emerging. “The foundation is in place. The next step is a structural, efficient reporting cycle, potentially supported by GenAI,” says Rens Krediet, researcher on behalf of ACE + Company.
Data Issues and Manual Work in the First CSRD Cycle
The first CSRD cycle has exposed numerous procedural and content-related challenges. Many institutions struggle with missing or inconsistent ESG data, often due to a lack of clear data definitions and lineage. These processes are largely manual. Most data flows still need to be established, potentially involving up to 1,200 data points. This creates a significant effort to understand what each data point means, where the data can be sourced, and how it moves from point A to B. This manual handling has raised concerns about data quality. Krediet explains, “GenAI-driven solutions, such as ACE + Company’s RegAI, could truly offer a way forward in the future.”
Towards a Professional Second Cycle
For upcoming reporting years, further professionalisation is essential. This includes data automation, centralised data intake platforms, and clearly defined RACI structures with traceable data flows. The research shows that organisations are currently relying on transitional structures. They begin by experimenting with innovative technologies within temporary teams and selected departments. This phased approach helps refine methods before they are integrated into the wider organisation.
Organisations are also investing more internally. While external consultants played a major role in the first cycle, the focus is now shifting towards internal staff. As one research participant noted, “We’re currently internalising work that was previously outsourced, so we can become self-sufficient in the long run.” This shift helps to embed CSRD into the daily operations of financial institutions.
Embedding CSRD in the Organisation
Besides embedding the CSRD reporting cycle, organisations are also working to incorporate CSRD into their broader risk and control frameworks. This helps to ensure ongoing progress and day-to-day relevance. However, this is a major task. The legislation must be compared to a wide range of existing policies to identify overlaps, gaps, or duplication. Here too, Krediet sees potential for GenAI. “Thanks to GenAI, this kind of work can now be carried out much more efficiently and with shorter turnaround times.”
Slow Progress Around CSRD
Staff responsible for contributing to the reports commonly view CSRD as a burden due to the additional workload. This can cause resistance within the CSRD process. However, according to the research, this tends to ease as familiarity increases and processes improve.
Furthermore, the arrival of the Omnibus Directive has led many future improvements to be put on hold. This may reduce short-term investment costs, but it also slows down the learning process needed to improve efficiency for the second cycle. Another consequence of this uncertainty is that staff and leadership have deprioritized making improvements to the process. As one participant shared, “We’re still trying to sell the importance of CSRD internally.”
External Pressure
The legislation requires sustainability reports to be reviewed through limited assurance as part of the annual report. This requirement has raised awareness within finance teams. One participant remarked, “Once audit got involved, resources became available.” The audit requirement acts as a lever to ensure CSRD is taken seriously at an organisational level.
Institutions are not only responding to legal pressure but also benchmarking themselves against peers. Observing other banks and joining market initiatives plays an important role in identifying ways to improve their own reporting processes.
GenAI as a Catalyst
Although CSRD implementation is not purely a technical challenge, the research shows that generative AI can significantly accelerate and structure the process. GenAI can support implementation of an ESG data model aligned with both internal and external guidelines. This helps ensure consistent terminology and definitions. It can also be used to check whether data meets the required criteria, which avoids time-consuming manual validation. Another benefit is the ability to link policy documents and control frameworks to CSRD requirements, helping organisations identify overlap, gaps, or duplicates. GenAI can also be used to monitor legislative updates, such as the Omnibus, and translate them into reporting implications.
By supporting repetitive and error-prone tasks, GenAI not only speeds up the reporting process, but it also makes it scalable and future-proof. ACE + Company is at the forefront of this development with its RegAI platform for financial institutions. This AI-native solution helps ACE clients automate up to 90 percent of the manual work involved in implementing new regulations such as CSRD. It offers a direct solution to one of the biggest challenges faced by regulated institutions: conducting in-depth impact assessments and translating complex legislations into their business-as-usual operations.