Q&A with Daniel Lösch, the founder of AtlasZero
| What kind of CSRD solutions do you have in your database?
We currently have 110 CSRD solutions listed in our CSRD solution finder. All of these solutions can help companies create a report that is compliant with EU regulations. Many providers are jumping on the CSRD reporting topic since it is mandatory and companies cannot opt out. In theory, this is a lucrative market, that’s why there are so many solutions.
Of the 110 solution providers, some offer consulting services, some offer software solutions, and some offer both. Those approaching it from the software side might have done carbon accounting or some other sustainability compliance before. They are now building software, which tracks all the CSRD data that companies have and need to report on.
Then there are consulting companies that may previously have worked on other types of sustainability consulting, such as GRI reporting. Now, they also want to provide consulting services to companies for CSRD reports.
Those different elements of software and consulting can be combined. Software companies may also offer some consulting on certain topics. For example, there are over a thousand data points in the ESRS. Especially when they are qualitative and companies need to write a narrative, the software can help in some ways, but not all. In those cases, companies need someone, who actually knows and understands the topic and can provide additional consulting.
| Is the line between consulting companies and software companies blurring? I mean there will no longer be pure consulting firms and pure software firms because clients are increasingly looking for a combination of both.
There is no doubt that many clients are looking for this combination. So it is either software companies that are looking to add some consulting elements to their services or consulting companies that know that their clients want to save some money by having some software to keep track of all the data points and the data itself. They either try to develop something themselves or they cooperate with others.
The market will have to consolidate somewhat because right now it is just like a huge mess of different solutions. Maybe in the short term it is going to grow a little bit more, but then at some point, it will need to contract. Some solutions will likely be combined, and a lot of consultancies, which now have their own solution, might join forces with a software company.
| Do you already see mergers and acquisitions?
Big consultancy firms have already started buying smaller sustainability boutique firms.
Although everybody is getting ready for CSRD reporting, the sales cycles are still super slow. Thus, some companies are unable to monetize quickly enough and will end up either being sold or going bankrupt. As a result, some big companies will get even more expertise by buying up small start-ups that don’t monetize fast enough.
| What do you think about the quality of these solutions? I hear a lot of complaints.
Solutions are of varying quality. You can get a CSRD solution for 5,000 euros per year or for 150,000 euros a year. Because their prices are very different, so is their quality. It really depends on what you are looking for.
Most of the time, when I look at the solutions, I can already guess where they come from by seeing their focus and expertise. The quality is just very different because some providers have a lot more resources and expertise, so the solutions are better. Some companies have much less of these and even though their software solutions may be able to create CSRD reports, I wouldn’t recommend it to my clients.
| So the price of the solutions in your portfolio range from 5,000 euros a year to 150,000 euros a year?
That is the general range, I would say. But then with these price ranges, we have to be careful, because obviously, you can always spend more on this, right? So if you go to one of the Big 4s, you will get prices from 250,000 euros and upwards. It really depends on the complexity of the project and the size of the company.
I am trying to track the starting prices of different software solutions and these are usually between 5,000 and 150,000 euros. This will obviously be adjusted upwards once companies know more about their specifications and also if the company has more than, let’s say, 500 employees.
| You have probably seen a lot of demos, right? What are your experiences with those demos?
It is super difficult to make a statement now that is still true in two weeks. Last December, I looked at a lot of tools, demos, and gathered information about the available solutions and features. As soon as I published all of that in January, I realized that nowadays it takes about two weeks for providers to release a new version of a software. After a couple weeks, these companies have a new feature, new products and they change the pricing.
It is difficult to keep track of all the developments because the market is so big and there are so many companies. They not only offer CSRD, but also Corporate Sustainability Due Diligence Directive (CSDDD), Taxonomy, Carbon Border Adjustment Mechanism (CBAM) and EU-Deforestation Regulation (EUDR) solutions. These are very different topics and companies develop very, very fast.
| How do you pick the right solution for your clients?
We have a three-step process. We begin by assessing the needs of the organization. We try to figure out what they are looking for: the price ranges, what the company is willing to spend and the language they want. Do they want software or do they want consulting? Or a mixture of both? Do they need a double materiality assessment? Do they have certain soft factors? Sometimes a client from Germany wants to work with a provider from Germany or they don’t want to work with a provider from Germany or whatsoever. Based on those factors, we create a long list. From 110 solutions, 10 to 20 are then selected. In the second part of the needs assessment we have 30 to 50 data points we discuss with the companies. We want to see, for example, how they want to input the data, manually or automatically or do they have certain specifications? We go through all the questions to get a better understanding of what the client is actually looking for.
And then we create a short list and present the client with the results. In the third and final step we help them select the right CSRD solution.
| Do you only work with European providers?
Our focus is definitely the EU with 90-95% of the solutions coming from Europe. However, non-EU providers can also sign up, if they have the necessary features and they can prove that they work in a CSRD compliant way. We have solutions from the US, Canada and Australia.
Currently we have the most solutions from Germany. I may be a bit biased because I have a German background and about 30% of my audience is still from Germany. There are also a lot of solutions from France, the UK, the Netherlands, Belgium and also the Scandinavian countries like Denmark, Sweden, where there is a lot of sustainability expertise.
To diversify, I have been reaching out to countries where I have fewer connections. Thus, we have also found solutions from Spain, Italy, Bulgaria, and Romania, for example.
| The EU member countries have to transpose the CSRD into national law, and there might be some differences. Will the solutions be able to address that issue?
I’m also curious to see how this works out. I was in Budapest earlier this year and I talked to an expert, who is quite interested in this topic. He was looking at how Hungary is going to implement the CSRD. He suggested there might be different requirements and that they might require the sustainability report to also be published in Hungarian.
So certain countries are likely to face specific issues in CSRD reporting. Once the regulation is more established and we know the differences in the countries, there will hopefully be solutions with a standard version that can be adapted for each country within the software.
| Do solution providers use AI?
Again, whatever I am going to say now, in two weeks it’s already going to be outdated.
Solutions are using AI to different extents. I have seen product demos where using the data you provide, the system makes AI generated recommendations about what to fill in the various fields. This can be helpful as a support. Having said that, companies also have to be careful that they don’t let AI do the whole CSRD report because this can get terribly wrong. I am a big fan of AI and I think it has a lot of potential. But if you don’t have enough data, then AI cannot tell you what you have to put into it for the different data points. You need to get the data yourself.
I have also seen companies that take all the information and guidance, smash all the data together and then train AI to answer questions. This, on the other hand, could be helpful because nobody likes to read through the ESRS text again and again. While it is necessary at some point, if you have a specific question, then you can just ask AI. The AI can quickly go through the text and then explain what you need to do in an understandable language. I think features like this could be very helpful.
| What does the structure of the available solutions look like?
This depends on the solution but in general they provide a CSRD conform report. This is the basis and then there are different options. You can add a double materiality assessment or a gap analysis module.
There are different features that help you to focus on other topics, such as, for example, the CSDDD. These other topics might require some more consulting work and therefore the different models have different degrees of automation. Eventually, automation will increase once we have a better idea of how everything will look like evetually.
Right now there are a lot of options where the CSRD report is in a software and then some additional modules can also be booked. In some cases, these are not even software, but consulting. It is because the regulations are not set and therefore the companies have not developed software for all the modules, yet.
I would recommend the double materiality module and the CSRD report come from the same hand to ensure that the systems fit together. Although the outcome of the double materiality assessment could be put into almost any system, this might require some extra manual work because the systems are not compatible, yet. We don’t have a standard process for this.
| What are you working on now?
With CSRD and double materiality and CBAM and EUDR and CSDDD, companies and sustainability managers often feel like they are in the middle of a jungle, which is still growing and changing. The whole topic overwhelms them, and they have to somehow comply and there are already deadlines.
We are now assembling all the data for a toolkit in order to help companies understand all of those different topics easily with short videos, templates and expert interviews. Through the toolkit, we aim to provide an overview of the whole CSRD topic and guidelines on how companies can proceed on their sustainability reporting journey.
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| brief bio
Daniel Lösch, the founder of AtlasZero is on a mission to bring more transparency to the market of sustainability solutions. They already created a list with over 800 different solutions and are constantly developing free content to support companies to easily understand various sustainability topics and to choose the right solution for them.
Gabriella Lovas is a GRI Certified Sustainability Professional with a CFA Certificate in ESG Investing and a Masters in Economics. She specialises in ESG and corporate sustainability reporting.
As a financial journalist and business writer, she has worked with international news agencies, such as Bloomberg, Big 4 consulting firms and start-ups. The purpose of her content is to educate and inform readers about sustainability in a clear, compelling way. She researches, writes, and edits articles, blog posts, and educational materials, using SEO tools and techniques to optimize them for online visibility.
Her passion is to support the transition to a more sustainable and inclusive economy.
| All opinions expressed are those of the author and/or quoted sources. investESG.eu is an independent and neutral platform dedicated to generating debate around ESG investing topics.
