The Corporate Sustainability Reporting Directive (CSRD) is reshaping how companies communicate their environmental, social, and governance (ESG) performance. It calls for transparency, comparable disclosures, and robust data across all areas of sustainability, including workforce matters.
The Pay Transparency Directive (PTD) is being hailed as a milestone in advancing equality, requiring companies to report gender pay gaps, disclose salary bands, and introduce corrective action where disparities are unjustified.
But PTD is not just another compliance burden. When implemented thoughtfully, it can become a powerful enabler for CSRD, particularly when reporting under ESRS S1 – Own Workforce. The question for many organisations is: how can PTD compliance actively support and improve CSRD reporting?
CSRD & PTD in a Nutshell
CSRD applies to large companies and listed SMEs across the EU, obliging them to disclose their sustainability performance using the European Sustainability Reporting Standards (ESRS). ESRS S1 focuses specifically on an organisation’s own workforce, covering equal pay, working conditions, diversity, and employee engagement.
PTD introduces obligations that include gender pay gap reporting, disclosure of salary bands for job categories, rights for employees to request pay information, and corrective action plans for pay disparities that exceed a 5% threshold.
For HR, compliance, and sustainability teams, both directives present an opportunity to work together, standardise processes, and create a comprehensive picture of workforce equity and inclusion.
The Overlap: Where PTD Falls Within CSRD
- PTD obligations map directly onto several ESRS S1 disclosure requirements:
- Gender pay gap reporting aligns with ESRS S1-16 (Pay Gap Disclosure)
- Salary band transparency supports ESRS S1-3 (Equal Pay Policies)
- Corrective action plans link to ESRS S1-17 (Targets & Actions)
- Employee information rights contribute to ESRS S1-5 (Social Dialogue & Worker Involvement)
This means the work done to comply with PTD can serve double duty, fulfilling legal requirements while strengthening CSRD reporting.
How PTD Data Improves CSRD Reporting Quality
PTD’s structured requirements raise the quality and reliability of workforce data, which is crucial for CSRD’s limited assurance requirements. By standardising data collection across HR and finance, organisations can work from a single, consistent dataset – reducing duplication, errors, and last-minute adjustments.
This process also builds a defensible audit trail, giving companies confidence that their disclosures will withstand scrutiny from assurance providers, investors, and regulators.
PTD as a Driver of Double Materiality Assessment
CSRD requires a double materiality assessment – considering both financial risk and the organisation’s impact on people and the environment. PTD compliance strengthens this assessment by:
- Identifying financial risks related to non-compliance fines, reputational harm, and talent retention.
- Demonstrating real-world impacts on employees and promoting fair treatment.
- Supporting the inclusion of pay equity as a material topic within CSRD reports.
Governance & Stakeholder Engagement Benefits
PTD pushes organisations to formalise oversight structures for monitoring pay equity, set targets, and communicate results. These governance measures go beyond compliance – they help build employee trust, encourage open dialogue, and provide ready-to-use policies and KPIs for CSRD narrative disclosures.
Practical Tips for Integration
Companies looking to maximise the value of PTD should:
- Build a unified data pipeline for PTD and CSRD reporting to streamline processes.
- Engage HR, compliance, and ESG teams early to align priorities and avoid siloed work.
- Use PTD gap analyses as a basis for defining CSRD targets and KPIs.
PTD compliance is not just about avoiding fines – it is a strategic enabler for CSRD. By aligning PTD implementation with CSRD objectives, companies can save time, reduce duplication, and strengthen their overall transparency strategy.
At ARQ Group, we support organisations in integrating these frameworks seamlessly, helping them build reporting processes that are robust, efficient, and credible. For more information, please speak to Martina Cutajar – Senior ESG Advisor – Risk and Compliance.
Martina Cutajar
Senior ESG Advisor
An expert in ESG and sustainability, Martina draws on her background in biology and marine conservation to help organisations enhance governance, meet compliance requirements, and achieve sustainability goals. She delivers tailored strategies, training initiatives, and stakeholder consultations, supporting businesses in thriving within the dynamic regulatory and sustainability landscape.
