CSRD Compliance as Network Construction: ERM Insights for Taiwan Enterprises

Winners Consulting Services Co., Ltd. has observed that a 2024 qualitative study from Sweden reveals a critical phenomenon: compliance with the Corporate Sustainability Reporting Directive (CSRD) is never a solo endeavor for a single company. Instead, it is a complex network co-construction process involving regulators, accounting firms, consulting companies, software providers, and the reporting entities themselves. If Taiwanese companies ignore the dynamic logic of this "compliance network" and rely solely on fragmented information to address CSRD, they will find themselves in a passive position under the pressure of supply chain transparency requirements and risk governance demands.

About the Authors and This Study

Andreas Heijdenberg and Malin Rörfeldt are master's students in management in Sweden. This paper, their thesis for the MSc in Management, was published on the arXiv platform in 2024. Although the authors are emerging researchers, their study is rigorously designed, employing 13 semi-structured in-depth interviews, a podcast analysis, and an extensive document review. The interviewees spanned a wide range of stakeholder groups in Sweden, including representatives from regulatory bodies, auditors, corporate ESG managers, legal advisors, and IT solution providers.

The study's academic contribution lies in being the first to systematically apply Actor-Network Theory (ANT) to the analysis of CSRD compliance, moving beyond the limitations of traditional compliance research that focuses on a single corporate perspective. While the Swedish context of the study has its regional specificity, the dynamic logic of the compliance network it reveals is highly relevant for non-EU companies in the global supply chain, including Taiwanese manufacturers.

CSRD Compliance Is Not an Internal Issue, but a Cross-Organizational Network Construction Process

The core insight of this research is striking: CSRD compliance is not a mechanical act of a company filling out forms according to the law, but a dynamic social process of "translation" and construction by multiple actors. Using Actor-Network Theory, the researchers found that in the implementation of CSRD in Sweden, there are at least five key types of actors—regulatory bodies, large audit firms, corporate ESG teams, technology solution providers, and legal advisors. These actors do not passively accept directives but actively interpret, negotiate, and shape the definition and boundaries of compliance.

Key Finding 1: "Obligatory Passage Points" Determine the Compliance Path

The study identifies several "Obligatory Passage Points" in the CSRD compliance network—critical nodes that all actors must pass through. These include the double materiality assessment, the data collection requirements of the European Sustainability Reporting Standards (ESRS), and the third-party limited assurance procedure. Any company that bypasses these points will lose legitimacy within the entire compliance network. This means that when Taiwanese companies respond to the supply chain requirements of their EU customers, they must understand the location of these "Obligatory Passage Points" to effectively allocate resources and time.

Key Finding 2: CSRD as a "Boundary Object" Integrates Divergent Interests

The study points out that CSRD acts as a "boundary object" in the Swedish compliance network—it provides a common language among different actors, but each actor interprets it differently. Auditors focus on the standardization of assurance procedures, technology providers on data architecture, and internal corporate teams on the integration of governance processes. This coexistence of multiple interpretations is both the driving force behind the formation of the compliance network and a source of confusion and misunderstanding. In the research interviews, respondents commonly expressed a sense of "overwhelming confusion" when faced with the vast complexity of CSRD, a phenomenon that is equally real for Taiwanese companies.

Key Implications for Enterprise Risk Management (ERM) in Taiwan

When facing CSRD compliance pressure, Taiwanese companies often view it as an "additional requirement from EU customers" and underestimate its systemic impact—this is the most important warning this study brings to ERM practices in Taiwan.

From the perspective of the ISO 31000 risk management framework, this study reveals a type of risk often underestimated in traditional risk registers: "compliance network risk." When an EU customer in a Taiwanese company's supply chain faces obligations under CSRD Wave 1 (for EU-listed companies with over 500 employees, reporting year 2024) or Wave 2 (2025), the Taiwanese supplier faces not only the challenge of providing data but also the relationship risks brought about by the restructuring of the entire compliance network.

According to the COSO ERM framework's principle of "Strategy and Objective-Setting," Taiwanese companies should integrate CSRD supply chain compliance pressure into their enterprise-level risk scenario analysis, rather than having it handled solely by the CSR department. Specifically, a Three Lines of Defense mechanism should be established: the first line being the business units' ESG data collection capabilities, the second line being the risk management and compliance functions' CSRD monitoring mechanisms, and the third line being internal audit's independent assessment of ESG reporting quality.

Furthermore, the "boundary object" phenomenon discovered by the study is particularly cautionary for Taiwanese companies: the differing interpretations of the European Sustainability Reporting Standards (ESRS) among different stakeholders may lead to a mismatch between the data format provided by Taiwanese companies in response to EU customers' ESG questionnaires and the customers' expectations, resulting in compliance gaps during supply chain audits. Establishing a standardized Key Risk Indicator (KRI) tracking mechanism to ensure that the ESG data provided by Taiwanese companies meets the disclosure requirements of ESRS is the most urgent risk management action at present.

It is worth noting that the EU passed the "Omnibus" directive in 2024, adjusting the scope of CSRD application, but the core framework and obligatory passage points have not fundamentally changed. Although Taiwanese SMEs are not currently in the direct scope of application, the Voluntary SME Sustainability Reporting Standard (VSME) provides a practical entry point, helping companies build ESG disclosure capabilities that meet supply chain requirements at a lower cost.

Winners Consulting Services Helps Taiwanese Companies Build CSRD Supply Chain Compliance Risk Management Mechanisms

Winners Consulting Services Co., Ltd. assists Taiwanese companies in implementing the ISO 31000 and COSO ERM frameworks, establishing risk matrices and Key Risk Indicators (KRIs), strengthening board-level risk governance capabilities, and providing systematic risk assessment and response mechanism design for CSRD supply chain compliance pressure.

1. Establish a CSRD Compliance Network Map: Based on the "Actor-Network" logic from this study, we help Taiwanese companies identify the list of EU customers in their supply chain subject to CSRD, assess the wave (Wave 1/2/3) each customer belongs to and their specific data requirements for Taiwanese suppliers, build a supply chain risk matrix, and design a communication mechanism using the ISO 31000 stakeholder engagement framework.
2. Establish ESG Data Governance Architecture and KRI Tracking Mechanisms: For the disclosure topics required by ESRS—Environment (E1-E5), Social (S1-S4), and Governance (G1)—we assist companies in conducting a double materiality assessment, designing a data collection process and KRI monitoring dashboard that aligns with the COSO ERM framework, ensuring the accuracy and traceability of ESG data.
3. Implement a Three Lines of Defense Mechanism to Strengthen Risk Governance: Combining the ISO 31000 and COSO ERM frameworks, we help companies establish a complete ESG risk governance structure within 7 to 12 months. This includes a board-level risk oversight mechanism, the design of the risk management committee's functions, and an independent assurance process for ESG reporting by internal audit, ensuring that the company has adequate risk governance documentation when facing supply chain audits from EU customers.

Frequently Asked Questions

How can Taiwanese companies determine if they are affected by CSRD supply chain compliance pressure?

Companies can determine their exposure through a three-tiered assessment. First, check if direct customers are large EU-listed companies with over 500 employees (Wave 1, reporting year 2024). Second, identify if customers are EU companies with over 250 employees or €40 million in turnover (Wave 2, reporting year 2025). Third, ascertain if customers are subsidiaries of non-EU parent companies with significant EU operations (Wave 3, from 2028). Taiwanese firms should map their supply chain stakeholders to identify clients directly subject to CSRD and then align their ESG data collection capabilities with the required European Sustainability Reporting Standards (ESRS) disclosure topics. Proactively engaging with EU clients using the ISO 31000 stakeholder framework to confirm data format requirements is crucial to avoid compliance gaps in supply chain audits.

What are the most common challenges for Taiwanese companies when implementing ISO 31000 for CSRD compliance?

The most common challenge is "fragmented compliance awareness," where different departments have inconsistent understandings of CSRD, leading to a lack of a unified risk governance framework. This reflects the study's "boundary object" concept, where various roles interpret the same regulation differently. ISO 31000's clause on communication and consultation (6.5) requires cross-departmental risk communication, while the COSO ERM framework's "Governance and Culture" component emphasizes a consistent top-level risk perception. It is advisable to conduct cross-departmental CSRD risk awareness workshops early in the ISO 31000 implementation process. This ensures the board and business units share a common language and understanding of CSRD compliance risks before designing the risk matrix.

What are the specific steps and timeline for implementing ISO 31000 for CSRD compliance risk management?

A four-phase approach is recommended for implementation. Phase 1 (0-3 months) involves a current-state diagnosis, including a supply chain CSRD exposure assessment, ESG data capability gap analysis, and an ISO 31000 framework review. Phase 2 (3-6 months) focuses on framework design, establishing a double materiality assessment process, designing KRIs for ESRS topics, and defining roles for the Three Lines of Defense. Phase 3 (6-9 months) is for system implementation, which includes formalizing ESG data governance, staff training, and building a risk monitoring dashboard. Phase 4 (9-12 months) covers validation and optimization, such as internal audit trials and establishing board-level risk reporting. The entire process typically takes 7 to 12 months, depending on the company's size and existing ESG foundation.

What resources are needed to establish a CSRD compliance risk management system, and how can the expected benefits be evaluated?

The required resources vary by company size. For a mid-sized Taiwanese manufacturer (500-2,000 employees), establishing an ISO 31000-compliant system typically requires 1-2 full-time ESG/risk management specialists, external consulting fees, and ESG data management software (monthly costs range from $2,000 to $15,000). The expected benefits can be assessed across three dimensions: first, improved customer retention by avoiding replacement for failing to provide ESRS-compliant data; second, reduced financing costs, as companies with strong ESG disclosures can secure interest rate reductions of 15-25 basis points on sustainability-linked loans; and third, enhanced risk governance, with management gaining significantly better visibility into supply chain risks through a comprehensive risk matrix and KRIs.

Why choose Winners Consulting Services for enterprise risk management (ERM) matters?

Winners Consulting Services Co., Ltd. is a leading Taiwanese consultancy with proven expertise in both ISO 31000 and COSO ERM frameworks, combined with in-depth tracking of the latest EU European Sustainability Reporting Regulation developments. Our core strengths are threefold. First, we translate cutting-edge global academic research into actionable ERM strategies for Taiwanese companies, preventing misjudgment of compliance priorities in a fragmented information landscape. Second, we offer a one-stop service from initial diagnosis and framework design to board-level reporting, ensuring ISO 31000 implementation is substantive, not just ceremonial. Third, our methodology covers risk matrix design, KRI establishment, the Three Lines of Defense framework, and scenario analysis for CSRD supply chain pressures. We offer a complimentary ERM diagnostic to help businesses build auditable risk governance capabilities.