Data analytic capability as an enabler of CSRD readiness: a moderated mediation analysis

Purpose The Corporate Sustainability Reporting Directive (CSRD) requires organizations to develop the capability to collect, process and report extensive sustainability data electronically. Drawing on Organizational Information Processing Theory and Dynamic Capability Theory, this study aims to examine how organizations can use digital transformation tools to enhance their CSRD readiness, with a focus on the mediating role of data analytic capability. Design/methodology/approach An online cross-sectional survey was administered to key informants from large companies and small and medium enterprises (SMEs) located in the European Union to examine whether digital transformation tools contribute to CSRD readiness. The mediating effect of data analytic capability and the moderating effect of data-driven culture were tested using partial least squares structural equation modeling. Findings The study’s findings showed that, for SMEs and large organizations alike, those that had implemented digital transformation technologies with a strong supply chain and/or inter-firm perspective had a better-developed data analytic capability, which in turn was positively associated with CSRD readiness. While the mechanism was similar for large organizations and SMEs, large organizations were significantly ahead in developing their CSRD readiness. Practical implications Organizations should approach CSRD compliance, and more generally, sustainability reporting practices, as a strategic capability-building initiative rather than a mere regulatory burden. SMEs in particular should prioritize developing data analytic capability through targeted technology investments, as this capability not only enables sustainability reporting compliance but also enhance their competitive position as trusted supply chain partners. Originality/value The study demonstrates how data analytic capability acts as the mechanism through which organizations translate investments in technology into improved organizational capabilities required for CSRD readiness.