ESRS reporting software that supports you at every step

The Corporate Sustainability Reporting Directive (CSRD) is an EU standard intended to make corporate sustainability reporting more standardised and consistent, requiring eligible companies to produce annual sustainability reports. The new European Sustainability Reporting Standards (ESRS) are a central element of the CSRD and specify how and what information and metrics companies must report to comply with the CSRD.

Reporting according to the ESRS is mandatory for all companies covered by the CSRD and must be incorporated in the management report. The reporting standards will also require companies to pay even more attention to traceability and transparency throughout the reporting process due to the limited assurance requirement.

The ESRS have a broader view of materiality than, for example, GRI Standards, and they are based on double materiality from an impact and financial perspective. The double materiality assessment will help companies to understand their impact, risks and opportunities spanning across their upstream and downstream value chains, arising from business relationships, geographical locations and more.

The CSRD will broaden the scope of sustainability reporting obligations, and the ESRS will apply to around 50,000 companies operating within the EU.

Companies will have to start reporting under ESRS according to the following timeline:  

– Companies previously subject to the Non-Financial Reporting Directive (NFRD) (large listed companies, large banks and large insurance undertakings exceeding 500 employees), as well as large non-EU listed companies with more than 500 employees: Reporting in 2025 on 2024 data.

– Other large companies including non-EU listed companies: Reporting in 2026 on 2025 data.

– Listed SMEs including non-EU listed SMEs: Reporting in 2027 on 2026 data. However, listed SMEs can opt out of the reporting requirements for a further two years. The deadline for a listed SME is to report in 2029 on 2028 data.

– Additionally, non-EU companies with turnover above EUR 150 m per year in the EU and that have in the EU either a branch with turnover exceeding EUR 40 m or a subsidiary that is a large company or a listed SME will have to report on the sustainability impacts at the group level of that non-EU company: Reporting in 2029 on 2028 data.

Double materiality is a core element of the ESRS, where the concept is broken down into impact materiality and financial materiality. In addition to the mandatory disclosures specified in the ESRS, companies are expected to report on all topics considered material in line with their double materiality assessment. If climate change is deemed as non-material, an explanation for this must be provided. For any other topical standards that are not deemed material, a brief explanation may be provided.

In identifying risks, impacts and opportunities that are either impact and/or financially material, companies must assess the critical dependencies and impacts in the value chain. The double materiality assessment is not only a compliance requirement under the CSRD/ESRS but a valuable exercise, as the outcomes from the assessment can be instrumental in formulating new sustainability strategies and action plans.