The European Sustainability Reporting Standards (ESRS) introduces new requirements for how your business reports on its environmental, social, and governance (ESG) impacts. This article provides a clear overview of ESRS and guides you through the reporting process.
Agenda:
What is ESRS?
ESRS is a set of standards that companies subject to the Corporate Sustainability Reporting Directive (CSRD) must use to disclose their sustainability performance. These standards aim to foster transparency and accountability, helping investors, stakeholders, and the public understand your company's impact on the environment and society.
Who needs to report?
The implementation of the CSRD will begin in 2024 and will be rolled out in the subsequent years. Your company will be affected based on its size and classifications:
Certain large companies (and parent companies of large groups) with over 500 employees: | Companies in this category will be obligated to publish their first CSRD report in 2025, reflecting the financial year of 2024. |
Other large companies (meeting two of the following three criteria: over 250 employees, €50 million in net turnover, €25 million in total assets): | Companies in this category will be obligated to publish their first CSRD report in 2026, reflecting the financial year of 2025.
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Listed SMEs (except micro-enterprises): | Companies in this category will be obligated to publish their first CSRD report in 2027, reflecting the financial year of 2026.
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Non-EU companies with significant activity in the EU (€150 million in net turnover in the EU): | Companies in this category will be obligated to publish their first CSRD report in 2029, reflecting the financial year of 2028. |
ESG topics to report on:
Environmental matters: | Climate change, Pollution, Water and Marine Resources, Biodiversity and Ecosystems, Resource Use and Circular Economy |
Social matters: | Own workforce, Workers in the Value Chain, Affected Communities, Consumers and End-Users |
Governance: | Business conduct |
Key concepts in ESRS:
Double materiality: Before reporting on relevant sustainability matters you need to assess and report on how each sustainability aspect affects your business ("outside-in" perspective) and how your business affects the environment and society (“inside-out” perspective). The double materiality assessment will support you in understanding which sustainability matters are material for you to report on.
Value chain: When conducting your double materiality assessment you should consider your entire value chain, including your suppliers and other business partners to determine the company's impacts, risks and opportunities The ESRS standards will also require you to report information about your stakeholders within your value chain.
How to prepare for ESRS reporting:
Understand the requirements and when you are obligated to disclose on CSRD: Familiarize yourself with the ESRS and the CSRD.
Conduct a double materiality assessment: Identify the ESG matters that are most important to your business and stakeholders.
Identify the data gaps and set a plan: Identify any data gaps early in the process and develop a strategic plan to address them. The process of reporting accordingly to CSRD may involve managing a substantial amount of data and data owners.
Prepare for assurance: Consider getting your double materiality assessment and sustainability report assured by an independent third party. We recommend that you consult your auditors to obtain specific information on what you need to consider.
Resources and support:
Your national competent authority: Visit your local authorities' website for specific guidance on ESRS reporting in your country.
If you have questions or require further assistance with ESRS reporting, please don't hesitate to contact our support team via the chat function in the bottom right corner 💜.
We are here to help you navigate these new requirements and report on your sustainability performance effectively.