This article reflects the current ESRS requirements as of the time of writing. However, due to the European Commission’s proposed Omnibus Directive, the number of required ESRS data points may be reduced in the future.
If the proposal is adopted, some reporting obligations outlined here may no longer apply or may become voluntary. We will update this article as more information becomes available.
The Corporate Sustainability Reporting Directive (CSRD) imposes several specific reporting obligations. This article will outline the topics that companies are required to report on and other process requirements, such as the Double Materiality Assessment, third-party assurance, and digital tagging.
What topics will I need to report on?
The ESRS
The European Sustainability Reporting Standards (ESRS) comprise the framework of technical standards that companies must report against under the CSRD. In this regard, where CSRD is the legislative requirement to which compliance is the aim, ESRS is the way to get there.
At their core, the ESRS are divided into two primary categories.
Mandatory cross-cutting standards
There are two 'standards' which are mandatory under the CSRD:
ESRS 1
ESRS 1
ESRS 1 clarifies the foundational requirements for CSRD readiness, ensuring companies align with essential sustainability reporting standards. This includes:
Categories of ESRS Standards, reporting areas and drafting conventions
Qualitative characteristics of information
Double materiality as the basis for sustainability disclosures
Due diligence procedure
Value chain information
Time horizons
Preparation and presentation of sustainability information
Structure of sustainability statements
Linkages with other parts of corporate reporting and connected information
Transitional provisions
Complying with ESRS 1 means that a company must disclose “all the material information regarding impacts, risks and opportunities in relation to environmental, social, and governance matters”:
“Impacts” refers to positive and negative sustainability-related impacts that are connected with the undertaking’s business, as identified through an impact materiality assessment process.
“Risks and opportunities” refers to the undertaking’s sustainability-related financial risks and opportunities, as identified through a financial materiality assessment process.
Not every company has to report on all reporting standards - only the ones that are material to their business. In order to find out which topics are material, businesses are advised to carry out a double materiality assessment.
ESRS 2
ESRS 2
ESRS 2 expands on this, detailing overarching disclosure requirements that apply to all other topical standards. ESRS examines:
Governance
Strategy
Impact, Risk and Opportunity
Metrics and Targets
ESRS 2 provides a general basis for the preparation of sustainability statements by providing an understanding of how your company prepares its sustainability statements, including the scope of consolidation, the value chain information and, where relevant, the disclosure exemption.
Topical standards
Beyond the foundational requirements, the ESRS stipulates ten non-mandatory standards grouped by Environment, Social, and Governance (ESG) categories:
These specialised standards are tailored to facilitate topic-specific disclosures, providing a more detailed lens through which companies can evaluate and report their sustainability performance. While not mandatory, these topical standards are critical for organisations to comprehensively disclose their sustainability practices and impacts in specific ESG areas.
ESRS E1: Climate Change
The Plan A Sustainability Platform helps you provide some of the relevant data points for ESRS E1: Climate Change. ESRS E1 covers Disclosure Requirements (DRs) relating to climate change mitigation, climate change adaptation, energy, and climate-related hazards that can lead to physical climate risks for the company and its adaptation solutions to reduce these risks. It also covers transition risks arising from the needed adaptation to climate-related hazards.
The current drafts of the ESRS E1: Climate Change requirements include:
Transition plan for climate change mitigation
Material impacts, risks and opportunities and their interaction with strategy and business model(s)
Description of the processes to identify and assess material climate-related impacts, risks and opportunities
Policies related to climate change mitigation and adaptation
Actions and resources in relation to climate change policies
Targets related to climate change mitigation and adaptation
Energy consumption and mix
Gross Scopes 1, 2, 3 and Total GHG emissions
GHG Intensity based on net revenue
GHG removals and GHG mitigation projects financed through carbon credits
Internal carbon pricing
Potential financial effects from material physical and transition risks and potential climate-related opportunities.
Which data points does the Plan A Sustainability Platform calculate?
The following datapoints* can be derived from the Plan A Sustainability Platform:
Standard | Disclosure Requirement | Paragraph | Related Application Requirements | Datapoint name |
ESRS 2 | MDR-T | 80d | AR 24 - AR 26 | Baseline value |
ESRS E1 | E1-5 | 37 | AR 35 | Total energy consumption related to own operations |
ESRS E1 | E1-6 | 48a | AR 43 | Gross Scope 1 greenhouse gas emissions |
ESRS E1 | E1-6 | 49a | AR 45 | Gross location-based Scope 2 greenhouse gas emissions |
ESRS E1 | E1-6 | 51 | AR 46 | Gross Scope 3 greenhouse gas emissions |
ESRS E1 | E1-6 | 44 + 52 | AR 47 | Total GHG emissions |
ESRS E1 | E1-6 | 44 + 52a | AR 47 | Total GHG emissions location-based |
ESRS E1 | E1-6 | 52a | AR 47 | Scope 2 location-based |
*The above datapoints are drawn from EFRAG IG 3: List of ESRS datapoints, published on 22/12/2023.
A number of other datapoints can be calculated by our team of carbon accounting experts off-platform. For more information, please reach out to Support or your Customer Success Manager.
Other process requirements
Reporting timeline
The CSRD report must be published together with a business's management report, meaning that sustainability information will reported alongside financial information.
There is no global or EU-wide date on which companies must publish their reports. Companies set the publication dates themselves. The only requirement is that approved financial statements and management reports are published within 12 months of the balance sheet date.
Double Materiality Assessment
The double materiality assessment (DMA) is a core aspect of the CSRD process. This double materiality approach obliges companies to understand and report 1) their impacts on people and the environment and 2) how social and environmental issues create financial risks and opportunities for the company. This can be considered an 'inside-out' and 'outside-in' perspective on sustainability.
The double materiality assessment highlights the most relevant (or 'material') sustainability topics to an organisation and its stakeholders. A sustainability topic, or in this case, an ESRS topic, meets the criteria of double materiality if it is material from an impact perspective and from a financial perspective:
Impact materiality entails how a business' activities impact society and the environment ('inside-out' perspective).
Financial materiality entails how a business is affected by sustainability issues ('outside-in' perspective).
All standards within the ESRS, except ESRS 2 'General disclosures', are subject to a materiality assessment.
Third-party assurance
For the first time, the CSRD will introduce a general EU-wide third-party audit (assurance) requirement for reported sustainability information (as specified in paragraph 60 of the CSRD). Mandatory report auditing is intended to increase users' and stakeholders' confidence in sustainability information and place the importance of sustainability reporting on par with financial reporting.
Any assurance will have to be carried out in compliance with assurance standards set by the EU Commission.
Limited assurance
Limited assurance is required for all of the CSRD’s implementation phases, meaning that entities within the scope of the CSRD must obtain limited assurance in their first year of reporting. Initially these will be ‘limited’ assurance standards but the Commission will also carry out an assessment to see whether it is feasible for there to be a ‘reasonable’ assurance.
Limited assurance vs reasonable assurance
Limited assurance essentially means auditing a small sample, whereas reasonable assurance audits the full report.
The current CSRD proposal requires limited assurance over the following items:
Compliance with the reporting standards adopted according to Article 19b; the reporting standards developed by the European Financial Reporting Advisory Group (EFRAG) will require reliable performance data and breakdowns per country or operating segments.
The process carried out by the undertaking to identify the information reported according to those reporting standards.
Compliance with the requirement to mark-up sustainability reporting in accordance with Article 19d (digitalisation)
Compliance with the reporting requirements of Regulation (EU) 2020/852 Article 8 (Taxonomy Regulation).
Who conducts third-party auditing?
Under the CSRD, this assurance may be provided by the company’s statutory auditor, but the Commission leaves it to the Member States to also enable independent providers of assurance services with the competence to audit - the Commission even considers it desirable that companies can choose from a wider range of independent auditors.
The assurance provider will present an assurance report containing a conclusion about whether the company has disclosed its sustainability information in accordance with the criteria noted above.
Electronic reporting and digital tagging
Electronic reporting
Companies must prepare their financial statements and CSRD Report in xHTML or electronic format in accordance with the ESEF regulations and EU Sustainability Taxonomy
This electronic reporting standard is specified in Article 3 of the Commission Delegated Regulation (EU) 2019/815 and must be submitted no later than 12 months after a company's balance sheet date.
Digital tagging
Companies must also digitally tag the reported information according to a digital categorisation system specified by the CSRD, so that it is machine-readable for use in the European Single Access Point (ESAP).
This involves applying digital XBRL tags against individual data points in the annual reports with the help of specialised software and in accordance with the ESEF Taxonomy. These XBRL tags indicate contextual information that describes the data to a machine, enabling it to find and “read” the data and its contextual information without human intervention.
The taxonomy can then be used to mark-up a company’s reported data ('facts' in XBRL terminology) with machine-readable terms in the XBRL language.
Digitising this information is part of the EU’s digital finance strategy that aims to improve the accessibility and reuse of financial sector data. It feeds into the European single access point envisaged in the capital markets union action plan.