CSRD & ESRS: EU Standards for Sustainability Reporting

In today's world, where sustainability is becoming an increasingly central issue, companies are under growing pressure to transparently report their environmental and social impacts. In this context, the European Union has introduced the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) to standardize and improve non-financial reporting. So, what do these new requirements mean, and how do they affect companies?

What is CSRD?

The CSRD is an EU directive that amends the previous Non-Financial Reporting Directive (NFRD) and significantly expands sustainability reporting requirements. It mandates companies to disclose detailed information regarding their environmental, social, and governance (ESG) performance. The main objectives of CSRD include enhancing transparency, improving comparability among companies, and providing relevant information to investors and other stakeholders.

Who is Affected by CSRD?

The CSRD significantly broadens the scope compared to the NFRD and applies to the following organizations:

• Large companies with more than 250 employees, a turnover exceeding €40 million, or a balance sheet exceeding €20 million.
• All publicly traded companies, including small and medium-sized enterprises (SMEs) except micro-enterprises.
• Subsidiaries of large groups may also be subject to reporting requirements, even if they do not meet size criteria on their own.
• Non-EU companies operating in the EU and meeting specific thresholds must also report in compliance with CSRD.

What Needs to Be Reported?

Companies are required to disclose comprehensive information on the following ESG topics:

• Environmental Protection: Climate protection measures, resource usage, environmental impacts, biodiversity.
• Social Issues: Workers' rights, diversity, equality, working conditions, and human rights.
• Governance: Anti-corruption, ethical behavior, corporate governance transparency.

Both qualitative and quantitative information must be provided, with special emphasis on double materiality: Companies should report how sustainability factors affect their operations (outside-in perspective) and how they impact the environment and society (inside-out perspective). Additionally, the risks and opportunities ESG factors present to business models must be disclosed.

Audit Requirement and Digital Reporting

A key aspect of CSRD is the introduction of an audit requirement: Sustainability reports must be reviewed by independent auditors to ensure compliance with the requirements. Additionally, reports must be published in machine-readable digital formats and made accessible through the EU’s “European Single Access Point” (ESAP).

When Does CSRD Take Effect?

The CSRD will be implemented gradually:

• From 2024: For companies covered by the NFRD (first reporting in 2025).
• From 2025: For all large companies.
• From 2026: For publicly traded SMEs, which may submit simplified reports.

What is ESRS?

The European Sustainability Reporting Standards (ESRS) are detailed standards that complement the CSRD. These standards define what information should be included in sustainability reports and how it should be presented. ESRS is based on international standards like the Global Reporting Initiative (GRI) and is divided into various modules covering specific topics.

What Topics Does ESRS Cover?

ESRS is divided into modules addressing the following key sustainability issues:

• ESRS E1: Climate Change – Measures to reduce greenhouse gas emissions and adaptation strategies.
• ESRS E2: Pollution – Management of pollutants and reduction of environmental impacts.
• ESRS S1: Social Issues – Responsibility towards employees, respect for human rights, and compliance with social standards.
• ESRS G1: Governance – Corporate governance, ethical behavior, and anti-corruption.

In addition to the general standards, there are sector-specific reporting requirements.

How Can CO2 Manager Support Companies?

In light of the increasing responsibility for climate protection, CO2 Manager is committed to helping companies achieve their sustainability goals. Our advanced software ensures that emission data is comprehensively and immutably recorded across the entire value chain.

One of the core features of our software is the ability to perform detailed performance analyses. Through these analyses, companies can identify areas for improvement and implement measures to optimize their sustainability performance.

CO2 Manager not only ensures compliance with legal requirements but also helps companies develop long-term sustainable business strategies. Let’s shape the future of emission reporting together and contribute to a more sustainable world for future generations.