CSRD and ESRS – A Guide for Compliant Data Collection
The CSRD and ESRS will change sustainability reporting across the EU to be unified and standardised. CSRD and ESRS are the two sides of the new EU sustainability reporting regulation. Understanding the relationship between these two four-letter abbreviations is crucial when preparing for mandatory sustainability reporting.
The European Union’s new CSRD directive is shaping the future of financial reporting. Starting from FY2024, companies must report on both finances and sustainability matters. CSRD aims to steer the economy into a greener future by helping investors recognise companies engaged in sustainable activities.
The ESRS, on the other hand, is a new mandatory reporting standard for companies operating in the European Union. ESRS consists of 12 standards focused on different areas of ESG. These standards are meant to guide the companies in fulfilling their reporting obligation according to the CSRD.
Do CSRD and ESRS standards help collect the data required for sustainability reporting?
The ESRS standards provide a long list of questions and data points the sustainability report must address. Despite the guidance of the ESRS standards, collecting data for the sustainability report can seem daunting. For companies, this data handling presents a unique and never-before-seen challenge. New data must be obtained, and existing data must be combed through and converted into a comprehensible format.
The sustainability statement preparation must handle over 80 disclosure requirements. There are over 1,100+ data points to consider when preparing the statement. Not every one of these data points is obligatory for every company to report on, but they must be carefully screened and justified.
The sustainability statement itself includes information at the consolidated level. Sustainability and financial data will be gathered from subsidiaries and sites and presented at the company or group level. The collected information is fragmented and must be processed for final reporting. Collecting data will be a tremendous challenge without a specified data collection and reporting software.
Requirements for the CSRD ESRS data quality
The collected information must be transparent and traceable. The reported information must include:
• obligatory disclosure requirements and data points
• material disclosure requirements and data points
• information by subsidiaries, sites, and countries
• suitable tags for delivery to European Single Access Point (ESAP)
The reported sustainability information should consider short-, medium-, and long-term perspectives. It should cover the company’s entire value chain, including its operations, products and services, business relationships, and supply chain. This encompasses the company’s value chain within the Union and includes information about third countries if the company’s value chain extends outside the Union.
The information requirements are flexible in the first three years, focusing on the available information and the company’s plan to obtain such information. The new sustainability reporting leads to harmonised, traceable, comprehensive, and better-quality sustainability information across the value chains.
Companies must disclose the percentage of economic activities that align with the Taxonomy in their total turnover, capital expenditures (CapEx), and operational expenditures (OpEx), along with relevant qualitative information. This information should be provided at the individual company level for those preparing separate non-financial statements, or at the group level for those preparing consolidated non-financial statements.
A digital solution to CSRD ESRS data handling provides security
A digital solution to CSRD reporting is a must. Compliance with CSRD will require electronically tagged information and submission to the ESAP by the National Contact Point. The collection of sustainability information for ESAP will begin on 10 January 2028. The information must be tagged using the European Single Electronic Format (ESEF). In practice, this is done using a human and machine-readable XHTML format.
It is vital to be careful when handling sustainability and financial information data. The sustainability statement consists of both. In the statement preparation phase, some financial information is sensitive and must be kept in a limited view. This sets some rules for information collection and handling. Specialised reporting software helps ensure that no outsider can get a peek at your company’s confidential data.
Benefits of a specialised SaaS-solution
With Ecobio Manager, you can not only limit access to your company’s data but also gather primary data from all levels and sites of your company. Ecobio Manager automatically calculates the necessary numerical taxonomy and other values for official templates. This allows you to handle your data according to the rules, avoid double accounting, compile the final reports using the correct templates, and archive all the reports.
Streamline CSRD Reporting with Ecobio Manager
Ecobio Manager is a thorough solution for CSRD sustainability reporting, encompassing double materiality assessment, taxonomy classification, data collection, sustainability statement preparation, assurance, and streamlined delivery to publication. Designed by sustainability experts, Ecobio Manager ensures compliance with CSRD and ESRS standards, streamlining the reporting process.
