CSRD Regulation simplified
What is the CSRD Regulation?
CSRD regulation, or officially the Corporate Sustainability Reporting Directive, is a significant legislative initiative introduced by the European Commission. It aims to enhance transparency and accountability in corporate sustainability reporting.
This directive is part of the EU Green Deal and sustainable finance action plan, designed to promote sustainable business practices and provide stakeholders with reliable sustainability information.
CSRD regulation’s legal background
The CSRD regulation replaces the previous Non-Financial Reporting Directive (NFRD) and expands the scope of mandatory sustainability reporting. Effective January 2023, the directive requires companies to disclose detailed environmental, social, and governance (ESG) information.
At first, the CSRD directive applies to large, listed companies with over 500 employees and will gradually extend to smaller companies over the next few years.
CSRD regulation mandates assurance of the sustainability report
To ensure the credibility of the reported information, the CSRD regulation mandates external assurance. Companies must provide limited external assurance for their sustainability reports starting from the financial year 2024.
This assurance process involves independent verification of the data on a limited level. The EU plans to transition to reasonable assurance by 2028, which will involve more extensive verification procedures.
The CSRD regulation requires ESEF-complaint tagging
Sustainability reports must be submitted in the European Single Electronic Format (ESEF) as per the CSRD regulation. This approach ensures reports are readable both by machines and humans, streamlining data access and comparison.
ESEF’s tagging system, using XHTML and iXBRL technologies, highlights specific data points for easier accessibility via the European Single Access Point (ESAP). ESAP delivery is set to begin in January 2028
Conclusion on CSRD directive and the ensuing new regulation
CSRD directive is a pivotal step towards greater corporate transparency and sustainability. By mandating comprehensive ESG reporting, digital reporting and external assurance, it aims to provide stakeholders with reliable and comparable sustainability information that can be reached easily. Large companies are the first to comply, with the scope expanding rapidly to include more companies.
How can you benefit from a digital approach?
Advanced technologies such as automation, data analytics, and artificial intelligence can streamline the entire CSRD reporting process, making it more efficient and accurate. These tools also aid the auditing process, providing the auditors with a more straightforward and organized look into the company’s reporting system.
Streamline CSRD Reporting with Ecobio Manager
Due to the complexity of the ESRS standards, it is optimal to apply electronic CSRD reporting from the beginning. Therefore, traditional reporting methods are no longer efficient or appropriate. The sustainability report must be submitted through national contact points to ESAP from January 2028 onwards, when the reporting data must meet the electronic marking standard (ESEF) requirements. The sustainability report must be prepared in XHTML format, and its information must be marked with an electronic XBRL tag. When implementing sustainability reporting under CSRD, the focus should be on the finish line. Enter Ecobio Manager: Your all-in-one solution for sustainability reporting.
