EU Sustainability Reporting Standards: ESRS – 5 Steps To Compliance
The European Sustainability Reporting Standards (ESRS) are sustainability reporting standards adopted by the European Commission to serve as a framework for sustainability reporting according to the CSRD.
The adoption of the sustainability reporting directive and the sustainability reporting standards mark the beginning of a new era of unified European sustainability reporting.
What do the EU Sustainability reporting standards (ESRS) change?
The change from the previous Non-Financial Reporting Directive (NFRD) to the Corporate Sustainability Reporting Directive (CSRD) and the ESRS raporting tsandards is enormous. Over 50 000 companies operating in the EU will be affected by CSRD. The new directive changes how Environmental, Social, and Governance (ESG) issues are reported. Instead of treating non-financial information separately, it’s now considered an essential part of a company’s core business. The directive emphasizes that sustainability reporting is crucial to a company’s strategy and operations.
Five steps to ensure compliance with the EU Sustainability Reporting Standards
Here are our simplified five steps to help you ensure compliance with the EU Sustainability Reporting Standards. Below, you will find links to relevant content, such as our webinars, to further guide you and your company on the path to a more sustainable and profitable future.
1. Learn about CSRD and ESRS
To achieve compliance with CSRD and ESRS, a company should first familiarise itself with the sustainability reporting directive requirements and EU taxonomy. In addition, the financial and sustainability reporting departments should learn more about EFRAG’s ESRS Implementation Guides (ESRS IG) and understand the legal background of CSRD.
2. Start with the double materiality analysis
The sustainability reporting process starts with a double materiality analysis. This involves assessing the company’s financial materiality (impact on financial performance) and sustainability materiality (impact on environmental, social, and governance aspects).
3. Conduct a gap analysis
After the double materiality analysis has been completed, the company should conduct a gap analysis to determine its current state in relation to the ESRS reporting requirements. The gap analysis should build on the foundation laid by the double materiality analysis.
4. Start the reporting process
Collect relevant data on environmental, social, and governance aspects. Ensure accuracy, consistency, and transparency. Leverage digital solutions such as Ecobio Manager to streamline the process. Collaborate with your stakeholders and your value chain to ensure that all necessary information is collected. Compile the report in a digitally tagged format.
5. Assure and Submit
Before submitting your sustainability report, verify data accuracy, completeness, and adherence to ESRS stnadards. The Corporate Sustainability Reporting Directive requires assurance. From the financial year 2024 onwards, companies obligated to comply with the CSRD must provide limited external assurance for all sustainability information. The assured sustainability report must be submitted to a unified European database, ESAP, that is set to be operational by January 2028.
For more detailed information about the requirements of the EU Sustainability Reporting Standards (ESRS) and the Corporate Sustainability Reporting Directive (CSRD), download our whitepaper on sustainability reporting.
Complying with the EU Sustainability Reporting Standards can seem like a daunting task. However, the sustainability reporting benefits all. A unified reporting system not only enhances transparency and steers investments in a more responsible direction but also offers businesses crucial information about risks and opportunities related to their operations. We understand the challenge that sustainability reporting poses. Contact us for guidance on all matters sustainability and a free demo of our all-in-one sustainability reporting software, Ecobio Manager.
