Tagging the ESRS sustainability statement: What are the digital requirements of CSRD?
Tagging of the ESRS sustainability statement will be mandated by the European Union. The European Financial Reporting Advisory Group (EFRAG) has chosen the XBRL format for tagging.
What is the tagging method for ESRS?
The XBRL format is an international standard for digital business reporting. It is a machine-readable format and complies with the Corporate Sustainability Reporting Directive (CSRD). The decision to use XBRL aligns with the European Single Electronic Format (ESEF), which specifies the technical language to mark up information in annual financial statements using Inline XBRL. The scope of ESEF will also be extended to cover sustainability reporting.
The ESEF regulation mandates companies to publish their sustainability statements in the Extensible Hypertext Markup Language (XHTML) format, with Inline XBRL tags (iXBRL). This enhances the transparency, accessibility and usability of the reported data.
What is ESMA’s role in ESRS tagging?
The European Securities and Markets Authority (ESMA) is collaborating with EFRAG to develop the ESRS’s tagging system. EFRAG has published an XBRL Taxonomy for ESRS Set 1. The XBRL taxonomy, not to be confused with the EU taxonomy, sets the basis for ESMA to develop Regulatory Technical Standards for tagging the ESRS sustainability statement. When finalised, ESMA’s standards will be incorporated into the ESRS regulation as a new delegated act by the European Commission.
Benefits of ESRS Tagging for Stakeholders
The adoption of ESRS Tagging brings numerous benefits to stakeholders. It provides a standardised method for regulators and policymakers to monitor and enforce compliance with sustainability reporting requirements. For investors and analysts, it offers a more transparent and comparable view of a company’s sustainability performance, aiding in better decision-making.
The European Single Access Point (ESAP), set to open in January 2028, will further streamline the process. The sustainability report will be submitted to a national contact point, which will forward it to ESAP, allowing investors and stakeholders to access the information easily. The objective is to redirect the economy towards a more environmentally friendly direction and prevent greenwashing.
Power of digitalisation for compliant CSRD Reporting
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.
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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.
