The purpose of ESRS Reporting
ESRS reporting framework and the CSRD directive will transform sustainability reporting across the EU into a unified and standardised system. They constitute the two components of the new EU sustainability reporting regulation.
What is the Meaning of ESRS Reporting?
ESRS reporting is the process by which companies disclose their impacts on people and the environment and report financial risks and opportunities affected by environmental and social issues. The ESRS is a central component of the Corporate Sustainability Reporting Directive (CSRD) and will affect over 50,000 European companies.
The ESRS outlines detailed reporting requirements for companies falling under the scope of the CSRD. It mandates companies to provide information on their governance and strategy to address material sustainability topics, the impacts, risks, and opportunities arising from those topics, as well as quantitative metrics and targets.
What does ESRS reporting have to do with ESG?
The ESG acronym stands for Environmental, Social, and Governance, representing the three key aspects of sustainability. The ESRS standards are designed to help companies create their CSRD report on ESG topics. These standards address environmental, social, and governance issues, such as climate change, biodiversity, and human rights. They provide valuable information for investors looking to understand the sustainable impact of the companies they invest in. The ESRS standards have been developed while considering other reporting frameworks, including the GRI.
Which ESRS standards are mandatory for companies to report on?
Conducting a Double Materiality assessment is the first step of the CSRD reporting process. The company will base its CSRD reporting on the material topics identified in the assessment.
The cross-cutting standards, ESRS 1 and ESRS 2 define mandatory requirements and disclosures for all reporting companies. The topical standards define reporting requirements for the company’s material topics. The obligation to report on the topical standards depends on the company’s double materiality assessment results. However, if a company finds that climate change is not material and omits all disclosures in E1, they need to provide a detailed explanation of the materiality assessment results, leading to the conclusion that climate change not being material. If other topics than climate change are found non-material, only a brief explanation of the materiality results is required.
What are the ESRS 1 and ESRS 2?
ESRS 1 General requirements cover important concepts and principles which must be followed when reporting under the CSRD. This include introducing double materiality as the foundation for sustainability reporting and the methodology to follow. ESRS also defines how and where the sustainability information should be reported.
ESRS 2 General disclosures defines the general information companies need to report as part of their sustainability statement. This includes information on how sustainability is managed in the company (GOV) and included in strategy, business model and value chain (SBM). ESRS also require description of how material impacts, risks and opportunities are identified and managed (IRO) and dictates minimum reporting requirements related to policies, actions, targets and metrics (MDR).
A digital approach to CSRD reporting is a must!
CSRD reporting has been created to be in electronic format from the beginning. Therefore, the CSRD sustainability statement cannot be done manually. In addition to topical reporting requirements, companies under CSRD must deliver their report with electronically tagged information and deliver their CSRD report to the European Single Access Point (from 2028 onwards).
It is impossible to create a CSRD report that complies with the requirements without using software specifically designed for CSRD reporting. Ecobio Manager handles the electronic tagging for you and helps deliver it to the ESAP.
Streamline CSRD reporting with Ecobio Manager
Ecobio Manager provides all-in-one software for sustainability reporting, including double materiality assessment, taxonomy classification, data collection, sustainability statement preparation, assurance, and delivery stages all the way to publication. Ecobio Manager fulfills CSRD and ESRS requirements. Developed by experts.
