With the CSRD (the Corporate Sustainability Reporting Directive) the EU is breaking new ground in corporate reporting. In addition to financial information, the disclosure of non-financial data in annual reports is now mandatory. This means that both aspects will gradually be given equal importance, including through a review by auditors.
The new directive is intended to lead to transparency and comparability of companies’ ESG (environmental, social and governance) performance. It also aims to guide companies on their journey towards a decarbonised economy, highlighting opportunities for action and creating competitive advantage for actions already taken.
CSRD and ESRS – what are they?
What is the double materiality assessment?
Which companies are affected?
CSRD and ESRS – what does myclimate offer?
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The Corporate Sustainability Reporting Directive (CSRD) is an EU directive on sustainability reporting that has been in force since January 2023. It replaces the previous directive, the Non-Financial Reporting Directive (NFRD), and requires significantly more companies to disclose their ESG data.
This will increase the number of companies required to report from just under 12,000 to almost 50,000 in the EU. The new directive is accompanied by a prescribed reporting methodology – the European Sustainability Reporting Standards (ESRS). These have been developed by the European Financial Reporting Advisory Group (EFRAG) and are mandatory for all reporting companies.
The ESRS currently comprise twelve standards. The standards are divided into general standards and topical standards. The standards will be expanded to include sector standards in the coming years.
In addition to data disclosure, ESG-related actions, objectives and strategies are an important aspect of the ESRS. This is intended to drive the transformation towards a sustainable economy.
A very important element of the new reporting scheme is the double materiality assessment, which must be applied to each company at the beginning of the process. This assessment determines the specific content of the environmental, social and governance report.
The double materiality assessment requires companies to apply two perspectives:
The CSRD sets out the scope of reporting. Reporting obligations depend, among other things, on the size of the company. The user groups will be introduced in stages. The first companies to be affected are those already required to report under the NRFD. SMEs subject to the reporting requirements may be granted a deferral until 2028. The first reports will be published in 2025 by companies already subject to the NFRD for the 2024 financial year.
As a climate protection organisation with 20 years of experience behind us, we have long been supporting companies with the Science-Based Targets Initiative (SBTi), reduction paths, carbon footprinting and climate strategy. These issues also form an important part of the ESRS in area E1 Climate Change. Specifically, we offer the following services to help you meet your CSRD obligations:
Need help implementing the CSRD? Contact us to arrange a no-obligation initial meeting.
