CSRD Readiness

CSRD: Overview and Tips for Reporting Companies

CSRD: Überblick und Tipps für berichtspflichtige Unternehmen

Sustainability reporting is becoming mandatory for many European companies. This is regulated by the Corporate Sustainability Reporting Directive (CSRD). Companies subject to reporting requirements[1] must publish data and information on sustainability-related information for the 2025 financial year from 2026. In Germany, this affects over 13,000 companies. We give you an overview of the requirements, tips for the first steps and what opportunities may arise for you.

Upgrading Sustainability Reporting

The CSRD is part of the package of measures of the European Green Deal and therefore an important piece of the puzzle for making the economy within the European Union (EU) modern, resource-efficient and competitive and achieving climate neutrality by 2050. The Green Deal thus also contributes to the objectives of the Sustainable Development Goals and the Paris Climate Agreement.

The CSRD creates the framework for coherent and consistent sustainability reporting that enables stakeholders to receive transparent information, e.g. as a basis for investment decisions. For this purpose, the European Commission published the European Sustainability Reporting Standards (ESRS) in July 2023 as part of a Delegated Regulation, thereby creating an EU-wide binding reporting standard.

Overarching Requirements for Reporting in Accordance with the CSRD

Implementing Sustainability Reporting with the Help of the European Sustainability Reporting Standards (ESRS)

The ESRS comprise two cross-sectional standards (ESRS 1, ESRS 2), which apply to all companies, and ten topic-specific standards from the areas of environment, social and governance, from which companies select – depending on their previously analyzed material topics.

Overview of the cross-sectional standards European Sustainability Reporting Standards (Copyright ÖKOTEC Energiemanagement GmbH)

The Principle of Double Materiality

In order to consider sustainability in a corporate context, a large number of topics need to be analyzed and key issues identified. To this end, companies carry out a materiality analysis in order to identify specific fields of action and derive corresponding targets and measures.

As part of the CSRD reporting obligation, the principle of dual materiality is expanded and the procedure is specified in the “Implementation Guidance – Materiality Assessment (EFRAG IG 1)”.

A Company Adopts Two Perspectives in the Case of Dual Materiality

As a result, a topic is material if it has been assessed as relevant for one or the other or both perspectives.

The Principle of Double Materiality (Copyright ÖKOTEC Energiemanagement GmbH)

The ESRS E1 Standard

Climate Change (Climate Protection, Climate Adaptation and Energy)

In the ESRS E1 topic standard, a company makes transparent what impact the company has (positive and negative) on climate change. It is not just about accounting for greenhouse gas emissions, but rather about a strategic analysis and positioning of the company in order to bring its business activities in line with the 1.5 degree target:

To this end, companies should disclose the following information, among others:

As part of the requirements of ESRS E1, a company is required to develop a climate strategy that depicts interim targets and measures for greenhouse gas reduction over a period of time. Quantitative information on the expected reductions must be provided in each case. The y-axis shows the GHG emissions in CO2 equivalents and the x-axis shows the progression over time. The bundle of measures over the entire period shows how the company intends to achieve the overall target it has developed in line with the 1.5 degree target. 

Climate target path European Sustainability Reporting Standards (Source: European Sustainability Reporting Standards, Annex to the Commission Delegated Regulation supplementing Directive 2013/34/EU, European Commission)

Our Recommendation

Addressing Opportunities and Challenges

Many companies currently see the challenges and scope of the work packages with the corresponding human resources that CSRD entails: the business activities must be analyzed, targets and measures developed and strategically anchored in the company, processes and data management structures established or adapted and the key indicators published accordingly.

However, sustainability reporting also offers many opportunities! This is because sustainability takes a holistic view: internal and external stakeholders are included, the value chain is analyzed and various time horizons are taken into account – and all this for the topics that are material for the company in the areas of ecology, social and governance (ESG).

This gives the people responsible in the company a comprehensive picture that enables them to make better decisions and drive forward innovations, measures and action plans for the competitiveness and future viability of the company. The annual reporting system supports this strategy and implementation process as a target and management tool.

Climate change and its consequences, biodiversity loss and other ecological crises, international conflicts and other disruptive events – the current challenges are complex and many different stakeholders are called upon to develop solutions together. Transparent reporting enables companies to position themselves strategically, take responsibility and make important contributions to the transformation.

Tips for Companies to Get Started with CSRD or to Implement it Pragmatically

(Copyright ÖKOTEC Energiemanagement GmbH)

Links and Resources

The European Commission provides a variety of tools for the preparation. These include guidelines for the preparation of the double materiality analysis and analysis of the value chain, an Excel file with all the ESRS data points including links to the requirements from the standards. The DNK is also expanding its range of services to include the requirements of the ESRS and has announced that it is developing a web platform for the electronic creation and publication of sustainability reports. We have compiled the links for you here:

Authors: Kristina Gallitschke, Mareike Hoffmann

[1] Large companies that meet two of the three criteria are required to report: > 250 employees; balance sheet total > EUR 25 million; turnover > EUR 50 million Previously, the Non-Financial Reporting Directive regulated the mandatory reporting of non-financial indicators for selected large companies. The CSRD builds on this. It extends the scope of application and specifies the reporting requirements.

Do you have any questions about CSRD? We look forward to hearing from you!

Mareike Hoffmann Team Marketing and Business Development

Mareike Hoffmann

Head of Climate Management & Communications

Kristina Gallitschke

Senior Project & Communications Manager

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