Unleash the potential of ESG reporting with the groundbreaking European Sustainability Reporting Standards! Dive deep into the complexities of CSRD compliance and explore how ESRS is transforming sustainable business strategies.
Is your company gearing up for the 2024 fiscal year under CSRD? In this blog we've got the inside scoop to help you transform your reporting game. Think of it as your secret weapon to become a true ESG champion. Intrigued? Let's unravel the mysteries of ESRS together!
So, the European Sustainability Reporting Standards (ESRS), hot off the press from the European Commission this year, are a game-changer for companies falling within the scope of the Corporate Sustainability Reporting Directive (CSRD). Picture this: 2025 is just around the corner, and you're facing a landscape where ESRS specifics can be a bit tricky. Don't worry; we're here to guide you through.
ESRS might ring a bell for many, seen as the cornerstone of CSRD. But for those navigating the ESG landscape, it can be a bit like finding your way through a maze. The important thing is – assurance of disclosed information is key. You'll need to audit your reporting, just like you do with financial reports. In the ESRS standards, the nitty-gritty of reporting requirements comes to life, giving you a roadmap to understand what to report, which metrics to generate, and how to create a killer and compliant report showcasing your commitment to ESG principles.
Now, CSRD demands thorough reporting on Environmental, Social, and Governance aspects. ESRS standards, logically, are super comprehensive and have undergone some serious drafting phases. They started with the European Financial Reporting Advisory Group (EFRAG) and now find their home in the European Commission. The goal here is to make sure the effort companies would undoubtedly have to take to produce compliant reports aligns with the desired outcomes. The endgame is to turn these standards into law, making them universal for all sectors and companies under CSRD.
The journey to bring ESRS to life resulted in 12 standards. Two cross-cutting standards cover general reporting concepts, including the crucial double materiality aspect. The other ten dive deep into specific ESG topics with five standards on Environmental areas, four on Social areas, and one uniquely devoted to Governance. There's a wealth of information to gather – over 80 disclosure requirements and 1000+ data points. But here's the good part: ESRS aims for comparability in sustainability info, extending beyond the supply chain to include the value chain.
For companies into climate or carbon reporting, ESRS steps it up. It includes scope 3 carbon reporting, broadening focus across environmental and social topics in the entire value chain. Yes, it's challenging, but ESRS offers relief for companies with phased-in disclosures. Smaller companies get some extra time for certain disclosures, making it a bit more manageable and ensuring the data gathering and quality is up to the needed standard.
Now, here's where it gets interesting. ESRS overlaps with financial reporting, adding a layer of complexity. You're not just crunching ESG numbers; you're also looking at financial impacts current and in the future. ESRS emphasizes interoperability, aligning with global reporting standards like ISSB or GRI. It's a bit like blending the worlds of ESG and Finance, so make sure to include your finance team as an important stakeholder.
Double Materiality plays a significant role in shaping these standards, driving the focus on both financial impacts and ESG considerations.
Double materiality is a big player within the standards. While only a few ESRS disclosures are mandatory, most depend on double materiality outcomes. It means deciphering how CSRD impacts your strategy, identifying risks, and recognizing gaps in reporting. Understanding double materiality is vital for compliance. Getting ready for ESRS compliance? It's like preparing for a journey. Assess and evaluate your current position, align it with anticipated requirements, and bridge those gaps. Many companies have found areas to improve, and even companies with a long history of reporting have shown their current reporting account for approximately 30% of what is required with double materiality and the ESRS. So don't worry if you're not at 100% yet, it is important to move forward in this journey step by step.
In conclusion, ESRS is your ticket to CSRD compliance and to ESG greatness. As the 2025 deadline approaches, challenges linger, but with 12 standards, ESRS aims for comparability, promising benefits for all sizes of companies. Phased disclosures and interoperability make it manageable, but the real key is taking a holistic approach, integrating double materiality into your global business strategy. Each report will be unique, but one thing is for certain: ESRS will ensure a clear distinction between ESG leaders and those opting for the minimum. So, ready to make your mark and decide if your company will be a leader in this directive?
Delve into the depths of the Double Materiality Concept
Delve into the depths of CSRD and Taxonomy to expand your expertise
