Guide to CSDR Reporting Requirements

In-Depth Overview of CSRD Reporting Requirements

With the implementation of CSRD reporting requirements, companies are now required to disclose a range of Environmental, Social, and Governance (ESG) topics in alignment with the European Sustainability Reporting Standards (ESRS). This includes standards such as Climate Change (E1), Water and Marine Resources (E3), Biodiversity and Ecosystems (E4), and Business Conduct (G1).

The directive requires companies to assess both financial materiality and impact materiality to establish what needs to be disclosed.

Financial Materiality

Financial materiality addresses sustainability issues that can influence a company’s financial position, through risks, and opportunities over short, medium, or long-term periods. Examples include climate risks affecting operational costs or biodiversity loss impacting raw material availability.

Impact Materiality

Impact materiality considers the direct and indirect effects that a company’s activities may have on the environment, people, and society as a whole. This could include carbon emissions impacting climate change or a supply chain’s social practices affecting local communities.

Key Components for CSRD Compliance

To meet the CSRD reporting requirements, companies must address several key components.

Policies: Companies must outline their sustainability policies and cover the approach and steps taken to address relevant ESG topics.
Targets: Organizations are expected to set measurable targets aligned with ESG issues pertinent to their industry and their stakeholders.
Actions: They also need to disclose actionable steps they are taking to achieve set targets, both internally and across their value chains.
Metrics: Clear and quantitative metrics must be reported on to track progress against ESG goals, and performance needs to be visible to investors and other stakeholders.

The CSRD mandates a thorough materiality assessment. It requires the company to identify the most material impacts, dependencies, risks and opportunities across the value chain to ensure that reported data accurately represents the company’s most important ESG impacts and financial exposure.

Specific CSRD Standards for Reporting

The European Sustainability Reporting Standards (ESRS) are the CSRD’s reporting standards, which through compliance, ensures consistency in disclosures across all companies and sectors. ESRS standards cover general disclosures, topic-specific guidance, and entity-specific requirements, with topics such as GHG emissions, workforce diversity, and water resource use. In other words, the ESRS cover a wide range of ESG issues.

The CSRD’s requirements are extensive and organized across multiple ESRS standards that outline specific reporting topics, as follows:

ESRS E1: Climate Change – Focuses on greenhouse gas emissions, climate mitigation, and climate adaptation.
ESRS E2: Pollution – Focuses on the need for companies to disclose information on pollutant emissions, including air, water, and soil contamination, as well as how they mitigate or manage pollutive outputs.
ESRS E3: Water and Marine Resources – Covers reporting on sustainable water usage and conservation practices, as well as marine resource consumption and eventual dependencies.
ESRS E4: Biodiversity and Ecosystems – Focuses on protecting and enhancing biodiversity, requiring companies to evaluate how their operations impact various ecosystems.
ESRS E5: Circular Economy – Focuses on practices related to waste reduction, recycling, and sustainable material usage.
ESRS S1-S4: Social Standards – Covers the impact on workforce, value chain workers, affected communities, and consumers.
ESRS G1: Business Conduct – Ensures companies disclose information on ethical practices, regulatory compliance, and anti-corruption measures.

CSRD Reporting Timeline and Compliance Deadlines

Another factor to consider to meet the CSRD Reporting Requirements is the key timeline milestones:

January 2024: First reporting year for large public-interest entities already under the NFRD, with reporting due in 2025.

January 2025: Former NFRD companies report for the first time according to a first set of sustainability reporting standards for their 2024 fiscal year.

January 2026: Listed small and medium-sized enterprises (SMEs) must comply, though they can opt out until 2028.

CEMAsys Solutions for Effective CSRD Compliance

CEMAsys has launched a specialized CSRD reporting tool that simplifies the reporting process for companies facing the new requirements. With this tool you can gather, manage, and verify required data, streamlining the often complex CSRD reporting workflow.

Our application includes features to guide users through each disclosure requirement and offers real-time monitoring with a user-friendly dashboard, breaking down reporting into General, Environmental, Social, and Governance standards.

For organizations seeking additional support, CEMAsys also offer consulting services tailored to CSRD compliance needs.

Why Early Compliance Matters

In addition to mere regulatory compliance, early adoption of the CSRD standards also offer other strategic advantages.

Operational Efficiency: Getting a head start on CSRD compliance allows companies to refine their ESG data management processes, reducing redundancies and enabling smoother resource allocation across departments.

Reputational Benefits: By actively aligning with CSRD reporting requirements and standards, companies not only fulfill regulatory expectations but position themselves as sustainability leaders. This proactive approach can help brand credibility and strengthen appeal among stakeholders who prioritize environmental and social responsibility.

Strategic Insights: CEMAsys tools go beyond compliance to deliver crucial insights into supply chain risks and operational inefficiencies. These insights are beneficial to make informed strategic decisions, and makes it easier to address potential risks early and optimize the operational approach.

Future-Proofing with CEMAsys’s CSRD Application

The CSRD represents a pivotal shift in corporate transparency and accountability, necessitating comprehensive ESG disclosures that align with EU goals. As more companies work toward compliance, leveraging tools like CEMAsys’ new CSRD application can streamline data collection, facilitate accurate reporting, and ease the verification process. With features specifically tailored to meet CSRD reporting requirements, CEMAsys empowers companies to transform sustainability reporting from a compliance obligation into a competitive advantage.

By choosing CEMAsys, organizations can ensure they’re equipped not just to comply with CSRD but to excel in a future where sustainability is central to business success.