What are the ESRS-standards
Central to the CSRD's mission is the implementation of the European Sustainability Reporting Standards (ESRS). The standards elevate sustainability reporting to the same level of significance as financial reporting.
Embracing a Sustainable Future: The European Sustainability Reporting Standards (ESRS)
At the heart of progress lies the Corporate Sustainability Reporting Directive (CSRD), adopted by the European Parliament on 10 November 2022. Scheduled to be published and come into effect in early 2023, the CSRD is more than a mere legislative act, it sets out a visionary goal for EU members to achieve. This directive will instate a legal obligation for companies to report on their Environmental, Social, and Governance (ESG) matters, signalling a pivotal shift towards corporate responsibility and sustainability.
Central to the CSRD's mission is the implementation of the European Sustainability Reporting Standards (ESRS). These cutting-edge standards not only complement the CSRD but also elevate sustainability reporting to the same level of significance as financial reporting. Crafted with meticulous care and detail, the ESRS address environmental, social, and governance matters, guiding companies on how to collect data and issue reports.
The power of double materiality reporting
The ESRS advocate for a double materiality reporting standard, revolutionizing the way we understand sustainability impact. Companies will be legally required to report on both financially material aspects influencing business value and those environmentally and socially material, intricately entwining the environment and people in the reporting process. Download our e-book "Understanding materiality in sustainability reporting"
Driven by innovation: EFRAG and the European Commission
The ESRS drafts, developed by the European Financial Reporting Accounting Group (EFRAG), exemplify a shared commitment to innovation and sustainability. As the appointed technical advisor to the European Commission (EC), EFRAG's drafts underwent public consultation and refinement before submission to the EC on 23 November 2022. With great anticipation, the EC will adopt these drafts as Delegated Acts by July/August 2023 (Q3).
Who will be empowered?
Get ready to be a pioneer in sustainability reporting, as the CSRD will impact an estimated 49,000 European companies, a substantial increase from the existing 11,700 companies governed by the Non-Financial Reporting Directive (NFRD).
The CSRD embraces all listed companies on the EU regulated market, extending to SMEs, while also encompassing large companies that meet specific criteria. Additionally, non-EU companies with substantial EU activity, small financial institutions, and captive insurance and reinsurance undertakings are invited to join this sustainability movement.
Empowering the entire value chain
The transformative ripple effect of the CSRD extends beyond the directly affected companies. The 49,000 figure does not even include the numerous companies comprising the value chains of the directly impacted ones. Suppliers and customers will be inspired to collaborate and align with the ESRS requirements, creating a harmonious ecosystem of sustainable practices.
Guidance for responsible reporting
The ESRS equip companies with a comprehensive roadmap for responsible reporting. With twelve draft standards, including cross-cutting and topical standards, the ESRS cover a broad spectrum of topics—from environmental concerns to social matters and governance practices. Your reports will be a reflection of your commitment to sustainability and corporate accountability, driven by the ESRS guidelines.
Embrace the change: A new reporting era
Even companies accustomed to current reporting rules will experience the transformative impact of the CSRD and ESRS. Not only will these initiatives multiply the number of reporting companies, but they will also expand the scope of ESG information to be disclosed. Companies will embark on a journey beyond their organizational boundaries, gaining insights into the true ESG impact of their entire value chain, upstream and downstream.
Mark your calendar for transformation
The CSRD's transformative journey begins on 1 January 2024, first applying to large listed companies already governed by the NFRD. These companies will report in 2025 on 2024 data. Subsequently, large companies not subject to the NFRD will embrace the Directive in 2025. Small and medium enterprises and captive insurance undertakings will follow suit, reporting in 2027 on 2026 data, with third-country undertakings obligated to report in 2029.
Together, let's embark on this sustainable journey, driven by innovation, professionalism, and a shared caring spirit for our planet and society. Embrace the CSRD and ESRS as we shape a brighter, more sustainable future for all.