CSRD and ESRS at a glance: how not to get lost in the new standards

Untitled Design 3

On 5 January 2023, the European Corporate Sustainability Reporting Directive (CSRD) came into force, replacing the previous Non-Financial Reporting Directive (NFRD). The CSRD sets out the legal framework and reporting obligations for companies. ESRS, the European Sustainability Reporting Standards, is the key document that sets the mandatory standards to which companies will report on sustainability. Let us now look at both obligations in more detail. 

What is behind the acronym CSRD? 

CSRD is another important piece in the mosaic of solutions to achieve the ambitious targets set out in the Green Deal for Europe and the Fit for 55 package. These goals are designed to ensure a sustainable and fair transformation of the European economy, including the creation of trillions of kronor worth of investment opportunities. In order for financial actors to make informed decisions in favor of sustainable investments, they must have access to accurate and standardized ESG reporting data. Publishing data, setting strategies, and monitoring progress on the environmental and social impacts of a company's activities will now be mandatory for a much wider range of companies. In the past, mandatory non-financial reporting only applied to 20 large corporations; now the CSRD is expanding this obligation to more than 1,000 companies in the Czech Republic. 

Does this also apply to your company? 

The CSRD applies to companies that meet at least 2 out of 3 criteria: net turnover of more than CZK 1 billion, more than 250 employees or assets on the balance sheet of more than CZK 500 million. 

What will I need to report? Let's take a look at the ESRS standards 

Despite the current availability of sustainability information, it is clear that it is often insufficient. Companies often omit key information that is crucial for investors and other stakeholders. This information is not easily comparable between companies, creating uncertainty for users of this information, especially investors who do not know whether they can trust it. 
That is why on 31 July 2023 the EU adopted sustainability reporting standards. The ESG Directive aims to create a transparent environment and significantly improve the quality of non-financial reporting. The full scope of the standards is set out in the European Commission Regulation, and we set out the key points below. 
There are currently 12 standards; specific standards for individual sectors with significant climate and environmental impacts are expected to be developed by the Commission in the future through so-called delegated acts. 

Other important aspects of the ESRS: Double materiality 

ESRS 1 and 2 are mandatory for all companies covered by the CSRD. Other standards and individual requirements will be subject to a materiality assessment. This means that a company will only report relevant information and may omit information that is not central to its business model and operations. The materiality assessment is not voluntary and is subject to external verification. For example, if a company concludes that climate change does not have a material impact on its operations, it will have to disclose a detailed explanatory report. This requirement reflects the fact that climate change has widespread and systemic impacts on the entire economy. 

Dual materiality looks not only at a company's environmental impact, but also at how the changing environment affects the company's operations and what risks it poses. The first type of information is primarily aimed at the public, consumers and employees; the second type is particularly important for investors. The assessment of the relevance of each phenomenon is in line with the SFDR. The assessment itself can be carried out by means of a questionnaire survey of key stakeholders working with the company.

Other important aspects of the ESRS include the fact that reports filed under the ESRS will be subject to audit, must be prepared digitally and machine-readable, and be labeled with appropriate labels. ESRBs were created to improve comparability between firms, increase their competitiveness, and create a level playing field. In the long term, they reduce costs for companies compared to today's fragmented and opaque standards. 

Is it too much? Green0meter can save you time and resources 

Non-financial reporting is still a mess of acronyms and often unclear material for many. Companies looking to invest in sustainability face additional costs, and the first steps are often challenging. In addition to the time and administrative burden, companies may struggle to navigate the topic due to a lack of data, capacity, and experience that are necessary to make informed strategic decisions with real impacts. 
To comply with CSRD requirements, companies across the EU will need to collect and report on a wide range of data. The Green0meter Studio platform helps companies collect information in an automated way using APIs, questionnaires, invoice analysis, and public data. It then assesses the carbon footprint (Scope 1, 2, 3) and generates non-financial reports according to CSRD, GRI, and SFDR. It also prepares reports and tailored recommendations which help your comany with the reduction of carbon emissions and circular solutions. 

It works: a large banking company operating in seven countries saved approximately 1,000 working days in the ESG department in one year thanks to Green0meter Studio technology 

By leveraging the technologies offered by Green0meter Studio, the client can formally report its carbon footprint to ISO 14064, issue a non-financial CSRD report to ESG standards, and identify key areas where significant savings or sustainability innovations can be achieved through AI recommendations. Digitizing the entire process allows us to track progress and plan necessary sustainability actions, as well as respond to growing customer and partner demand for sustainable products and practices. 

Start working on your CSRD report today and get free demo access to the Green0meter platform

author avatarAuthor: Karel Kotoun

Let's talk!

By submitting you agree with the general terms and conditions

Other Articles

Every year, Czech municipalities come up with new ideas in the environmental field, whether it is energy savings, self-sufficiency or innovative environmentally friendly technologies. ČSOB has long supported such initiatives, and therefore this year, in cooperation with the Economia media house, it is announcing the Green Municipality of the Year competition.

The CBAM Regulation has been in force in the EU since 1 October. What does this mean for your business? In this article, we explain the important steps and obligations that CBAM brings, including how to prepare for the upcoming reporting requirements

At Green0meter, we've made it our mission to empower you on your journey to sustainability by providing a range of services to help you measure and reduce your environmental impact. Sustainability encompasses environmental, social, and economic dimensions, striving for a harmonious balance that benefits people, the planet, and prosperity.

The amount of greenhouse gases in the atmosphere is steadily increasing due to human activity, which is the main cause of climate change. Its negative impacts are already being felt today, but will increase dramatically in the future. This will lead to extreme weather fluctuations, the collapse of ecosystems and the uninhabitability of some regions of the world.

Calculating a company's carbon footprint is one of the tasks that comes with changing European legislation and the implementation of the CSRD, which significantly expands mandatory reporting for companies. The legislative requirements respond to the slow pace of implementation of the commitments set out in the Paris Agreement and the accelerating impacts of climate change.

In today's dynamic financial world, sustainability is becoming not only an ethical priority but also a critical measure of the value of investments. In this article, we will review the SFDR and the solutions offered by the Green0meter platform to meet its requirements.  

Familiarizing yourself with legislation, current subsidy opportunities, assessing whether you are eligible for green finance - all this takes a great deal of time and effort. Thanks to our partnership with ČSOB, we are taking green financing to a higher level.

Green finance is becoming a key issue in both European and national environmental legislation, with individual pieces of legislation contributing to the goal of directing financial flows towards a sustainable transformation of the economy.

Looking for a way to reduce your energy costs, contribute to environmental protection and improve your ESG score or the environmental performance of your building portfolio? The best place to start is with energy consulting services or an energy audit. These two possible avenues will point out the areas with the greatest potential for energy improvement and also suggest cost-saving measures. In this article, we look at the key issues associated with energy consulting and its benefits for businesses

Product carbon footprint

Don’t miss a chance to get an advantage of a collaboration between dedicated experts on product carbon footprint calculation and cutting-edge AI technology to accurately measure product carbon footprints, Integrate complex data points and environmental factors and obtain comprehensive assessments of a product's life cycle emissions.

EU Taxonomy

What exactly does the much-discussed term EU Taxonomy mean? It is a common vocabulary to help investors decide which activities are sustainable and which are not. Companies whose activities are in line with the taxonomy open up a wide range of investment opportunities.

The use of Artificial Intelligence (AI) has been gaining momentum globally in the fight against climate change. This innovative technology can help reduce carbon emissions and drive sustainability. Green0meter, a sustainable design and development studio in the Czech Republic, is committed to promoting sustainable solutions and is utilizing Microsoft's AI technology to help achieve this goal.

Event Carbon Footprint

When we think about the environmental impacts of events, our minds often go to the paper waste from brochures, the plastic waste from water bottles, and perhaps the energy consumption of lighting and sound equipment. However, there's a much larger impact that we tend to overlook: the carbon footprint of the event attendees themselves.

Climate change impact on insurers

In recent years, we have seen dramatic changes in the climate, impacting a wide range of sectors, including the insurance industry. Insurance companies are being forced to face the increasing risk caused by climate change and adapt to new realities

Energy savings play a key role in the fight against climate change and sustainable development. The industrial and energy sectors are responsible for a significant proportion of greenhouse gas emissions

Nowadays, the issue of sustainability and corporate responsibility towards the environment, society and its own employees is becoming more and more topical. In order to adapt to changing legislative requirements, companies need to have a clear overview of their impact on the planet and the community. For companies just starting out in this area, it is not easy to get to grips with ESG issues and non-financial reporting requirements. A quick ESG Scan from Green0meter can help.