CSRD, EFRAG & ESRS – Frequently asked Questions Vol. 2


CSRD – The preliminary Timeline:

CSRD Vol.2

CSRD, , and ESRS will be a game changer for corporate reporting in the EU:
Sustainability reporting is upgraded substantially and be treated equally important as financial reporting. After introducing fundamentals in our previous Blog Post in Vol.1: www.score4more.eu/en/csrd-efrag-esrs-vol1/, let’s focus now on what content changes for companies, who have to report.

A selection:

  • Material topics by sector predefined:
    ESRS draft prescribes what are material topics by industries. Companies need to report according to the topics by industry. If companies don’t want/can’t report, it needs to be justified e.g. based on their own materiality assessment.
  • Core business model in focus:
    ESRS no longer distinguishes sustainability from core business. Companies have to describe their core business, business model, and strategy and reflect the importance of and impacts on sustainability by the core business.
  • 1.5 dimate targets to be set:
    Given the climate crisis urgency, all companies will be required to report on climate targets and actions as well as the 1.5° alignment of these targets.
  • Environmental criteria Taxonomy aligned:
    The environmental criteria are aligned with the 6 environmental goals in the EU Taxonomy: 1. Climate Change, 2. Pollution, 3. Water and Marine Resources, 4. Biodiversity & Ecosystems, 5. Ressource Use & Circular.
  • Social criteria added with end-consumers:
    Social criteria compose 1. Own Workforce, 2. Workers in the Value Chain, 3. Affected Communities and – new – 4. Consumers and End-Users. These companies have to report how they impact consumers and end-users on material topics like health, safety, or end-consumer rights.
  • Governance criteria extended:
    Existing governance topics like anti-corruption, anti-competitive or political lobbying are enriched by new aspects like payment behavior to suppliers: thousands of SMEs go bankrupt because large company customers pay late with long payment terms, which creates substantial economic damage in the EU.

ESRS is still in draft status and further changes can be expected along the timeline. But it is obvious that ESRS builds on existing standards and extends those. Companies just starting in reporting can therefore prepare for ESRS by starting with initial reporting cycles using existing reporting standards like DNK or GRI.