With the implementation of the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) next year, the first companies will be required to collect their ESG data for the year 2024, on which a sustainability report must be written in 2025. It is therefore important for companies to understand which data they need to collect in order to meet these new requirements.
The ESRS consists of ten environmental, social and good governance topics and one chapter covering general company information. The latter addresses business operations, strategy, impacts, risks and opportunities for the organisation. Fortunately, companies are not required to report on all ten ESG chapters. These are identified and tailored per company using a materiality assessment. A materiality assessment is a process that organisations use to identify and prioritise the topics that are most relevant and important to their business operations and stakeholders.
One of the core areas of the CSRD and ESRS is environmental impact. Companies must collect data as soon as one of the environmental chapters is considered material, such as climate change, pollution, water and marine resources, biodiversity and ecosystems, and resource use and circular economy. These chapters contain, for example, data points on greenhouse gas CO2 emissions and equivalents, energy consumption, water usage, resource use and the organisation's impact on biodiversity. This requires detailed recording of operational processes and the environmental footprint of products or services.
Companies must also collect information on social aspects, including the material topics, own workforce, workers in the value chain, affected communities, and consumers and end-users. This includes data points on working conditions, diversity and inclusion, and human rights. It covers data on employee numbers, salary structures, workplace safety, training opportunities and the way the enterprise deals with suppliers and contractors.
Transparency on governance practices is also important in sustainable and responsible business. This concerns one chapter in the ESRS under business conduct. It covers data on a wide range of practices and principles, including ethical conduct, compliance with laws and regulations, corporate social responsibility, and fair trade practices. Data must be collected on regulatory compliance, governance structure, ethical business conduct, compliance and risk management. Collecting this information contributes to understanding how sustainability goals are integrated into business strategy.
Collecting this data is no easy task. The first step for the organisation is to determine which topics are material and therefore applicable to the CSRD report. Subsequently, the organisation must undergo a cultural shift in which collecting and storing sustainability information becomes an integral part of all business activities. However, the benefits are significant. Companies that adapt to these new reporting requirements will not only comply with legal obligations, but also position themselves as leaders in the transition to a more sustainable future.
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