5 steps to successful implementation of the ESRS

The introduction of the European Sustainability Reporting Standards (ESRS) as part of the Corporate Sustainability Reporting Directive (CSRD) marks a significant step towards more transparent and standardized sustainability reporting in the EU. 

In this practical guide, we answer the most important questions about ESRS and guide you through the most important steps for implementing the reporting obligation.

The European Sustainability Reporting Standards (ESRS)

The European Sustainability Reporting Standards (ESRS) are standards and guidelines that were developed as part of the European Union's Corporate Sustainability Reporting Directive (CSRD). Their aim is to create uniform and comparable benchmarks for corporate sustainability reporting.

The ESRS specify how companies should document their impact on the environment, society and governance (ESG). These standards help companies to present their sustainability performance accurately and transparently, which is increasingly important for investors, customers and other stakeholders. The ESRS promote transparency and accountability in corporate sustainability practices and are an integral part of the EU regulatory framework.

How are ESRS and CSRD connected?

The Corporate Sustainability Reporting Directive (CSRD) is an EU directive on sustainability reporting. Its aim is to standardize and simplify sustainability reporting. To this end, it bundles various reporting standards and frameworks into a uniform sustainability statement that meets the requirements of EU regulators, investors and other interest groups. The binding directive renews non-financial reporting (NFRD) as of January 5, 2023. 

The ESRS form a central component within the CSRD. They represent the reporting standards and guidelines that companies must follow in order to meet the CSRD requirements. The ESRS define which data points, information and ESG metrics companies must submit to European regulators, distinguishing between general and specific standards. A detailed overview of the ESRS and their contents can be found here.

The objectives of the ESRS 

• Standardization: The ESRS aim to create a uniform reporting format for sustainability information that can be used throughout Europe.

• Transparency and comparability: By providing clear guidelines and standards, sustainability reports from different companies should become easier to compare and more transparent. This enables stakeholders such as investors and customers to make informed decisions.

• Compliance with regulatory requirements: The ESRS support companies in meeting the requirements of the Corporate Sustainability Reporting Directive (CSRD).

• Improving the quality of information: The ESRS are intended to ensure that the reported sustainability information is relevant, reliable and meaningful. By implementing the ESRS guidelines, companies can identify areas for improvement and take measures to implement their ESG topics. 

The most important steps for implementing the ESRS

1. Conducting the materiality analysis: The double materiality analysis forms the basis of CSRD reporting and identifies the company's material impacts on the environment and people (inside-out) and the financial impacts (risks and opportunities) of the environment and people on the company (outside-in). This systematic and integrative approach promotes a sound and robust prioritization of material ESG topics and indicators. More information on the dual materiality analysis and its implementation can be found here.

2. Collect data and information: The second step in implementing the ESRS is to identify relevant key figures, those responsible for them and their storage locations. The key data for reporting, including the source systems and responsibilities, must be recorded precisely. It is also important to determine the departments responsible for ESG key figures and to assign responsibility for this data to these departments. A review of current data processing and analysis capabilities will help to identify any shortcomings and develop plans to ensure accurate and effective reporting in accordance with the ESRS.
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3. ‍Recording the CO₂ balance sheetThe carbon footprint is crucial for the ESRS as it is a key element of environmental reporting within the ESG framework. The accurate recording and reporting of CO₂ emissions enables companies to transparently present their impact on climate change. This is essential both for their own sustainability management and for informing stakeholders such as investors, customers and the public. A detailed carbon footprint not only helps to demonstrate the company's environmental responsibility, but also provides important data points for assessing environmental risks and opportunities. The carbon footprint thus contributes to compliance with ESRS requirements and helps companies to improve their sustainability strategies and meet increasingly stringent regulatory requirements. Software solutions such as Planted's sustainability platform help companies to record their balance sheet in a TÜV-certified and automated manner.
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4. ESRS reporting process: Once the KPIs and responsibilities to be reported have been defined, the focus should be on developing efficient ESRS reporting processes. This includes the optimization of data flows, the integration of supporting IT systems and the clear assignment of responsibilities for the relevant KPI areas. A critical step in this process is a thorough analysis of the current status: the methods used to record key figures, existing weaknesses and possible inconsistencies. This analysis makes it possible to identify potential for improvement and to align with industry-specific best practices. The next step is to precisely design and comprehensively document future ESRS reporting processes, from the planning phase to critical data paths and technical implementation. Close coordination with those responsible for implementing the processes is also essential. This ensures that the processes not only function effectively, but are also in line with the company's objectives and contribute to the continuous improvement of sustainability performance.
   
   
5. Continuous review: Monitoring these reports is an ongoing process to ensure that the information provided is current, accurate and in line with evolving standards. Companies should regularly review and adapt their reporting methods to ensure compliance with the latest CSRD and ESRS requirements. This ongoing monitoring not only allows companies to respond to changes in the sustainability landscape, but also to effectively assess and evolve their own ESG goals and strategies. 

The implementation of ESRS is a complex but essential process that requires comprehensive consideration and integration of ESG aspects into corporate reporting. At Planted, we support your company in the implementation of ESRS with our innovative software solution and close expert support. Starting with the double materiality analysis, the collection of ESRS data points through to CO2 accounting and the final CSRD report. Would you like to get to know our software solution without obligation? Book an appointment with our CSRD expert team today.

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