Unlocking the CSRD Essentials: Your Ultimate Guide to ESG Reporting

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In the recent weeks, the European Financial Reporting Advisory Group (EFRAG) published the “CSRD Essentials,” a comprehensive guide aimed at helping companies navigate the new European Corporate Sustainability Reporting Directive (CSRD). This document serves as an essential tool for organizations beginning their journey in environmental, social, and governance (ESG) reporting, providing clarity on the regulatory framework and practical advice on compliance. Download CSRD Essentials or from the EFRAG website.

Here’s a breakdown of the main sections covered in the book:CSRD essentials manual by EFRAG

  1. NFRD vs CSRD: What’s New? – This section highlights the differences between the Non-Financial Reporting Directive (NFRD) and the new CSRD, focusing on the expanded scope, more stringent requirements, and the introduction of mandatory reporting standards for a broader range of companies. The CSRD extends the reach from 11,000 to over 42,500 companies, including non-EU companies operating in the EU.
  2. Scope and Timing – The guide provides a detailed timeline for the phased implementation of the CSRD, explaining which companies are affected and when. It includes large companies, listed small and medium-sized enterprises (SMEs), and non-EU companies that meet specific thresholds, outlining the critical deadlines for compliance.
  3. European Sustainability Reporting Standards (ESRS) – This section introduces the new reporting standards, developed by EFRAG, which companies must adhere to under the CSRD. The standards cover general, environmental, social, and governance aspects, providing a unified framework to ensure consistency and comparability across reports.
  4. Audit & Assurance – The document details the new requirements for the assurance of sustainability information, including mandatory limited assurance initially, with a gradual move toward reasonable assurance. It highlights the role of statutory auditors and independent assurance service providers in validating the accuracy of reported data.
  5. Materiality and Internal Supervision – Focused on the concept of “double materiality,” this part of the book explains how companies need to assess and disclose both financial materiality (the impact of sustainability risks on the company) and impact materiality (the company’s impact on society and the environment).
  6. SMEs and the Value Chain– Recognizing the challenges faced by SMEs, the book discusses simplified reporting standards for these entities while maintaining alignment with the overall goals of the CSRD. It also touches on the broader implications for supply chains and how smaller companies can align their practices with larger counterparts.

The “CSRD Essentials” by EFRAG is a vital reference for any organization starting its ESG journey. It breaks down complex regulatory requirements into manageable steps, ensuring businesses are well-equipped to meet their sustainability reporting obligations under the CSRD. For those looking to deepen their understanding of ESG compliance, this book is an invaluable resource.