Is your company affected by the Corporate Sustainability Reporting Directive (CSRD) and do you have to prepare a sustainability report in accordance with the European Sustainability Reporting Standards (ESRS)? Or are you dealing with the topic voluntarily or under pressure from your customers or suppliers and don’t know where to start?
Many companies are currently working on the double materiality analysis. This is a good start. But what happens next? This article breaks down the complex requirements of CSRD reporting into manageable individual steps. From the dual materiality analysis to data collection and reporting, it explains what needs to be done.
CSRD reporting: step-by-step guide
Creating a CSRD-compliant report requires a methodical approach that ensures that all relevant aspects of your company’s sustainability performance are accurately captured and reported.
This section provides you with a clear overview of the individual steps you should take to create a complete and compliant CSRD report that is also approved by your auditor. Speaking of auditors. It is advisable to involve them in the process at an early stage.
- Carry out a double materiality analysis: Identify the relevant sustainability issues (impacts, risks and opportunities – IROs) for the company and stakeholders.
- Determination of the relevant data points: Derivation based on the material topics on which data (quantitative and qualitative) and key figures must be reported.
- Gap analysis and data collection: Analysis of the gap between the existing data and the required data and collection from internal and external sources to cover the previously identified data points.
- Preparation of the report: Conversion of the collected data into a structured and comprehensible report that complies with the CSRD guidelines.
- Review and audit: Have the report reviewed by auditors (limited assurance) to ensure the accuracy and completeness of the information.
- Finalization and publication: Make any necessary adjustments and publish the report in accordance with the regulatory deadlines and in the specified format.
Each of these steps is covered in detail in the following sections to provide an in-depth understanding of the required processes and best practices. This structured approach helps to efficiently fulfill the requirements of the CSRD and transparently present sustainability efforts. Relevant internal and external stakeholders should be involved in the implementation of the steps.
1. perform a double materiality analysis
Double materiality is a very central element of CSRD reporting. The materiality analysis is a crucial first step in CSRD reporting. It includes the evaluation of topics that are significant both from the perspective of the company’s impact on the environment and society (outside-in) and from the perspective of the impact of these topics on the company’s business activities (inside-out).
This holistic approach enables companies to set priorities and focus on the aspects that are both the most relevant for stakeholders and represent the most relevant risks and opportunities for the company. As part of the CSRD materiality analysis, companies must document exactly how they carried out this analysis, which stakeholders were involved and how the results are integrated into their sustainability strategy and reporting.
The result of the materiality analysis is usually a list of material topics. This can also be presented graphically as a materiality matrix. This process is not only a regulatory requirement, but also provides important information for risk management and the opportunity to sharpen the company’s strategic focus with regard to sustainability. Investors, customers and other interest groups are increasingly demanding more transparency on environmental, social and governance (ESG) issues. Once the materiality analysis has been completed, the second step follows.
2. determination of the relevant data points
At this stage, it is important to identify specific metrics and data required to adequately report on the issues identified as material. These data points should be selected so that they provide a clear and measurable picture of the company’s performance in relation to the relevant ESG aspects. Companies must ensure that the selected data points are in line with international standards and the specific requirements of the CSRD.
Specific procedure for determining the ESRS data points
- List of ESRS data points: As a starting point, we recommend using the EFRAG list of ESRS data points.
- Add your own columns to the template: The data point list can be extended with additional columns, for example:
- Material Is this data point material based on the identified material topics.
- Responsibility Which department or person is responsible for collecting this data point?
- Data availability Are the information for the data point already available or does a process still need to be set up to collect it?
- Data source / system: In which system is the information for this data point located.
- Comments: Possibility to add notes and comments.
- Determination of material data points: Based on the topics or (sub-)subtopics identified as material, it can be determined for each data point or the 11 ESRS standards (shown as tabs in the Excel table) whether it must be reported or not. Certain data points (e.g. ESRS 2 or IRO1) are mandatory for all companies.
- Fill in additional columns (optional): Complete the table including the added columns. This can also be expanded to include other relevant company-specific data points.
- Apply filter: The data points list can now be filtered so that only the data points subject to reporting are displayed. The following filters can be applied:
- Phase-in for companies with fewer than 750 employees: These data points are not mandatory for organizations below the threshold at the beginning.
- Phase-in for all companies: These data points are not mandatory for all organizations in the first reporting year(s).
- May [Voluntary]: These data points may or may not be reported.
- Essential: Only display the data points marked as essential.
The “translation” of the key topics into the key data points can be relatively time-consuming with over 1,100 data points. CSR Tools supports its customers in determining the key data points and has also extended the EFRAG template accordingly and equipped it with helpful macros. We have also released a new data point mapping tool that determines the key data points based on the materiality analysis in a matter of seconds.
Need support? Please feel free to contact us!
3. gap analysis and data collection
The third step in CSRD reporting involves conducting a gap analysis and subsequent data collection. The gap analysis determines what data is already available and what additional information still needs to be collected in order to fully cover the requirements resulting from the materiality analysis.
The additional columns ‘Responsibility’, ‘Data availability’ and ‘Data source / system’ from the previous step are helpful to get a quick overview of which data is not yet available, who is responsible for it and in which systems the existing data is located.
This analysis helps to identify gaps in the existing data sources and set priorities for data collection. Once these gaps have been identified, the next step is to collect the data needed to paint a comprehensive picture of the company’s ESG performance. This process requires a systematic approach to ensure that the data collected is reliable, accurate and representative. Companies may need to implement new methods and tools or adapt existing processes to effectively collect and process the required information.
4. preparation of the report
Once the data has been successfully collected, the fourth step in the CSRD reporting process follows: the preparation of the report. In this phase, the collected data is structured and prepared in a format that meets the CSRD requirements. The report must be provided digitally and machine-readable (keyword ESEF – European Single Electronic Format) and the information must be marked up in accordance with the XBRL standard from 2026.
The sustainability report in accordance with European reporting standards should not only include quantitative data, but also offer qualitative explanations and analyses of the key topics. It is important that the report is clear, coherent and comprehensible for all stakeholders. This includes presenting complex information in an understandable way and highlighting key findings. Companies should ensure that the report strikes a balance between depth of detail and clarity and covers all relevant ESG topics comprehensively. In addition, the report must make the methodology of data collection and processing transparent in order to strengthen credibility and trust among readers.
5. review and audit
This phase is crucial to ensure the credibility and accuracy of the reporting. In this step, the report is subjected to a thorough internal review, followed by an external audit by an independent third party.
The CSRD requires the sustainability report to be audited by an auditor. Initially, an audit with limited assurance is sufficient, but it is expected that the audit standard will be equated with the financial report in future and that a reasonable assurance will also be required.
These audits are designed to confirm compliance with legal requirements and industry best practices and to identify any inaccuracies or omissions. Companies should ensure that auditors have access to all the necessary information and resources to conduct an effective audit. Clean documentation throughout the process is therefore important.
The outcome of these reviews should also be used to continuously improve internal processes and practices. Successful completion of the audit not only strengthens stakeholder confidence in the reliability of ESG reports, but also promotes the transparency and accountability of the company.
6. finalization and publication
After the report has been validated through reviews and audits, companies make the necessary adjustments to ensure that all information is accurate and complete. This step also includes the final approval of the report by the management and the supervisory board (both bodies should already be regularly involved during the process), which underlines its importance and the company’s accountability.
Publication should be strategically planned to achieve maximum reach and impact. This includes selecting appropriate platforms and formats that both comply with legal requirements and reach target audiences effectively. Companies often use both digital and traditional channels to disseminate their CSRD reports and integrate them into their overall communication strategy. The transparency demonstrated by publishing the report can strengthen stakeholder trust and promote the company’s image as a responsible player in the economy.
CSRD reporting: Does the use of ESG software make sense?
Just six steps to the finished CSRD report? Sounds easy?
Unfortunately, it probably sounds easier than it actually is in practice. The use of specialized ESG software can be a decisive advantage. These software solutions are designed to simplify and optimize the creation, management and submission of ESG reports. Our ESG software overview presents the most relevant tools for CSRD reporting.
But in which steps of CSRD reporting does the use of ESG software actually create added value?
1. materiality analysis
The Excel template from CSR Tools supports companies in carrying out the double materiality analysis and guides them step-by-step through the process. Some providers (e.g. Luup) have specialized in materiality analysis. However, some all-in-one ESG software solutions also enable companies to efficiently assess impact and financial materiality and automatically collect stakeholder feedback to understand which topics are important to internal and external stakeholders.
2. determination of the relevant data points
Following the materiality analysis, ESG software helps to precisely identify and categorize relevant data points. It enables systematic recording and management of these data points, which is particularly beneficial when it comes to compliance with the detailed requirements of the CSRD. Through integrated reporting standards, the software can ensure that all relevant aspects are covered. With the help of our new data point mapping tool, you can also have your key data points picked out at the touch of a button, rather than having to manually go through each point and check whether it is relevant to your reporting.
3. data collection
Perhaps the greatest advantage of ESG software comes into play during data collection. It can automatically aggregate data from various internal and external sources and store it in a central system. This not only simplifies the data collection process considerably, but also improves data quality by reducing transmission errors.
4. preparation of the report
In the report creation phase, ESG software enables the efficient compilation of the collected data into a formatted document that complies with CSRD standards, including XBRL tagging. Automated templates and report structures facilitate the creation of compliant reports. In addition, many software interfaces offer a visual presentation of the data, which improves the readability and interpretability of the reports.
5. review and audit
ESG software can also support the review and audit processes by providing comprehensive audit trails that document every data entry and change. This facilitates the traceability and verifiability of data for internal and external auditors.
6. finalization and publication
Finally, ESG software can support the finalization and publication of the report by providing tools for the final review and approval processes. In addition, many solutions allow reports to be published directly on company websites or social media, which speeds up and simplifies the dissemination process.
CSRD reporting: Select software
According to studies by PwC and Ubirch however, the market is very fragmented, which does not exactly make it easy to select suitable tool support. The CSRD Software Selection Guide provides a clear plan and the software evaluation model a method of how companies can proceed with the selection. We at CSR Tools are also happy to advise you on the selection of CSRD tools.
In summary, the use of ESG software offers significant benefits at every step of the CSRD reporting process, from increased efficiency to quality assurance and compliance. By integrating such software, companies can not only save time and resources, but also ensure that their reporting meets the latest standards and is appreciated by their stakeholders.
