From the Trenches
CSRD Hub Newsletter #13
February 2025
 

First “ESRS official” reports

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Congratulations to the companies publishing their first ESRS sustainability statements. You may have already seen several sources collecting annual reports with the first official ESRS sustainability statements, led by Danish companies. 

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You may also have read that the fidelity of implementation to the letter of the standards also seems to be mixed. We’d tend to agree, but as always, we’ve been involved with implementation directly and have always maintained that reporting is a journey. Kudos to the companies achieving this major milestone.

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We’ll take a closer look at a few reports in our next newsletter once more companies have published. In the meantime, a few examples from within reports that we find impactful:

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• Novo Nordisk. Great chapter structure with IROs and intro and consistent approach to MDR disclosures, including a table for relevant policies and clear overview of actions.

• Rockwool. Great overview of broader strategy with links to ESRS topics and overview of the value chain (see pages 52-53).

• Orsted. One of the first early adopters, their first required sustainability statement is very well structured with clear links to ESRS disclosures and navigation.​​

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Waiting for the (Omni)bus

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We don’t want to give much more airtime to the Omnibus given it has been covered by many already and the speculation is running rampant. 

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Big picture

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The European Commission is reportedly considering changes to reduce the reporting burden related to the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy. Sources suggest the proposal—originally expected on February 26—may be delayed until March.

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A few takeaways and changes, including from a recent Responsible Investor article are below. 

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But remember, no one knows exactly what will happen and a number of leaders, including in the investment community, have come out in support of the current reporting requirements. In addition, the strategic value of the core tenets of the reporting regime, in particular double materiality, remains.

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A few proposed updates, still to be finalized:

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• CSRD Scope Reduction: The Commission is considering aligning the CSRD with CSDDD, meaning companies with fewer than 1,000 employees may no longer be required to report. This change would remove approximately 85% of current in-scope companies from reporting obligations.

• Double materiality under discussion: The double materiality principle, which assesses both financial risks and opportunities to companies and their broader impact on society and the environment, is reportedly back on the table and is being discussed in relation to a more financially focused single materiality approach (i.e., as in the IFRS Sustainability Standards).

• Reevaluation of CSDDD elements: 11 key provisions of CSDDD, including climate transition plans and civil liability, are reportedly under discussion for revision.

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Next steps

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The final proposal was expected at the end of February, although sources note it may be March. Unfortunately, the roundtable discussions have been less than transparent, with the proposal expected to undergo minimal additional stakeholder consultation, including by EFRAG.

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Our POV

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Stay the course. Things may change, but investors, market, and other stakeholder expectations for transparency remain high, and double materiality—regardless of regulatory mandates—provides a strategic lens to assess both financial risks and broader business impacts.

If requirements are indeed scaled back, it provides more precious time to focus and prepare. And companies who are serious about their efforts can set themselves apart from others.

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​​​​​​​​​​​​​Open questions on double materiality

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Thanks to the 400+ participants in our last double materiality webinar, where we applied lessons learned from a year of DMA implementation and insights from priorities of assurance providers and enforcement agencies. We didn’t have time to get to all the questions, so we’ve included those here.

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If you missed the webinar, check it out on the CSRD Hub!

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Question: Should Impact assessment and Financial Materiality assessment be sequenced? How are they interconnected?

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Our POV: ESRS does not prescribe a sequence for the impact and financial materiality assessment; however, we follow the approach outlined in EFRAG’s implementation guidance, which focuses first on impact materiality, as impacts often have implications for risks and opportunities.

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Question: Where does the Sustainability Statement go? I.e., publicly available on your website?

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Our POV: The sustainability statement is integrated into the management report, as described under ESRS 1, Chapter 8. Regulations that attach to the management report would extend by analogy to the sustainability statement. For more details and considerations on preparing the sustainability statement, see our previous newsletter.

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Question: Are you able to provide guidance on recommended data points for entity-specific disclosures? Should GRI disclosures then be focused on for the entity-specific disclosure? 

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Our POV: Entity-specific disclosures could look quite different from company to company, and many may not have any entity-specific disclosures. They really are focused on those material IROs not sufficiently covered by the ESRS topics, subtopics, and sub-subtopics. 

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A few examples that we have seen across industries include tax transparency and cybersecurity. Other sectors have topics/IROs that tend to be material within the industry but may not be part of the AR-16 list in ESRS. See Novo Nordisk’s materiality assessment for an example of entity-specific topics.

 

In this case, companies may orient to existing standards such as GRI or SASB to determine appropriate datapoints. ESRS 1 (especially the Application Requirements) have helpful information for companies as they consider and report on entity-specific topics.

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Question: If an IRO is not material, but the company wants to present the related data point in the ESG Report, is it a limitation in this direction?

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This could be addressed two ways: 1) should the datapoints related to the non-material IRO be presented in the sustainability statement, and 2) should the non-material IRO be presented in another ESG report. 

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Many companies provide information of interest to different stakeholders that may not be directly related to material IROs. This is a matter that companies need to address carefully. One approach is to address only material information in the sustainability statement while maintaining some type of voluntary reporting for other purposes.

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In terms of including non-material datapoints in the sustainability statement, ESRS provides some guidance in ESRS 1 Paragraph 114 as well as in FAQs, Question ID 526 and ID 1021. According to ESRS 1 Paragraph 114: When the undertaking includes in its sustainability statement additional disclosures stemming from (i) other legislation which requires the undertaking to disclose sustainability information, or (ii) generally accepted sustainability reporting standards and frameworks, including non-mandatory guidance and sector-specific guidance, published by other standard-setting bodies (such as technical material issued by the International Sustainability Standards Board or the Global Reporting Initiative), such disclosures shall: 

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(a) be clearly identified with an appropriate reference to the related legislation, standard or framework (see ESRS 2 BP-2, paragraph 15); 

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(b) meet the requirements for qualitative characteristics of information specified in chapter 2 and Appendix B of this standard.

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Ready to learn more? Check out our CSRD Hub!​