Sustainability Reporting: Implementing the CSRD Step by Step

The Corporate Sustainability Reporting Directive (CSRD) marks a paradigm shift in corporate reporting. Sustainability is moving from a voluntary exercise to a regulatory obligation. For many companies, this means a significant extension of their reporting duties – with new standards, new data collection processes and new assurance requirements. Those who begin implementation early will secure not only compliance but also a strategic advantage in the competition for capital, talent and customer trust.

Who Must Report? The Scope of the CSRD

The CSRD progressively and significantly expands the circle of companies subject to reporting obligations:

From financial year 2024 (report in 2025):

Large public-interest entities with more than 500 employees that were already subject to the Non-Financial Reporting Directive (NFRD)

From financial year 2025 (report in 2026):

All large companies meeting at least two of the following three criteria: more than 250 employees, more than EUR 50 million in net turnover, more than EUR 25 million in total assets

From financial year 2026 (report in 2027):

Listed small and medium-sized enterprises (SMEs)
Small and non-complex credit institutions
Captive insurance undertakings

Practical note: Companies not directly subject to reporting obligations are also indirectly affected if they must supply ESG data as suppliers or business partners of reporting companies. The requirements cascade through the entire value chain.

Step 1: Double Materiality Assessment

The double materiality assessment is the foundation of CSRD reporting. It determines which sustainability topics your company must report on and distinguishes two perspectives:

Inside-out perspective (Impact Materiality):

What impact does your company have on the environment, society and human rights?
Both actual and potential impacts are considered.
Assessment criteria: severity (scale, scope, irremediability) and likelihood of the impacts.

Outside-in perspective (Financial Materiality):

Which sustainability risks and opportunities affect the financial position, performance and cash flows of your company?
Assessment criteria: magnitude of financial effects and probability of occurrence.

Practical approach:

Identification of relevant sustainability topics along the entire value chain
Stakeholder engagement (employees, customers, suppliers, investors, civil society)
Assessment and scoring of each topic from both perspectives
Documentation of the methodology and results
Determination of the reportable topics

Step 2: Understanding and Applying the ESRS Standards

The European Sustainability Reporting Standards (ESRS) provide the content framework for reporting. They are structured as follows:

Cross-cutting standards:

ESRS 1 – General Requirements: Fundamental principles, report structure, materiality concept
ESRS 2 – General Disclosures: Governance, strategy, management of impacts, risks and opportunities, metrics and targets – these disclosures are mandatory for all reporting companies

Topical standards – Environment (E):

ESRS E1: Climate change (greenhouse gas emissions, climate targets, transition plan)
ESRS E2: Pollution
ESRS E3: Water and marine resources
ESRS E4: Biodiversity and ecosystems
ESRS E5: Resource use and circular economy

Topical standards – Social (S):

ESRS S1: Own workforce
ESRS S2: Workers in the value chain
ESRS S3: Affected communities
ESRS S4: Consumers and end-users

Topical standards – Governance (G):

ESRS G1: Business conduct and corporate culture (including anti-corruption)

Which topical standards apply is determined by the double materiality assessment. Only ESRS 2 must always be reported in full.

Step 3: Data Collection and Gap Analysis

Following the materiality assessment and the identification of relevant ESRS standards, a systematic stocktake is required:

Conducting the gap analysis:

Comparison of required data points with already available data
Identification of missing data sources and processes
Assessment of the quality of existing information
Prioritisation of gaps by effort and materiality

Typical data gaps in practice:

Scope 3 emissions (particularly in the upstream and downstream value chain)
Biodiversity-related metrics
Social metrics in the supply chain (e.g., living wages)
Transition plan and climate targets aligned with the 1.5-degree goal
Governance metrics for sustainability management

Step 4: Integration into the Management Report

The CSRD requires the sustainability report to be integrated as a separate section within the management report. This has far-reaching consequences:

Unified document: Financial and sustainability information stand side by side on an equal footing.
Consistency: Disclosures must be consistent with the financial information in the management report.
Timing: The sustainability report must be available at the same time as the annual financial statements.
Responsibility: Management bears responsibility for the accuracy of the entire management report – including sustainability information.

Step 5: Limited Assurance

The sustainability report must be reviewed by an independent auditor with limited assurance. In the medium term, an upgrade to reasonable assurance is envisaged.

What does limited assurance mean?

The auditor provides a statement that nothing has come to their attention that causes them to believe that the report has not been prepared, in all material respects, in accordance with the ESRS.
The scope of the review is less intensive than a financial statement audit but nonetheless includes inquiries, analytical assessments and sample testing.

Practical recommendation: Engage with your statutory auditor early regarding the requirements for the sustainability assurance. Assurance planning should run in parallel with report preparation.

Step 6: Digital Tagging (ESEF/iXBRL)

The CSRD requires the sustainability report to be prepared in a machine-readable format (iXBRL – Inline eXtensible Business Reporting Language). Each individual data point is tagged digitally to enable automated analysis.

Practical implications:

The ESRS taxonomy defines the tags to be used.
Specialised software or service providers are required for tagging.
Tagging must be coordinated with the content preparation of the report.
Test runs before the final version are strongly recommended.

Timeline: 12 to 18 Months before the First Report

A realistic project plan for initial CSRD application includes the following milestones:

Months 1–3: Establish project organisation, define governance structure, clarify responsibilities
Months 3–6: Conduct double materiality assessment, identify relevant ESRS standards
Months 5–8: Complete gap analysis, build data collection processes, adapt IT systems
Months 7–12: Conduct initial data collection, prepare draft report
Months 10–14: Coordination with the auditor, dry run of the assurance
Months 12–16: Finalise the report, iXBRL tagging
Months 16–18: Assurance, approval by management, publication

Internal Governance Structure

Successful CSRD implementation requires clear responsibilities:

Board/Management: Overall responsibility, approval of materiality assessment and report
Sustainability officer/ESG manager: Operational project management, coordination of data collection
Specialist departments: Data delivery (HR, procurement, production, facility management, finance)
Controlling/Accounting: Integration into the management report, consistency review
IT: System adaptations, data management tools
External advisors: Support with materiality assessment, ESRS interpretation, assurance preparation

Software Tools for ESG Data Management

Manual collection and management of ESG data in spreadsheets quickly reaches its limits. Specialised software solutions offer:

Automated data collection: Integration with existing ERP, HR and energy management systems
Workflow management: Structured collection and approval processes
ESRS mapping: Automatic allocation of data points to relevant ESRS requirements
Audit trail: Complete traceability of data origin and processing
iXBRL export: Integrated tagging functionality

When selecting a solution, pay attention to ESRS standard coverage, integration capability with your existing systems and scalability.

Conclusion

CSRD implementation is a demanding project that goes far beyond a mere reporting obligation. It requires new processes, new competencies and a shift in corporate governance thinking. Those who approach the topic strategically can use reporting as a catalyst for a more sustainable business strategy – building trust with investors, customers and employees in the process. The team at compleneo accompanies you through the entire CSRD implementation process: from the double materiality assessment through data collection to assurance preparation – ensuring that your sustainability reporting is not only compliant but also a genuine management tool.