CSRD Directive: how to comply with ESRS standards

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As of 2025, ESG reporting becomes mandatory for unlisted companies that exceed specific size criteria: over EUR 50 million in turnover, EUR 25 million in assets or 250 employees. Listed SMEs and non-EU companies with revenues above 150 million in the EU will also be affected. This means that many companies will have to review their data collection and reporting processes to ensure compliance. The main objective of the directive is to increase transparency on sustainability performance, providing investors and stakeholders with clear and comparable information. In order to comply, companies will have to identify relevant ESG data, implement monitoring systems and integrate the new practices into company financial statements.

The ESRS standards, developed by EFRAG, establish a single reporting framework for sustainability. The principle of double materiality requires companies to assess their impacts in both financial, environmental and social terms. This means that companies will not only have to measure their impact on the environment and society, but also assess how external factors may affect their financial stability. Companies will have to report information considering the entire value chain, including suppliers and business partners. The ESRS cover several areas, including governance, risk management ESG, environmental impacts, social aspects and human rights. Adopting these standards requires a significant change in reporting processes, with the need to collect detailed and verifiable data.

The obligation of ESG reporting will start gradually: from 2025 for large listed companies with more than 500 employees, from 2026 for large unlisted companies, from 2027 for listed SMEs and from 2029 for non-EU companies with a significant presence in Europe. This progressive approach allows companies to gradually adapt to the new requirements, but requires careful planning to avoid delays in implementation. Companies will have to prepare a sustainability report integrated into the annual report, ensuring that the information is transparent, reliable and ESRS-compliant.

The CSRD directive requires the digitisation of reporting to improve accessibility and transparency. ESG balances will be subject to verification by accredited auditors, ensuring the reliability of published information. Companies will have to report data on energy consumption, emissions, working conditions, governance and risk management. This implies the adoption of advanced digital systems for monitoring and data collection, reducing the risk of errors and ensuring traceability of information. The external verification of ESG reports will increase the credibility of companies in the eyes of investors and stakeholders, making sustainability reporting a strategic element for corporate competitiveness.

Companies will have to demonstrate the relevance of ESG issues in their specific context by conducting a materiality analysis. For example, if a company considers climate change irrelevant, it will have to provide a detailed explanation based on documented analysis. The materiality assessment allows the identification of key issues for each organisation, ensuring that reporting is relevant and focused. The mandatory information contained in ESRS Standards 1 and 2 remains binding for all companies subject to the CSRD, ensuring a minimum level of transparency. Conducting a thorough materiality analysis helps companies focus on the aspects most relevant to their industry and operations, avoiding a superficial approach to ESG reporting.

To best address compliance with CSRD, companies should initiate a three-step process. First, an internal assessment or assessment to identify gaps in ESG data and reporting processes. Second, the implementation of digital tools for data collection, management and verification, ensuring compliance with ESRS standards. Thirdly, the formation of an internal team dedicated to sustainability, supported if necessary by expert consultants, to integrate ESG reporting into corporate strategy. In addition, initiating initial voluntary reporting prior to the regulatory obligation can help test the system, reduce errors and optimise workflows for future mandatory audits.

This article has been realised within the project "Biodiversity services EU expansion" (CUP: E43D22000480009) in the framework of the Lombardy Region's call for tenders "PR FESR 2021-2027 - LINEA INTERNAZIONALIZZAZIONE 21-27", aimed at supporting the internationalisation of Italian companies. 3Bee is the naturetech company that develops innovative technologies for monitoring, protecting and regenerating biodiversity, supporting companies in defining customised climate strategies based on the analysis of their impacts and dependencies on nature. With an established portfolio in Italy, Germany and France and prominent partnerships, 3Bee continues its expansion into international markets to create real impact through technology.