This blog post is part of a webinar series “The ultimate ESRS roadmap: From Zero to Final Report” and is a step-by-step guide through the entire process. Watch the recording here or get an overview of the process first in the associated webinar or blog.
Table of contents
A gap analysis compares the existing sustainability data with the current reporting requirements of the relevant standards that fall within the scope of the materiality analysis. This process can help to identify
discrepancies or areas where new data is needed.
1. review of the topic-related standards
Continuously review the relevant standards that are part of your reporting scope according to the materiality analysis. This step is critical to developing an understanding of the information required on the various ESG topics. It is particularly important to ensure compliance
and that your reporting process is in line with best practice. Re-reading the standards can often uncover additional requirements or opportunities to streamline your reporting process.
Keep up to date
Keeping up to date with these standards makes it easier to set up sustainability management structures and supports the continuous improvement of your sustainability reporting.
Another crucial step is to involve your stakeholders in order to assess specific criteria when determining the materiality of IROs. Finally, you should define and explain clear thresholds. These determine when an IRO is considered material. This also provides you with a good basis for your gap analysis.
Complete integration of the ESRS into the Code Gaia software
Conveniently, all topic-related standards, including all disclosure requirements and associated application requirements, are fully integrated into the Code Gaia software. This eliminates the need to constantly leaf back and forth through paper documents or digital copies of the standards.
2. conducting a gap analysis (optional for experienced reporters)
Although this step is not mandatory for compliance with the standards, a
gap analysis can be a valuable step for organizations with established sustainability processes. For companies that are new to sustainability reporting, a gap analysis is usually less productive.
Procedure for a gap analysis
Start by reviewing the relevant topic-related standards to ensure you understand the key areas that need to be reported on.
Also assess the data available in your organization to determine what data is already available and what needs to be sourced or updated.
Historical data from previous reports such as the GRI or the DNK can serve as a useful
reference. However, bear in mind that the ESRS may introduce additional requirements or different definitions.
This approach makes it possible to start with the existing ESG data and map or adapt it to the
specific data schema of the ESRS. The EFRAG Implementation Guidance 3 (“IG 3”) can serve as a comprehensive checklist for the gap analysis to ensure that all required data points are covered.
Not suitable for all companies
For new reporters and companies that have not yet collected sustainability data
, a gap analysis may be far less productive. In such cases, it may be more efficient to conduct a targeted search based on what is to be reported under the ESRS (i.e. start with the material IROs and work from there) rather than starting with the existing data and trying to figure out where it fits into the ESRS data schema.
Introducing new data collection procedures at an early stage
Even if a full gap analysis is not carried out, it is important to check whether
new procedures need to be introduced at an early stage to ensure timely data collection. This applies, for example, to the reporting of greenhouse gas emissions according to standards such as the GHG Protocol. The ESRS point to many such methods and processes, some of which could require months of work to establish new
data collection and analysis.
Review of each thematic standard within the ESRS
Which topic-specific methods need to be introduced can only be determined once all material IROs have been defined. To understand whether such methods need to be adopted, it is necessary to review each topic-specific standard within the ESRS. It is important to consider long-term data collection and analysis processes once the materiality assessment has been completed (if these processes are not already established). Code Gaia supports many of these methods and processes either directly in the software (e.g. with GHGP carbon accounting) or through our extensive and knowledgeable partner network.
3. identification of existing strategies, measures and targets in relation to key IROs
The next step is to determine whether the company’s existing strategies, measures and objectives already address the material impacts, risks and opportunities (IROs) identified in the materiality analysis . This step is important to integrate your company’s current practices into the sustainability statement.
Review internal documents at an early stage
Start by reviewing internal documents, such as environmental policies, health and safety protocols or social responsibility policies, to determine how they align with the material IROs. Identifying these documents early on can greatly simplify the process of preparing disclosures and ensure consistency in your reporting.
Involve other departments
Also speak to departments such as facilities management, compliance, HR and operations, as they may have valuable data and insights into how the company deals with material
issues. If additional clarity is required, involve other stakeholders to ensure that all relevant information is captured.
4. coordination with the finance team
Financial materiality is a crucial aspect of sustainability reporting and many disclosure requirements call for specific financial data. Close collaboration with your finance team is essential to ensure that the required monetary amounts are reported correctly.
Checking the consistency of financial data
As a rule, the required financial data can be found in the financial controlling or
accounting departments. It is essential to ensure that this data is consistent with the financial data reported in the
official company reports. Any
discrepancies could not only affect the credibility of your sustainability statement, but could also result in the statement being declared invalid or
requiring extensive corrections.
However, it is worth noting that financial data is often finalized late in the reporting process (just before and after the end of the financial year), so it is important
not to put the collection of this data at the first step of your project. Instead, maintain
open communication with the finance team to ensure timely integration of this information into your report without
delays.
5. conclusion:
The continuous review of topic-related standards is a key step for successful and legally compliant sustainability reporting. By continuously addressing the relevant ESG issues and complying with regulations, companies ensure that their reporting process remains up to date and in line with best practice. This forms the basis for efficient materiality analysis, accurate reporting and a sound basis for further optimization of sustainability management. Thanks to the full integration of the ESRS standards into the Code Gaia software, this process is made considerably simpler and more efficient.
