Implement the ESRS in 5 steps

Important note:

n December 2022, the EU Parliament adopted the CSRD. It will come into force on January 1, 2024 and expand the requirements of the existing Non-Financial Reporting Directive (NFRD). This means that companies are also obliged to report their non-financial and sustainability information in accordance with the European Sustainability Reporting Standards. to be disclosed in the annual report.

However, with the omnibus proposal presented in February 2025, the EU Commission has initiated a course correction: Deadlines, areas of application and reporting obligations are to be partially postponed or adjusted. Although this provides relief, it also creates new uncertainty. Even if not all details have been finally clarified: Those who prepare now will give themselves a clear head start. In this article, we show you how you can prepare your company for ESRS and therefore CSRD compliance in good time with 5 concrete steps.

The period leading up to the quarterly close is particularly hectic for CFOs and their staff. They are responsible for preparing and reviewing financial reports and must carefully analyze and compile data in order to produce accurate and meaningful reports on time.

The CSRD and the EU taxonomy are now increasing the pressure, particularly on SMEs, to integrate not only financial key figures but also non-financial key figures into the management report and to define basic processes and standards for this. The financial part of reporting and the expectations of stakeholders alone require a considerable amount of work. Accordingly, there is little capacity left for the preparation of an ESRS-compliant sustainability statement, which also requires specific specialist knowledge.

Many companies are therefore concerned with how they can create a standard-compliant sustainability report as quickly and easily as possible in a relatively short space of time and make their company ESRS-ready .

We want to take you by the hand with this blog article and show you how you can effectively achieve your ESRS-compliant report in 5 steps and disclose your sustainability efforts stress-free.

1. familiarize yourself with the reporting standards

As part of the EU taxonomy and the CSRD, uniform standards have been or are being developed by the EU and national legislators. The ESRS reporting standards are contained in a delegated regulation (supplementing the Accounting Directive) and were published in their final form on July 31, 2023. The standards prescribe exactly what and how a company must report and are subject to a complex set of procedures that largely revolve around “materiality” (also known as double materiality) (more on this in step two).

Other widely used standards for non-financial reporting include the German Sustainability Code (DNK), the Global Reporting Initiative (GRI), the UN Global Compact, the Carbon Net Zero Standard, the Common Good Balance Sheet and many more.

Set the standard today rather than tomorrow 📄📌

It is important to carefully select the appropriate standard and carry out a double materiality analysis as well as define the objectives to be achieved with the reporting. The GRI, for example, is a very comprehensive and globally recognized standard, while the Sustainability Code adopts some performance indicators from the GRI, is only applicable at German level and is somewhat easier to prepare.

You should therefore carefully consider what stage the sustainability statement is currently at and what goals you would like to pursue with it in the future. The selection of a standard has a direct impact on the amount of work required to prepare it. While there is a choice for some standards (DNK/GRI rather voluntary, or possibly required by customers/business partners), the ESRS will be mandatory in the near future. However, it is also possible to take a step-by-step approach, for example by starting with the GRI and switching to the ESRS later.

In general, the earlier you start collecting data and information and setting up the corresponding structures, the better and easier it will be to deal with the ESRS later on. Check with your internal legal department or external legal advisors at an early stage whether and from when you fall under the ESRS reporting obligation.

2. perform a double materiality analysis

The first step after deciding on a standard is to identify the most important sustainability aspects using a double materiality approach (a list of all sustainability aspects compiled by Code Gaia can be found here).

This assessment identifies both the environmental and social impacts of your business and the impact of environmental and social issues on your business, which form the basis for your ESRS reporting (ESRS 1, sections 3.4 and 3.5).

What is the double materiality analysis and why is it important? 🏭🌍

An assessment of double materiality influences the scope and detail of the information that must be disclosed in a sustainability statement.

Dual materiality is the combination of “financial materiality” (impact of the environment on a company’s financial performance) and “impact materiality” (impact of the company on society and the environment).

Information is considered material to the primary users of general purpose financial reporting if it could reasonably be expected that omitting, misstating or obscuring that information could influence the decisions they make on the basis of the company’s sustainability statement.

A sustainability aspect is material from a financial perspective if it has a significant financial impact on the company or can reasonably be expected to do so.

Please feel free to make an appointment with us at this point to clarify any questions you may have about the consulting packages.

3. simplify data collection within the company

The requirements of the standards for non-financial reporting can be very complex for employees who have not previously come into contact with this topic. For example, the HR department can quickly reach its limits if it has to calculate employee turnover for ESRS S1-6 without an exact formula being provided.

Compiling sustainability data can also be a mammoth task, as the required information is often stored in various tables and across different departments.

💡 Tip: Identify common denominators in the data analysis

There are many common databases, particularly for ecological evaluations and indicators in your sustainability statement, which should be used to generate synergy effects.

One example of this is financial accounting. Almost all reporting standards consider the material flow through the company with the upstream and downstream supply chain in order to determine the ecological indicators. With all incoming and outgoing documents, it provides a perfect database for this.

It is important to recognize and process the relevant receipts in accordance with the standard. The fuel receipt for a company vehicle, for example, is relevant for your company’s Scope 1 emissions. In addition to the financial entry, you can also record the number of liters and the fuel type in a database in order to then convert these into CO₂ equivalents using an emission factor.

ESRS software can save a lot of stress and time here. Instead of collecting data in tables, for example, the Code Gaia software solution uses artificial intelligence to automatically read invoices from the accounting department during data import and categorize them into the environmental data in a matter of seconds.

4. analyze your data

According to a study by PWC and IMI, the biggest challenges in implementing ESRS lie in the collection, quality, processing and analysis of data. A full 73% of the SMEs surveyed cited this as a difficulty, closely followed by a lack of time resources.

With our software solution, you can integrate your key data from existing information and processes into the Code Gaia dashboard together with our experts without time-consuming onboarding. Our system enables the recording and consideration of emissions in the three scopes according to the GHG protocol. We also integrate environmental indicators from other standards and save you the time-consuming process of familiarizing yourself with complex regulations.

We take you by the hand step by step:

Import data 💻⬅️

Our advanced AI technology makes it possible to automatically read out invoices to automate the recording of emissions. In addition, we will be offering a supplier connection in the near future to efficiently take Scope 3 emissions into account.

Flexible data integration enables your company to meet specific requirements and take individual data sets into account. This increases the efficiency and transparency of your sustainability reporting.

Record social & governance indicators 🗣️📃

With Code Gaia, social & governance indicators can be collected decentrally within the company. Smart questionnaires enable uncomplicated data collection without the complexity of standards playing a role. All relevant aspects such as deadlines, different roles in the team and email requests are managed centrally in one tool. Text modules, templates and comprehensive information are available to support data providers and make the process easier.

Derive a sustainability strategy 🌱🧾

As soon as the data has been integrated into the software and categorized, you can view your ESG performance and carbon footprint in the Code Gaia dashboard and use this as a basis for independently developing a tailor-made sustainability strategy.

Carry out industry benchmarking 📊

You can also compare your sustainability efforts directly with your market competitors. To do this, Code Gaia collects data from public sustainability reports from your industry for reference. This means you can not only view sample examples from sustainability reports directly in the dashboard, but also derive measures based on valid industry comparisons.

5. receive your ESRS-compliant report

Our intuitive SaaS solution provides you with comprehensive support – from data collection to the identification of optimization potential – and delivers standard-compliant reports at the click of a button. We guarantee that the standard you select will be adhered to and that the report will be ready for presentation to your stakeholders within a maximum of four weeks.

How exactly do we proceed? 📍

We place the calculated data in the right place in the report, break down the complex legal text of the ESRS into questions and provide information on how to answer them.

Our software solution also helps you to coordinate collaboration between different departments to collect data and enables you to work in a decentralized manner.

An ESRS-compliant report in the shortest possible time 🚀

Code Gaia reports offer fast third-party assurance capabilities, developed in collaboration with leading audit firms. Code Gaia’s sustainability team also performs a compliance review and gap analysis of your final reports and is available to assist you throughout the reporting process.

To make it as easy as possible for you to obtain an ESRS-compliant report, no prior knowledge or lengthy onboarding is required to use our reporting software.

Make your company ESRS-ready in no time and without Excel chaos!