This blog post is part of the webinar series “The ultimate ESRS guide: From scratch to the final report” and serves as a step-by-step guide through the entire process. Watch the recording here or first get an overview of the process in the related webinar or blog.

A gap analysis involves comparing the existing sustainability data with the current reporting requirements of the relevant standards that fall within the scope after the materiality assessment. This process can help identify discrepancies or areas where new data is needed. .

1. Review of the topic-specific standards

Continuously review the relevant standards that fall within your reporting scope according to the materiality assessment. This step is crucial for developing an understanding of the required information on various ESG topics. It is particularly important to ensure compliance with regulations and to align your reporting process with best practices. Revisiting the standards can often reveal additional requirements or opportunities to streamline your reporting process.

Stay up to date

Staying up to date with these standards makes it easier to establish structures for sustainability management and supports the continuous improvement of your sustainability reporting.

Another crucial step is engaging your stakeholders to assess specific criteria in determining the materiality of IROs. Finally, you should define and explain clear benchmarks that determine when an IRO is considered material. This also provides a solid foundation for your gap analysis.

Full integration of the ESRS into the Code Gaia software

Conveniently, all topic-specific standards, including all disclosure requirements and associated application guidance, are fully integrated into the Code Gaia software. This eliminates the need to constantly flip 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 meeting the standards, a gap analysis can be a valuable step for organizations with established sustainability processes. For companies new to sustainability reporting, a gap analysis is often less insightful.

Process for conducting a gap analysis

Start by reviewing the relevant topic-specific standards to ensure you understand the key areas that need to be reported. Additionally, assess the data already available within your company to identify which information is readily accessible and which needs to be collected or updated.
Historical data from previous reports, such as GRI or DNK, can serve as a useful reference. However, keep in mind that the ESRS may introduce additional requirements or differing definitions.

This approach allows you to start with the existing ESG data and map or adapt it to the specific data framework of the ESRS. The EFRAG Implementation Guidance 3 (IG 3) can serve as a comprehensive checklist for the gap analysis, ensuring 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 might be more efficient to conduct a targeted search based on what needs to be reported under the ESRS (i.e., starting with the material IROs and working from there) rather than beginning with existing data and trying to determine where it fits into the ESRS data framework.

Implement new data collection processes early

Even if a full gap analysis is not conducted, it is important to assess whether new processes need to be implemented early to ensure timely data collection. This applies, for example, to reporting greenhouse gas emissions under standards such as the GHG Protocol. The ESRS reference many such methods and processes, some of which may require months of work to establish new data collection and analysis procedures.

Review of each topic-specific standard within the ESRS

Which topic-specific methods need to be implemented can only be determined once all material IROs have been identified. To understand whether such methods are required, it is essential to review each topic-specific standard within the ESRS.
It is important to consider long-term data collection and analysis processes as soon as the materiality assessment is complete—unless these processes are already in place. Code Gaia supports many of these methods and processes either directly within the software (e.g., carbon footprinting in accordance with the GHGP) or through our extensive and highly skilled partner network.

3. Identification of existing strategies, measures, and targets related to material IROs

The next step is to determine whether the company’s existing strategies, measures, and targets already address the material impacts, risks, and opportunities (IROs) identified in the materiality assessment. This step is crucial for integrating your company’s current practices into the sustainability statement.

Review internal documents early

Start by reviewing internal documents such as environmental policies, health and safety protocols, or corporate social responsibility guidelines to determine how they align with the material IROs. Identifying these documents early can significantly streamline the disclosure process and ensure consistency in your reporting.

Involve other departments

Additionally, engage departments such as facility management, compliance, human resources, and operations, as they may have valuable data and insights on how the company addresses material topics. If further clarity is needed, consider involving additional stakeholders to ensure that all relevant information is captured.

4. Koordinierung mit dem Finanzteam

Financial materiality is a crucial aspect of sustainability reporting, and many disclosure requirements demand specific financial data. Close collaboration with your finance team is essential to ensure that the required financial figures are accurately reported.

Verify alignment of financial data

The required financial data is typically found in the financial controlling or accounting departments. It is essential to ensure that this data aligns with the financial figures reported in the official corporate reports. Any discrepancies could not only undermine the credibility of your sustainability statement but also risk invalidation or necessitate extensive corrections.

However, it is important to note that financial data is often finalized late in the reporting process (shortly before or after the end of the fiscal year). Therefore, collecting this data should not be the first step of your project. Instead, maintain open communication with the finance team to ensure the timely integration of this information into your report without causing delays.

5. Conclusion

The continuous review of topic-specific standards is a key step for successful and compliant sustainability reporting. By consistently engaging with relevant ESG topics and adhering to regulatory requirements, companies ensure that their reporting process remains up to date and aligned with best practices. This forms the foundation for an efficient materiality assessment, precise reporting, and a solid basis for further optimizing sustainability management.
Thanks to the full integration of the ESRS standards into the Code Gaia software, this process is significantly streamlined and made more efficient.