Category: ESG

CSRD-Nachhaltigkeitsbericht nach den Simplified ESRS
17.04.2026

Simplified ESRS: What Is Changing and What Companies Should Do Now

The new Simplified ESRS are set to replace ESRS Set 1. This will make them the new standards for mandatory CSRD reporting. In this blog article, you will find everything important about the simplified standards for sustainability reports.

The Simplified ESRS

The ESRS (European Sustainability Reporting Standards) are set to become simpler, but not less important. With the planned Simplified ESRS, also referred to as Amended ESRS or ESRS Set 2, the focus is shifting: away from maximum detail and toward sustainability reporting that presents material topics more clearly, more consistently, and in a more practical way. For companies, this raises not only the question of what will be removed in the future. More importantly, it is about what will actually matter in reporting going forward.

The planned changes are linked to the EU’s Omnibus initiative. The aim is to streamline sustainability reporting requirements under the CSRD (Corporate Sustainability Reporting Directive) without abandoning the core logic of the ESRS. For companies, this means fewer mandatory disclosures, but still a clear focus on material information, transparent disclosures, and a robust presentation of their sustainability topics.

At a glance: What the Simplified ESRS mean for you now

Already deep into ESRS? → Map existing data points to the Simplified ESRS instead of starting from scratch.

Just getting started? → Clarify early whether VSME, Simplified ESRS, or another reporting framework is a better fit, then set up data collection directly along that logic.

No longer in scope? → Assess which form of voluntary reporting makes strategic sense.

Still have time until 2028? → Use the additional time to align materiality, data architecture, and responsibilities cleanly with the Simplified ESRS.

Where do the Simplified ESRS currently stand and what can be expected next?

The Simplified ESRS have not yet been formally adopted. So far, EFRAG’s technical recommendation to the European Commission is available. The final version of future ESRS Set 2 still needs to be adopted by the Commission as a delegated act.

Since the EU plans to adopt EFRAG’s draft as it stands, the direction is already clear: fewer data points, fewer redundancies, greater focus on material information, and more principles-based reporting.

For companies, the draft status is therefore not a reason to wait. Those who understand the logic behind the Simplified ESRS now can already begin aligning reporting processes more effectively toward relevance, coherence, and practical data use.

What is new in the Simplified ESRS and what stays the same?

The planned Simplified ESRS are intended to make sustainability reporting leaner and easier to understand. At the core, the aim is to place greater focus on decision-useful information while reducing the burden on companies where previous requirements were particularly extensive, redundant, or difficult to apply in practice.

Was ist neu und was bleibt bei den Simplified ESRS, den Berichtsstandards der CSRD.

What is new?

Focus on material information

Going forward, only material data points are expected to be disclosed. The goal is a sustainability report that is clearer and less driven by formally checking off every single requirement wherever possible.

Significantly fewer data points

According to EFRAG, mandatory data points are expected to be reduced by around 61 percent. At the same time, voluntary disclosures will be removed. So this is not just about less volume, but also about stronger focus on what is truly relevant for users and decision-making.

Shorter and more understandable standards

The standards are expected to be streamlined. Redundant content will be cut back, and overlaps between ESRS 2 and the topical standards will be reduced. This is intended to improve readability and make application easier in practice.

More principles-based narrative reporting

Key governance topics such as SBM-3, IRO-1, as well as Policies, Actions and Targets will be brought together more strongly. At the same time, presentation is expected to become more flexible. As a result, the report should function less like a checklist and more like a coherent overall picture.

Less burden around value chain data

Going forward, there will no longer be an explicit preference for primary data. Estimates and secondary data are also expected to be allowed where robust primary data is unavailable or can only be obtained with disproportionate effort.

Simplified materiality assessment and clearer disclosure logic

Disclosure logic is also becoming more focused. Companies should be better able to distinguish between material and non-material information. This also affects the question of which mandatory disclosures are actually required and where narrative context matters more than completeness for its own sake.

What stays the same?

Despite the simplification, the core logic of the ESRS remains in place. ESRS Set 1 is not being reinvented, but rather condensed, focused, and further developed in the form of the Simplified ESRS. The double materiality assessment (DMA) also remains a central starting point for reporting. The following three points will continue to be central in the new Set 2:

Double materiality remains mandatory.

Companies must therefore continue to systematically assess which sustainability topics are material, both from an impact perspective and a financial perspective. What is new is mainly that application is intended to become more practical: EFRAG refers to clearer guidance, less documentation effort, and stronger focus on truly decision-useful information.

The 12 topical standards remain structurally in place.

The Simplified ESRS continue to build on the same architecture: ESRS 1 and ESRS 2, along with the familiar environmental, social, and governance standards, remain in place. For companies, this means existing structures, responsibilities, and mapping logic can generally continue to be used, while the depth and volume of required disclosures will be reduced in many places.

The objective remains a transparent presentation of material sustainability topics.

Even with simplified requirements, companies are not expected to simply check off data points, but to explain clearly which material topics they have identified and how they manage them. EFRAG emphasizes stronger focus on relevance, Fair Presentation, and reporting that is less purely compliance-driven. Companies therefore still need to provide an internally coherent story around their material topics.

Fair Presentation: Why the report should be less checklist and more overall picture

A central point in ESRS Set 2 is that it does not just shorten individual requirements, but also shifts the logic behind reporting. This is especially visible in the principle of Fair Presentation.

What does Fair Presentation mean?

A report should not merely appear formally complete. It should provide a coherent, balanced, and understandable overall picture of a company’s material sustainability topics.

In other words, it is no longer enough to simply work through individual Disclosure Requirements. What matters is whether the report as a whole makes it understandable

  • which topics are material
  • why they are material
  • how the company is addressing them

What changes in practice as a result?

With the Simplified ESRS, three things move more strongly into focus:

  • Relevance instead of maximum detail
  • Coherence instead of isolated individual disclosures
  • Clarity instead of overloaded reports

Fair Presentation therefore describes quite precisely what good reporting will increasingly be measured against in the future: not just the quantity of information, but its explanatory value.

Undue Cost or Effort: More pragmatism in data collection

The Undue Cost or Effort principle is intended to reduce the burden on companies wherever data can only be collected with disproportionate effort.

Where is the practical relief?

This is especially relevant for data that is hard to obtain, for example in the value chain or where information cannot be gathered reliably in the short term.

Going forward, there is expected to be more flexibility for:

  • estimates
  • secondary data
  • a more pragmatic approach to data gaps

This is a noticeable relief, especially for companies that are still building reliable ESG data structures.

What does this not mean?

Undue Cost or Effort is not a free pass to simply leave out information.

Companies therefore cannot rely on this principle in a blanket way by saying that data collection is difficult or expensive. What remains decisive is that assumptions, methods, and approaches are transparent and understandable.

What matters here:

  • Decisions should be justifiable
  • Estimates should be plausible
  • Data gaps should be contextualized, not hidden
  • the report should still provide a robust overall picture despite simplification

This principle therefore stands for a more realistic approach to data collection. The focus is not on perfection at any cost, but on an approach that remains practical while still being transparent.

Fewer data points, but not automatically lower expectations

Reducing data points is a clear form of relief. According to EFRAG, mandatory data points that must be disclosed when material are expected to decrease by around 61 percent. At the same time, voluntary disclosures will be removed.

What has been reduced in concrete terms?

The simplification mainly affects the volume of disclosures that companies previously had to collect, document, and prepare consistently in addition to core requirements. At the same time, the standards as a whole are expected to become shorter, clearer, and more principles-based. This comes with fewer overlaps, more flexibility in narrative disclosures, and a simplified materiality assessment.

But a reduction of around 61 percent does not mean that sustainability reporting will automatically become 61 percent easier. And it does not mean that companies will only need to prepare a heavily shortened report.

Even with fewer mandatory disclosures, the central task remains the same: companies must transparently explain in the ESG report which topics are material, which information is relevant in that context, and how this results in a coherent report.

What does this mean for companies?

The effort therefore shifts in part:

  • away from pure data collection
  • toward prioritization, contextualization, and clear presentation

The real simplification, then, is not that everything becomes easy. It is that the focus becomes clearer.

VSME or Simplified ESRS: Decision support for mid-sized companies

With the Simplified ESRS, the question becomes more relevant which framework makes sense for companies that are currently not subject to reporting requirements or want to report voluntarily. VSME is not automatically the better choice simply because it is leaner. What matters is what the reporting is intended to achieve: a pragmatic starting point or voluntary reporting with stronger alignment to ESRS logic.

Answer the following questions for yourself. The more often you answer “yes” to a statement, the more likely the respective standard is a good fit.

VSME is more suitable if …

  • You want to start voluntary reporting with the lowest possible effort.
  • You need a pragmatic framework without immediately having to work deeply into ESRS systematics.
  • Your reporting is primarily intended to provide an initial overview and is not yet meant to reflect all strategic management questions.
  • You are still at an early stage when it comes to data, processes, and responsibilities.
  • You first want to establish a solid foundation before expanding reporting and management further.

The Simplified ESRS are more suitable if …

  • You want voluntary reporting that is already closer to future ESRS logic.
  • You want to use sustainability not only for documentation, but also more actively for management and strategic purposes.
  • You are already working with a double materiality assessment or plan to do so.
  • Your sustainability information also needs to be robust and compatible with expectations from banks, business partners, or more complex customer requirements.
  • You want to build reporting today that is more robust and future-proof in the long term.

As a rule of thumb

If you mainly want to get started simply and with minimal use of resources, VSME is usually the more suitable entry point.
If you want to report voluntarily in a more structured way, with greater compatibility and closer alignment to the ESRS, there are stronger arguments in favor of the Simplified ESRS.

How companies should move forward now

Which next steps make sense depends above all on where your company currently stands. For most companies, this is not about rebuilding everything from scratch now. It is about adjusting the current course in a targeted way to align with the logic of the Simplified ESRS.

If you are already reporting under ESRS or have prepared extensively for it

Then you should not discard the work you have already done. A sensible approach is to

  • continue using existing preparatory work
  • map previously collected ESRS data points to the Simplified ESRS
  • assess which disclosures will be removed in the future, merged, or only remain relevant if material
  • review content for opportunities to shorten, improve relevance, and strengthen coherence
  • question where completeness has so far taken priority over materiality

The next step here is therefore not a restart, but a mapping from the previous ESRS approach to the logic of the Simplified ESRS.

If you are just starting with reporting

Then now is a good time to clarify whether VSME, Simplified ESRS, or another reporting framework is a better fit, and then set up data collection directly along that logic.

What matters now:

  • build processes around materiality from the outset
  • avoid creating unnecessarily broad data collection
  • keep the reporting structure clear and flexible
  • assess early whether the Simplified ESRS or a VSME-oriented starting point makes more sense

Anyone starting now should therefore no longer follow the principle of “just collect everything first,” but instead orient themselves early around a more focused framework.

If you have fallen out of CSRD scope

Then you should not automatically stop your preparatory work. Instead, now is the right time to reassess your sustainability reporting:

  • Which ESG information will continue to be expected by customers, banks, or business partners?
  • Is a leaner voluntary approach such as VSME sufficient for that?
  • Or is it worth staying voluntarily closer to ESRS logic?

For these companies, the focus is therefore shifting away from pure compliance and toward the question of which form of voluntary reporting makes strategic sense.

If you still have time until 2028

Then waiting is not the best solution. It is more useful to use the additional time deliberately to

  • set up the double materiality assessment properly
  • align data architecture early with the logic of the Simplified ESRS
  • define internal responsibilities and processes clearly
  • systematically build only the data that is actually relevant for the future sustainability report
  • design the reporting structure to be more focused and easier to understand from the start

Anyone who lays the right foundations early can report far more efficiently later and avoid unnecessary effort caused by overly broad ESG data collection or a setup that no longer fits.

Need support?

If you need support preparing your next sustainability report – or your first one – we are here to help with software and advisory services, depending on your needs.

Schedule a meeting

* This information is summarized editorial content and should not be construed as legal advice. VERSO accepts no liability.

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Krötenbaby auf einem Finger – Symbolbild für die Verantwortung, die ESG bedeutet
13.08.2025

ESG Standards and Frameworks: An Overview

Get to know the key standards and frameworks for ESG management and reporting.

Contents

  1. ESRS
  2. VSME
  3. GRI
  4. DNK
  5. SDG
  6. UNGC
  7. ISO 14001
  8. ISO 26000
  9. EMAS
  10. ISSB
  11. TCFD

ESRS

About:

The European reporting standard ESRS was introduced as part of the EU CSRD Directive. Its aim is to improve the quality and comparability of sustainability reports.

Focus areas:

  • Environment
  • Social
  • Governance

Relevant for:

Companies required to prepare a CSRD report.

Advantages:

  • EU-wide comparability
  • Simplified versions for SMEs

Disadvantages:

  • High complexity
  • Very extensive

Other:

Phased implementation depending on company size

VSME

About:

The Voluntary Standard for Small and Midsized Enterprises (VSME) enables meaningful sustainability reporting without the effort required for the “full” ESRS.

Focus areas:

  • Environment
  • Social
  • Governance

Relevant for:

Midsized companies that want to showcase their sustainability performance without being subject to CSRD requirements – officially recommended by the EU Commission in July 2025.

Advantages:

  • Clear framework for reporting and communication
  • Modular structure with flexible effort levels

Disadvantages:

  • No mandatory assurance

Other:

Voluntary standard.

Factsheet: VSME in Detail

All key information on the VSME – from its benefits for midsized companies to its structure, including a comparison with the ESRS.

Download factsheet

GRI

About:

The GRI Standard has existed since 1999 and has been continuously developed since then. It provides companies with a framework to measure and disclose their progress in the ESG areas.

Focus areas:

  • Environment
  • Social
  • Governance

Relevant for:

Primarily large international companies.

Advantages:

  • Strong international recognition
  • Developed in dialogue with stakeholders
  • Serves as a foundation for management systems

Disadvantages:

  • Very extensive
  • High effort required
  • Losing relevance in the EU due to ESRS

Other:

Voluntary reporting standard, but its content is reflected in the ESRS.

DNK

About:

The German Sustainability Code (DNK) is a national reporting standard. With the CSRD, it is being restructured into a support tool for companies to facilitate CSRD implementation.

Focus areas:

  • Environment
  • Social
  • Governance

Relevant for:

According to the DNK, all companies required – or willing – to report under CSRD.

Advantages:

  • Aims to simplify CSRD reporting

Disadvantages:

  • No materiality assessment included

SDG

About:

The Sustainable Development Goals (SDGs) are the UN’s 17 sustainability goals. They serve as a global framework that companies can use to report on their contribution to these objectives.

Focus areas:

  • Environment
  • Social
  • Governance

Relevant for:

Any company.

Advantages:

  • Good for getting started
  • Globally recognized
  • Complementary framework
  • Helpful for communication

Disadvantages:

  • Requirements must be translated individually
  • No specific corporate guidelines

Other:

Voluntary framework – SDG logos may be used for non-commercial purposes.

UNGC

About:

The UN Global Compact (UNGC) is an international network promoting 10 principles in the areas of human rights, labor standards, environment, and anti-corruption. It also offers a reporting framework.

Focus areas:

  • Environment
  • Social
  • Governance

Relevant for:

Any company.

Advantages:

  • Good for getting started
  • Large network and database
  • Strong support from the UN and partner organizations

Disadvantages:

  • Less structured and specific
  • No binding control

Other:

Voluntary framework – members may use UNGC logos for non-commercial purposes.

ISO 14001

About:

ISO 14001 is an international standard for environmental management systems. It helps companies systematically identify and continuously improve their environmental impacts.

Focus areas:

  • Environment

Relevant for:

Any company.

Advantages:

  • Certification available
  • Internationally recognized
  • Enables systematic improvement of environmental performance

Disadvantages:

  • Environmental audit only recommended
  • Environmental statement not required to be published

Other:

Often required in tenders.

ISO 26000

About:

ISO 26000 is an international guideline on social responsibility. It provides recommendations for integrating sustainable and responsible practices into strategies and processes.

Focus areas:

  • Environment
  • Social
  • Governance

Relevant for:

Any company.

Advantages:

  • Well suited for the development of sustainability processes
  • Comprehensive approach
  • Flexible application

Disadvantages:

  • No certification, therefore less recognized

Other:

ISO 26000 serves as a practical guideline and can be useful in tenders.

EMAS

About:

The Eco-Management and Audit Scheme (EMAS) is a standard for environmental management systems. It goes beyond ISO 14001 by requiring, among other things, a public and detailed environmental statement.

Focus areas:

  • Environment

Relevant for:

Any company – especially large enterprises and corporations.

Advantages:

  • Certification available
  • Public register promotes transparency
  • Strengthens the environmental image
  • Simplified variant for SMEs

Disadvantages:

  • More demanding than ISO 14001

Other:

EMAS certification includes regular external environmental audits.

ISSB

About:

The International Sustainability Standards Board (ISSB) develops a global standard for capital market-oriented companies to ensure consistent and comparable sustainability disclosures.

Focus areas:

  • Environment
  • Social
  • Governance

Relevant for:

Primarily capital market-oriented and international companies.

Advantages:

  • Integrates and harmonizes central elements of existing frameworks
  • Aims to become the leading global standard

Disadvantages:

  • High implementation effort

Other:

Voluntary reporting standard, but content is reflected in ESRS.

TCFD

About:

The Task Force on Climate-related Financial Disclosures (TCFD) provides recommendations for companies on how to report the financial impacts of climate change on their business.

Focus areas:

  • Climate

Relevant for:

Primarily the financial sector and capital market-oriented companies.

Advantages:

  • Provides insights into climate-related risks and opportunities
  • Consistent and standardized reporting

Disadvantages:

  • Limited to climate-related impacts
  • Implementation can be challenging

Other:

Voluntary reporting standard, but content is reflected in ESRS.

*This information is summarized editorial content and should not be considered legal advice. VERSO assumes no liability. 

Nachhaltiges Wirtschaften im Mittelstand
23.04.2025

Sustainable Business Practices: The Business Case for SMEs

Stakeholders, ESG obligations, or simply conviction – For many reasons, sustainability is on the agenda of companies. Whether mandatory or voluntary: sustainability must not only be promised, it must be implemented. This article explains why sustainable business practices are important for all companies – from SMEs to large corporations.

Why is Sustainable Business Important for Small and Medium-sized Enterprises (SMEs)?

Sustainability creates transparency in the supply chain

Sustainable business practices are becoming a prerequisite for medium-sized companies to remain supply-capable and competitive in the long term – as large companies today expect full transparency across the entire supply chain.

Many small and medium-sized enterprises (SMEs) supply products or materials to larger companies that are subject to legal requirements such as the Supply Chain Due Diligence Act (LkSG), the Corporate Sustainability Reporting Directive (CSRD), the EU Deforestation Regulation (EUDR), etc. These companies are often also bound by industry-specific guidelines that demand sustainability information from the supply chain.

Large companies must not only disclose their own ESG information but also that of their suppliers. This means that you, as a supplier, are also affected by the regulations and will be asked for extensive sustainability information:

  • You will need to undergo thorough due diligence processes, such as the EcoVadis sustainability assessment, which identifies potential risks to people and the environment in the supply chain.
  • Proof must often be provided not only by suppliers but also by sub-suppliers.

Sustainability as a factor for financing

Sustainable business practices not only improve the ESG rating but also provide access to better financing terms – whether for loans, investments, or insurance.

Medium-sized companies seeking capital from investors or loans from banks should be prepared for ESG inquiries. In practice, the ESG rating directly influences credit terms – the better the rating, the more favorable the loan conditions.

Investors are also increasingly incorporating ESG criteria into ratings and M&A decisions. At the latest, during transactions or investment decisions, robust sustainability metrics will be expected from you.

In addition, (re)insurers also require ESG information from their clients. Sustainability risks are increasingly being incorporated into the risk assessment during contract negotiations, which can directly impact insurance premiums and coverage.

Sustainability expectations from customers and business partners

Anyone who wants to have a say, collaborate, or bid today needs a clear sustainability position – because ESG criteria are increasingly determining partnerships and contract awards.

In partnerships, collaborations, and tenders, certifications and ESG information are increasingly being requested to demonstrate a company’s sustainability ambitions. When entering negotiations, you need to be well-prepared:

  • No Open Doors without ESG Certifications: A prerequisite for serious discussions – alongside, for example, well-known standards for information security – are increasingly ESG-related certifications. Undergo the assessments early – they are often time-consuming and cannot be “quickly submitted.”
  • Sustainability and ESG Criteria in Tender Processes: If there is a tender, your company might be excluded from consideration due to the lack of a robust sustainability strategy. This is demonstrated, among other things, through recognized ESG certifications. With sustainability and ESG criteria in tender processes, companies want to ensure from the outset that ecological and social standards are adhered to in the supply chain.
  • Sustainability also plays a significant role in other quality standards, such as Fairtrade, organic certifications, employer rankings, or ISO standards: ESG criteria are also requested here.

Protection against greenwashing accusations

Simply labeling oneself as “green” is a thing of the past. With the Green Claims Directive and the EmpCo Directive, the EU specifically outlines what constitutes greenwashing and what does not.

  • Soon, companies will be required to scientifically verify the accuracy of their environmental claims. Failure to do so will not only result in reputational damage, but also actual legal and financial consequences.

You certainly do not intentionally engage in greenwashing, but it can easily happen unintentionally in small and medium-sized enterprises: many greenwashing accusations originate from marketing activities that portray the company in too favorable a light. This often happens when a company’s sustainability data is not transparent.

A climate and sustainability strategy ensures transparent sustainability communication: through a data-driven strategy, KPI tracking, and a CO2 balance, you can communicate numbers, facts, and goals in a verifiable manner.

Improved risk management and resilience

A solid sustainability strategy helps you identify ecological and social risks early – not just within your company but throughout the entire value chain. The foundation for this is the Double Materiality Analysis, which adds a holistic ESG perspective to your existing risk management – including the consideration of opportunities.

This allows risks to be assessed in a targeted way, measures for avoidance or reduction to be derived, and their impact in ESG management to be systematically monitored. This makes your company more resilient to climate impacts, geopolitical changes, or resource shortages – while also saving costs and preventing future losses.

Efficient resource use and optimized processes

A well-thought-out sustainability management system helps you use resources more efficiently. It drives process optimizations and innovations – for example, through energy-saving machines or the recycling of production waste. This saves raw materials, reduces costs, and protects the environment.

With effective ESG management, you not only reduce waste and energy consumption but also save time: you focus on the truly important issues – and can drive them forward in a targeted way. A clear advantage for the future viability of your company.

Holistic corporate strategy and future viability

Individual measures are of little use if the strategic connection is missing. A sustainability strategy provides the necessary overall view: All measures are part of a larger plan – rather than isolated individual initiatives.

The foundation for this is the Double Materiality Analysis, which helps you identify the most important topics. This results in a long-term, systematic strategy – ideally integrated into your corporate strategy. In this way, sustainability becomes a top priority and is managed, measured, and communicated in a targeted manner – for example, with a suitable software solution like the VERSO ESG Hub.

How do you embed sustainability in your company?

For sustainable business practices to be more than just a good intention, they must be deeply embedded in the company. This is achieved with the following building blocks, which demonstrate how small and medium-sized enterprises can move into action in a structured and impactful way.

1. status quo and material topics

Before developing a sustainability strategy, a solid status-quo analysis is needed as a foundation – it provides transparency on data, processes, and challenges within the company. Building on this, a materiality analysis highlights which ESG topics are truly material and where the greatest impacts, risks, and opportunities lie.

2. Setting SMART goals and appropriate measures

Goals are the heart of any sustainability strategy and should be scientifically grounded, formulated in a SMART way, and closely linked to the corporate strategy to avoid conflicts of interest. The development of appropriate measures is crucial for implementation – ideally in collaboration with employees and relevant stakeholders who can contribute practical solutions.

3. Creating awareness for sustainability across the company

Sustainability is a company-wide team project – and that’s why it requires a shared awareness and clear alignment. When developing your sustainability strategy, you should define vision, mission, and values to provide direction, motivate employees, and anchor the topic effectively in the overall strategy. Being transparent about ambitions and strategically using internal communication lays the foundation for living sustainability throughout the company.

4. Moving into implementation: Control is key

After the strategy, the real work begins: Implementing ESG measures is a long-term process that requires continuous adjustment and perseverance. To maintain an overview and be able to respond flexibly to new developments, structured ESG management, regular monitoring, and transparent communication – both internally and externally – are essential. Only in this way will progress remain visible, stakeholders stay engaged, and motivation within the company be maintained.

Start with VERSO

Now it’s time to move from planning to action. We support you every step of the way – with the right software solutions and services throughout your entire sustainability journey: from the first report and goal setting to tracking concrete measures. Step by step, you will build the foundation for sustainable business practices in your company.

Get in touch with us.

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Phase-in-Regelung ESRS
02.12.2024

Phase-in regulations of the ESRS: All about the transition periods for the CSRD report

Companies that have to prepare a CSRD sustainability report are given some relief with the phase-in regulations of the ESRS. The transitional periods make it possible to address certain topics at a later date. In this article, you will find out which phase-in regulations and deadlines are available.

The European Sustainability Reporting Standards (ESRS) are the basis for a legally compliant sustainability report. However, the framework entails a large number of disclosure obligations. Companies must provide comprehensive qualitative and quantitative data on their material topics and data points. The path to a CSRD report is not easy! In order to provide some relief for companies subject to reporting requirements, the ESRS offer so-called phase-in regulations. The transitional periods allow you to process certain topics later or in a simplified form, even if you have identified them as material.

Why are there phase-in rules in the ESRS?

Plain and simple: for many companies, the data for some data points is simply not yet available. As data collection will still take some time, phase-in rules have been integrated into the ESRS. The transitional periods are intended to make the start of reporting a little easier. During this “acclimatization period”, companies can omit specific disclosure obligations, particularly in the first few years of mandatory reporting. The transition periods give you the opportunity to gradually build up the processes for data collection and CSRD reporting. Our tip is: start the reporting process as early as possible! And before your company is obliged to do so! This will allow you to establish and optimize important structures and processes before time runs out or it is even too late. Then you will be prepared when it comes to mandatory reporting or when the transition periods end and you have to provide all data on key topics.

CSRD compliance made easy

From the CSRD basics to the finished report: Our practical software package guides you step by step to CSRD compliance!

Learn more now

What phase-in rules are there for the ESRS?

The ESRS offer companies numerous phase-in regulations. They are listed in Appendix C of ESRS 1. The scope varies greatly: sometimes they only relate to a few data points, sometimes to all disclosure requirements of a standard. When using the VERSO ESG Hub, the specific phase-in rules of the individual standards are displayed directly. You can therefore see at a glance whether you can omit a standard or have to report on it directly. In this list you will find the disclosure requirements that have been gradually introduced. The effective date refers to the mandatory reporting in each case.

ESRS Disclosure obligation Transition period for companies
under 750 employees		 Transition period for companies
over 750 employees
ESRS 2 SBM-1: Strategy, business model and value chain The data points SBM-1, 40 b (Breakdown of total revenue by material ESRS sectors) and SBM-1, 40 c (List of additional relevant ESRS sectors) do not have to be reported until the delegated acts of the corresponding sector standards enter into force.
SBM-3: Significant impacts, risks and opportunities and their interaction with strategy and business model The data point SBM-3, 48 e (expected financial impact) can be omitted in the first year. In addition, qualitative data is sufficient in the first three years if it is not feasible to prepare quantitative data.
ESRS Disclosure obligation Transition period for companies
under 750 employees		 Transition period for companies
over 750 employees
ESRS E1 E1-6: Gross greenhouse gas emissions (Scope 1, 2, 3 and total greenhouse gas emissions) Information on Scope 3 and total emissions can be omitted in the first year if the company has fewer than 750 employees on average. —
E1-9: Expected financial impact of significant physical and transition risks and potential climate-related opportunities The information can be omitted in the first year. In addition, qualitative data is sufficient in the first three years if it is not feasible to prepare quantitative data.
ESRS E2 E2-6: Expected financial impact due to pollution-related impacts, risks and opportunities The information can be omitted in the first year. In addition, qualitative information is sufficient in the first three years. An exception to this second simplification is data point E2, 40 b on operating and capital expenditure incurred in the reporting period in connection with major incidents and deposits.
ESRS E3 E3-5: Expected financial implications of impacts, risks and opportunities related to water and marine resources The information can be omitted in the first year. In addition, qualitative information is sufficient in the first three years.
ESRS E4 E4: All disclosure requirements The disclosures can be omitted in the first two years if the company has an average of less than 750 employees. —
E4-6: Expected financial implications of impacts, risks and opportunities related to biodiversity and ecosystems The information can be omitted in the first year. In addition, qualitative information is sufficient in the first three years.
ESRS E5 E5-6: Expected financial implications related to resource use and circular economy impacts, risks and opportunities The information can be omitted in the first year. In addition, qualitative information is sufficient in the first three years.
ESRS Disclosure obligation Transition period for companies
under 750 employees		 Transition period for companies
over 750 employees
ESRS S1 S1: All disclosure requirements The disclosures can be omitted in the first year if the company has an average of less than 750 employees. —
S1-7: Characteristics of the company’s external workforce The information can be omitted in the first year.
S1-8: Collective bargaining coverage and social dialog The disclosure requirement in relation to own workforce in non-EEA countries can be omitted in the first year.
S1-11: Social security The information can be omitted in the first year.
S1-12: Percentage of people with disabilities The data can be omitted in the first year.
S1-13: Continuing education and skills development The information can be omitted in the first year.
S1-14: Health and safety Information on the data points on work-related illnesses and the number of days lost due to injuries, accidents, fatalities and work-related illnesses can be omitted in the first year. In addition, reporting on external workers may be omitted.
S1-15: Work-life balance The information can be omitted in the first year.
ESRS S2 S2: All disclosure requirements The disclosures can be omitted in the first two years if the company has an average of less than 750 employees. —
ESRS S3 S3: All disclosure requirements The disclosures can be omitted in the first two years if the company has an average of less than 750 employees. —
ESRS S4 S4: All disclosure requirements The disclosures can be omitted in the first two years if the company has an average of less than 750 employees. —

Phase-in rules: The key to successful ESRS reporting

The ESRS phase-in rules are a useful relief for companies preparing for CSRD reporting. However, they should not be a free ride, but a strategic opportunity to prepare for the new requirements. Companies should use the transition periods to set up internal processes and create the data basis for future reports. The sooner you start, the better prepared you will be for the full implementation of the CSRD requirements. Although reporting in accordance with the ESRS is challenging, it is also an opportunity to embed sustainable business practices deep within the company. In the long term, this not only pays off in terms of regulatory compliance, but also creates valuable opportunities for your business. In a blog post, we show 6 potentials of CSRD for your company.

Get to know the VERSO ESG Hub right away

The VERSO ESG Hub simplifies and accelerates the entire CSRD reporting process. Would you like to get to know the software solution right away? Then arrange a demo appointment directly.

Book a demo

* This information is summarized editorial content and should not be construed as legal advice. VERSO accepts no liability.

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Der Aufbau der ESRS: SO berichten Sie CSRD-konform.
28.11.2024

Structuring an ESRS report: How to ensure CSRD compliance

Tens of thousands of companies are required to publish a CSRD compliant sustainability report for the first time. Many are now faced with over 1,000 data points and wondering: How do we turn this into a structured sustainability report? What is the structure of an ESRS report?

This article will guide you through the process and provide you with a checklist to help identify the key data points for your report.

Creating an ESRS report – What needs to be done?

For most companies, preparing a CSRD-compliant sustainability report is uncharted territory. So far, only a few have completed this process, meaning you are not alone. To understand the structure of an ESRS report, it is helpful to first familiarize yourself with the individual ESRS standards. The next step is to focus on the disclosure requirements and data points that are most relevant to your company. To support you in this process, we have prepared a practical checklist.

What do CSRD and ESRS require?

Being affected by the CSRD means that a company is required to publish a sustainability report as part of its management report. This sustainability report is not meant to be a marketing brochure but a comprehensive document covering environmental, social, and governance (ESG) topics.

A key aspect: Companies do not have the freedom to choose their reporting framework – the ESRS are the mandatory standards they must follow. Additionally, just like the management report, the sustainability report must be audited by external auditors. This makes it even more crucial to understand the framework, be familiar with the structure of the report, and ensure that you report on the correct, material data points.

How should I approach the double Materiality Assessment?

Speaking of key data points: The double materiality assessment is the core of the ESRS report.

Download the full blog post now and gain access to:

  • Tips for conducting the double materiality assessment,
  • An overview of the ESRS structure,
  • In-depth insights into the content of the ESRS standards, and
  • A checklist for identifying the key material data points.

Before we continue

The content on this website is the result of the work of people who immerse themselves in the world of ESG with much passion and care. We take the time to present complex topics in an understandable way and provide practical tips. To prevent our work from being copied or used as AI training material, we ask you to leave us your e-mail address for particularly extensive and detailed content such as this. You will then receive the article as a PDF directly in your mailbox.

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Mastering CSRD challenges: The double materiality analysis in seven steps

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  • Current ESG topics and legislative changes
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Doppelte Wesentlichkeitsanalyse
27.11.2024

Mastering CSRD challenges: The double materiality analysis in seven steps

Which topics are relevant for the CSRD report?
The answer is provided by the double materiality analysis. In this article, you will learn how to efficiently master the analysis step by step with the support of our AI-based software solution.

The goal of double materiality

With the introduction of the CSR reporting obligation CSRD, the European Union wants to increase the scope of sustainability disclosures. This will make CSR reports more meaningful and comparable.

The impact of the sustainability report will also be increased because the dual materiality contributes to a shift from a shareholder perspective to a stakeholder perspective. The CSR report is aimed at investors, but also at employees, customers and society.

Definition: What is double materiality?

Double materiality means: it must be stated
how sustainability aspects affect the company (outside-in perspective)
AND
how the company affects society and the environment (inside-out perspective). The dual materiality will change the materiality principle used in Germany in particular and lead to significantly more information being relevant to reporting and CSR reports becoming more meaningful as a result. In future, companies will have to state both perspectives – independently of each other – in the sustainability report.

Previously, both aspects had to be fulfilled at the same time. In the case of the outside-in perspective (“financial materiality”), disclosures must be made that are necessary for an understanding of the company’s business performance, results or position. Particularly in the world of finance, this perspective is often the only one considered today and referred to as “ESG” or “ESG-related risks” – in other words, only the risk perspective is considered from a sustainability perspective.

With the inside-out perspective (“environmental and social materiality”), information must be provided that is necessary for an understanding of the impact of business activities on sustainability aspects. In short, it must be explained: What impact does my company have on the planet and society?

Infografik: Erklärung doppelte Wesentlichkeit der CSRD

What is the outside-in perspective in double materiality?

Many companies have so far focused on the outside-in perspective, as it represents a form of risk management. This field will also be covered in the future. The information is primarily aimed at investors. From the outside-in perspective, companies must disclose the following information:

  • How do external developments affect the business model, strategy and sales, among other things? External developments include unexpected weather events, for example, but also stricter regulatory requirements.
  • Industry-specific topics also play a role: Are there sustainability aspects that have already been identified by competitors, customers or suppliers?
  • What are the main risks for the company, a product or a service? And how are they managed or mitigated?

What is the inside-out perspective?

The inside-out perspective significantly broadens the view. Contact persons are not only investors, but also employees, consumers and environmental and social organizations. From the inside-out perspective, companies must disclose how their activities affect society and the environment. The impact of products, services and business relationships (including the supply chain) should also be mentioned here. Information is required on, among other things

Environmental issues:

  • Climate impact
  • Prevention and reduction of environmental pollution
  • Environmental impact of energy use
  • Biodiversity

Social:

  • Health and safety in the workplace
  • Diversity and equal treatment
  • Human rights
  • Social commitment

Governance:

  • Management and control processes
  • Combating corruption and bribery

In 7 steps through the double materiality analysis

1. Create an understanding of dual materiality

In the dual materiality analysis, you determine how sustainability aspects affect your company and how its activities impact the environment and society. The double materiality analysis forms the start and basis for your sustainability reports in the coming years. A high-quality process and a well-founded result are therefore a must.

In addition, auditors will audit the materiality analysis process and the finished CSRD report in the future. It is therefore worth going through the analysis in a tool that is recognized by auditors. VERSO’s AI-supported software solution for dual materiality guides you through the process step by step; the auditor can check directly in the tool. First, it is important for you and your sustainability team to take a closer look at the concept of double materiality. Here are some questions that are helpful in this first phase:

  • Are we familiar with the concept of dual materiality? Does everyone in the team understand which perspectives (financial and impact materiality; impacts, risks and opportunities) need to be considered?
  • What are the general conditions of our company, which topics could be relevant from the outset due to the environment, industry and products?
  • Which upstream and downstream economic activities, from raw material extraction to consumption and disposal, are part of the value chain?
  • Do we all understand what the dual materiality analysis process should look like, what our goal is, how we will proceed?
  • Who are important stakeholders (e.g. those affected by impacts; groups with an interest in information) with whom we work and to whom we turn?
  • Have we brought the management team on board and kept them sufficiently informed? Can we count on their commitment?

AI-supported materiality analysis from the industry pioneer

As a sustainability software pioneer, we also have your back when it comes to CSRD reporting: save time, money and nerves with the market-leading solution for double materiality.

Get to know the module for dual materiality

2. Create a roadmap for the dual materiality analysis

Once everyone is familiar with the topic and has gained an overview, the next step is to plan the analysis. Fundamental decisions should be made in three areas:

Responsibilities: Clarify who in your team is responsible for what. You can define these responsibilities in the VERSO software. This allows you to assign different levels of authorization and keep track of who is working on which topics at all times.

Time and resource plan: Analyzing dual materiality takes time. Create a schedule and consider what human and financial resources you need. Plan in such a way that you can talk to all affected stakeholders, involve management in the process and also coordinate the results well at the end. Think about all of this in the context of the sustainability report: have you considered the double materiality analysis when preparing the report or do you need to adjust the project plan?

Sources and stakeholders: Consider which methods and with which stakeholders and colleagues you want to carry out the materiality analysis. The ESRS and other frameworks as well as industry standards and findings from the corporate environment provide you with starting points for possible relevant topics.

Einblick in das KI-gestützte Modul zur Wesentlichkeitsanalyse von VERSO

At VERSO, we have already supported many customers throughout the entire process – from the double materiality analysis to reporting. This includes, for example, the Deutsche Automobil Treuhand GmbH (DAT)which also uses the AI-supported VERSO software.

3. Identifying impacts, risks and opportunities (IROs)

A sustainability aspect of the ESRS is material and reportable if the associated impacts, risks or opportunities (IROs) are considered material. Example: If the pollution of wastewater by substances used is a material impact, this must be reported on the data points in the associated standard E2 “Environmental pollution”.

Identifikation der Auswirkungen, Risiken und Chancen (IROs) in der VERSO Software

But how do you get to the IROs?

The IROs can arise from a wide variety of sources, such as industry or company specifics and discussions with various stakeholder groups. Sparring with the VERSO consultants is helpful here. In addition, internal data from whistleblower systems, occupational health and safety information or discrimination cases can provide you with information on relevant ESG issues in your company.

VERSO makes it easier for you to determine the IROs: Based on your information on company activities, NACE codes, locations, industries, etc., our AI module suggests possible material topics. So you don’t start with a blank sheet of paper. You can start directly with individual effects and assign them to the respective topics. Anyone with a little knowledge of the subject will have noticed that our AI-supported materiality analysis module takes a bottom-up approach to IRO identification.

Here, you first identify and evaluate the IROs so that the material topics of the ESRS emerge at the end. You could also do it the other way around – but in our experience, important topics often fall through the cracks.

The bottom-up approach in detail:

  • Identify all actual and potential impacts that your company or your economic activities have or could have on stakeholders along the entire value chain(impact materiality or inside-out perspective).
  • Define which financial opportunities and risks could arise for your company from sustainability issues(financial materiality or outside-in perspective). Here you can build on the results of the impact assessment.
  • Sharpen the IROs to make them as specific as possible. You have clearly listed your collected impacts in the VERSO module. For a CSRD-compliant ESRS report, you must also specify the information and interests of your stakeholders. You must roughly describe which of your material IROs the stakeholders influence or experience impacts on. VERSO’s materiality module saves you time here too: you can enter the affected stakeholders when specifying the material topics and also describe these groups and their impacts in more detail.

Get to know our materiality analysis module

Would you like to try out our AI-supported software solution for analyzing double materiality? Then arrange a demo for the VERSO ESG Hub now and we will answer your questions!

Book a demo

4. Coordinating and sharpening of the IROs with the management

Now it is time to coordinate the preliminary results with your company’s management. The management level has a different view of the company and also knows other perspectives, such as those of investors.

And finally, the dual materiality analysis should be supported by the entire company and form the basis for strategy development – management must be on board for this. It is best to present the results to management directly in our software. The data is clearly presented in the module, but can of course also be exported in the desired format and incorporated into presentations.

5. Definition of the main topics

In order to classify the IROs as material in accordance with the CSRD, they must be assessed according to the ESRS criteria. Among other things, you evaluate the IROs according to

  • Extent,
  • Scope,
  • Immutability and
  • Probability of occurrence.

Attention:
Depending on the type or category of IROs (e.g. actual or potential impact), different assessment criteria must be used. These categories are already stored in the VERSO software. You can select these for your IROs and assess the scope, extent and probability of occurrence with just a few clicks. Suitable threshold values are also already stored in the software solution. They help you to determine the IROs that are actually material for your sustainability report. The software automatically calculates the severity of the respective IRO. At the end, you can see at a glance which IROs are classified as material.

Festlegung und Bewertung der wesentlichen IROs im VERSO Tool

You can easily assign the identified IROs to the ESRS-compliant subtopics in the module. This results in the relevant topics for your report. IROs that do not fit any of the predefined topics can of course still be included and assigned to your own topics in the software.

There is also a completeness check in the VERSO module to check whether you have evaluated and assigned all topics. You will see those ESRS topics and subtopics for which you have not entered any IROs. If such a topic seems important to you, you can refine it in the IROs.

This way, no IRO will slip through. Topics for which you have not identified any material IROs are not included in the reporting obligation. At the end, you have all topics that have been assessed as material from either a financial or an impact perspective. You can present the results graphically in a materiality matrix or in a classic table. According to the CSRD, a graphical representation of the materiality analysis is not mandatory. And that’s it for the analysis itself: with our software, you can save your information in the final step and lock it for editing. The auditor can then check your analysis directly in the module.

This last step is immensely important so that you can guarantee that the materiality analysis process has been carried out in accordance with the CSRD and checked by an auditor. With our software, you can also be sure that your double materiality analysis is ESRS-compliant and audit-proof in accordance with the requirements of the Institute of Public Auditors in Germany (Institut der Wirtschaftsprüfer – IDW). Once the materiality analysis has been completed, the material topics, standards and data points are transferred to the VERSO ESG Hub reporting module so that you can continue directly with your reporting.

6. Definition of measures

The double materiality analysis does not stand for itself: The material IROs serve as the basis for your sustainability report. This shows the status quo and, over the years, the development of your company in the area of sustainability. In addition, the materiality analysis is the basis for your sustainability strategy, in which you define targets and measures.Incidentally, the ESRS already provides you with valuable input for the definition of targets and measures. And you can find out how to approach the CSRD report in the CSRD practical guide.

7. Stick with it, adapt, repeat

A final tip from us: don’t see the double materiality analysis as a one-off project, but as an analysis tool that will accompany you in your sustainability work.

If there are significant changes in the company, you will have to repeat the double materiality analysis. You usually revise individual parts and adapt the analysis annually. This keeps the key IROs up to date and makes your company’s developments measurable.

Get to know the AI-supported materiality analysis directly

The dual materiality analysis is the basis of your CSRD report. We make this process easier and faster for you: with our AI-supported software solution for the dual materiality analysis, you can be sure that your analysis is CSRD-compliant. Try it out for yourself and book a demo where we will show you all the functions.

Get to know VERSO Software

* This information is summarized editorial content and should not be construed as legal advice. VERSO accepts no liability.

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Holzwürfel, die ein Diagramm mit steigendem Pfeil abbilden: Richtig gemacht, können Nachhaltigkeitesberichte zur Steigerung des Unternehmenserfolgs beitragen Rising bar chart made of wooden blocks symbolizing measurable progress and continuous improvement in a sustainability report.
19.11.2024

Sustainability Report – What Is It and What Do You Need to Know?

Some companies are intrinsically motivated to embed ESG within their organization, while others are driven by the CSRD requirements or aim to gain a competitive edge. For all of them, the sustainability report becomes a constant companion on their ESG journey. Here’s an overview of the key terms and requirements for reporting.

What is a sustainability report?

This is the first fundamental question to address. In their sustainability report, companies disclose information on:

  • Environmental aspects,
  • Social matters
  • Corporate governance

The report outlines how external factors impact the company and how the company’s activities affect the environment and society. The first report usually reflects the status quo. However, the report is meant to go beyond that: it also describes strategies, targets, and actions aimed at enhancing sustainability.

The length, structure, and thematic focus of sustainability reports can vary greatly. This depends on the standard you choose. In general, you are free to decide which reporting framework to follow – unless you are bound to mandatory reporting requirements, such as those under the CSRD. In that case, you must comply with specific guidelines and often follow certain standards, such as the ESRS.

Overview of the ESRS Standards

The European Sustainability Reporting Standards (ESRS) are designed to make sustainability reports more meaningful and comparable. All the details are available in the whitepaper.

Download factsheet

Sustainability, ESG, CSR – What’s the difference?

When it comes to reporting, all three terms essentially refer to the same concept: addressing the fundamental responsibility of companies toward the environment and society – now and in the future.

In recent years, the term CSR (Corporate Social Responsibility) was widely used in Germany.

  • CSR describes a company’s responsibility for its impact on society.
  • In practice, the term was often used to cover all three dimensions of sustainability: environmental, social, and governance aspects.
  • The focus of CSR is more on the qualitative assessment of a company’s actions regarding sustainability, corporate values, and social engagement.

The term ESG has now become increasingly established.

  • ESG stands for Environmental, Social, and Governance.
  • The term originates from the financial sector and focuses primarily on assessing companies based on environmental, social, and governance factors.
  • Measuring sustainability follows a more quantitative approach.

The broader term sustainability is generally used synonymously with CSR and ESG. It also accurately describes the reporting process, as it covers sustainability across all areas of the business.

You can find more on this topic in our blog post “CSR, ESG, Sustainability – What’s the Difference?”.

When do I have to publish my first sustainability report?

With the new Corporate Sustainability Reporting Directive (CSRD), many companies will soon be required to publish a sustainability report. The reporting obligation is based on criteria such as the number of employees, revenue, and total assets.

Although the first report often requires significant effort and may contain only limited insights into progress and developments, our honest advice is: Start now!

Our CSRD factsheet helps you quickly find out if and when your company is subject to reporting requirements—and what your next steps should be.

Practical Guide: Ready for Your First CSRD Report

The first CSRD report is a major challenge, as the EU directive comes with numerous requirements and new standards. Our practical guide, including a checklist, helps you get started and prepare for the CSRD and ESRS.

Download the CSRD factsheet

How do I create a sustainability report?

The first sustainability report can be demanding. You’re likely doing this for the very first time, with little prior experience – targeted training can be a great help. You often have no benchmarks yet, no established processes or structures, and still need to find the right reporting software – based on our experience with customers, the list of challenges for a first report is long.

That’s where we come in: With the VERSO ESG Hub, you can create your sustainability report easily and efficiently. To help you get started, we’ve created a hands-on guide “7 Steps to Your CSR Report” that walks you through the process step by step toward a meaningful sustainability report.

For CSRD beginners, we’ve also developed a 10-step guide for your CSRD report and share our tips for efficient data collection. And when it comes to software, you can rely on VERSO for your CSRD reporting: our CSRD Suite offers you an all-in-one solution.

 

7-step process showing the key stages of creating a sustainability report, from preparation and materiality analysis to data collection, goal setting, publication, and continuous improvement.

I’m new to the role of ESG Manager…

How do I establish sustainability management in my company?

If you’re just starting to work with ESG, this may sound familiar: You have a lot of ideas and initiatives in mind, but you need to align them within a clear, goal-oriented sustainability strategy. You’re also thinking about which targets are realistic and make sense for your business. On top of that, you still need the right processes and metrics to monitor progress.

And above all, three key questions arise:

  1. What does all of this mean for my company?
  2. How do I tackle such a huge topic?
  3. How do I justify my efforts and the necessary resources to management?

Our introductory blog articles on sustainability management are a great starting point. You’ll gain valuable insights into your role and responsibilities as a sustainability manager and get tips on how to communicate effectively with management – showing why sustainability matters for your business.

CSRD, SFDR, EU Taxonomy – What are they, and what’s the background?

With so many regulations, you’ve probably come across terms like CSRD, SFDR, EU Taxonomy, and ESRS. They are all part of the European Green Deal and closely interconnected. The EU aims to strengthen sustainability across the economy through these directives and regulations.

To comply with the CSRD, companies are required to report according to the ESRS—the European standards set by the EU. But how exactly do you apply these standards? Do frameworks like GRI or DNK also meet these requirements? You’ll find the answers in our ESRS Whitepaper.

The SFDR is a sustainability-related disclosure regulation for the financial sector. If you’re unsure whether it applies to your business and what steps to take, our SFDR Factsheet provides the guidance you need.

The EU Taxonomy is a classification system applied within CSRD and SFDR. It defines when an economic activity is considered green, sustainable, or environmentally friendly—creating clarity around sustainability claims. What this classification means for your business and your sustainability work is explained in our EU Taxonomy Whitepaper.

How can I make my company more sustainable?

Start taking action now! The more you can showcase (implemented) measures in your report, the more meaningful your sustainability report will be. Here are a few tips for effective sustainability initiatives in your company.

Communicate your sustainability journey right from the start—and be transparent about areas where action is still needed. This makes your ambitions credible and easier to understand. But be careful not to fall into common greenwashing traps when communicating your efforts. Not only could this damage your reputation, but the EU is also introducing specific anti-greenwashing regulations, such as the Green Claims Directive.

 

We support you in creating your sustainability report!

Preparing a sustainability report is especially challenging the first time. But with the right tools and solid knowledge, you can save both time and costs. We offer the perfect solution for both: Our training programs (available in german) provide fresh insights and help you become a sustainability expert. And with our ESG management software, you can quickly and efficiently collect all relevant sustainability data in one place.

Contact us

* This information is summarized editorial content and should not be considered legal advice. VERSO assumes no liability. 

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15.11.2024

Trend job sustainability manager: Skills, tasks and further training

Let’s take a closer look at this up-and-coming professional group. What are the tasks of sustainability managers, what training and further education is available and what does their day-to-day work look like?

What distinguishes sustainability managers?

Sustainability managers, also known as CSR managers, sustainability managers or ESG managers, are usually passionately committed to the topic of sustainability and have set themselves higher goals: a fairer world, environmental and climate protection. They exemplify sustainability and motivate their colleagues for ecological and social issues. At the same time, sustainability managers are confronted with the comprehensive ESG regulations. They act as business strategists and cross-functional interfaces within the company to guide it through the sustainable transformation.

Why are sustainability managers important?

In over 14 years of experience in sustainability management, we at VERSO have learned that the sustainable transformation of a company can only be achieved through an effective strategy and clear responsibilities. Why? Sustainability affects all areas of the company. That’s why someone is needed to bring it all together. Sustainability managers take on this interface function. They analyze business processes, implement sustainable business practices and aspects such as environmental protection, employee and human rights. They help medium-sized companies in particular to differentiate themselves massively from the competition. And for some years now, they have also been ensuring ESG compliance in companies.

What does that mean? Sustainability managers are responsible for compliance with the CSRD and are also involved in other regulations such as EUDR, CBAM, CSDDD and LkSG, at least in a supportive capacity. They are also responsible for preparing a sustainability report, including data collection – which many companies now do in accordance with the complex CSRD. They are therefore jointly responsible for the future viability of companies – both from a sustainability and a business perspective.

How is the profession changing?

Sustainability managers often have to deliver a one-man or one-woman show. This is now slowly changing: with the well-known regulations CSRD, EUDR, CSDDD, CBAM and many other ESG-related tasks, it is becoming increasingly important for companies to build a strong sustainability team: A team that is fully committed to minimizing the company’s negative impact as far as possible, implementing sustainability campaigns and positioning the company for long-term sustainability. This is the only way for companies to survive in the long term. And not just survive: Those who take sustainability seriously can also generate real business value from it – more on this in our blog post on the opportunities of CSRD.

The new and complex ESG requirements have also changed the scope of tasks and the skills required of sustainability managers. In the past it was still very much about internal communication, driving ideas for more sustainability and writing reports as a means of communication. Nowadays, ESG managers often find themselves dealing with complicated legal texts, compliance requirements and time consuming data collection. To ensure that there is still time left to implement sustainability measures, it is worth investing in ESG software such as VERSO. In any case, sustainability managers are now required to have a very broad set of hard and soft skills.

What skills do sustainability managers need?

First of all, the so-called “hard skills” – i.e. technical skills or professional competencies that can be learned and are in demand. Below is a selection of some of the skills that are becoming particularly important in view of ESG regulation:

  • Knowledge of sustainability reporting (e.g. CSRD, GRI, ESRS)
  • Understanding of regulations/legislative texts (e.g. LkSG, CSDDD, EUDR)
  • Data analysis and management (e.g. for measuring CO2 emissions, energy consumption)
  • Understanding of value creation and economic activity
  • Project management (planning, implementation and monitoring of sustainability projects)
  • Supply chain management (assessment of environmental impact, supplier selection)
  • Fundamentals of environmental science, sustainability concepts and ecological footprinting

Hard skills can be learned well, and further training courses such as the VERSO Academy can also provide support here. Software is also a big help for skills such as data collection, carbon footprint and supply chain management. In addition to these skills that can be learned, sustainability managers also need special interpersonal skills, the so-called “soft skills”. Among other things, these skills help to effectively implement sustainability in companies:

  • Empathy and social responsibility (understanding social and ethical implications)
  • Communication skills (convincing communication with internal and external stakeholders)
  • Change management (leading companies through sustainable transformation)
  • Problem-solving and decision-making skills (solving complex challenges)
  • Negotiation skills (negotiating with suppliers, partners or superiors)
  • Ability to work in a team and leadership skills (management of teams, cooperation across departments)
  • Critical and strategic thinking (developing long-term sustainability strategies)
  • Flexibility and willingness to learn (react to changing regulations, findings and market requirements)

What are the tasks of sustainability managers?

Sustainability managers do not have a fixed working routine. They usually juggle between data collection, coordination and writing for the ESG report and the creative and strategic development of sustainability measures. The tasks of ESG managers include:

  • Developing a sustainability strategy
  • Collecting sustainability-relevant data (especially for the CSRD report)
  • Defining and implementing targets and measures, monitoring target achievement using key figures
  • Obtain expectations and input from internal and external stakeholders
  • Check supply chains
  • Create a sustainability report
  • Communicate sustainability issues internally and externally (especially with marketing and management level)
  • Prevent Greenwashing
  • Advising all business divisions on sustainability
  • Setting an example of sustainability as well as training employees and motivating them to follow suit

How much do sustainability managers earn?

According to statistics from the German Federal Employment Agency, the salary of sustainability managers lies between €5,000 and €7,100. The average full-time gross monthly salary in Germany is €6,628. However, the salary can vary greatly – it depends in particular on the size of the company, but also on the individual’s professional experience as well as the federal state they work in. Accelerating the sustainable transformation within a company therefore does not necessarily mean having to settle for a lower salary – quite the opposite: the trend is set to intensify, as demand is extremely high while the supply of qualified sustainability experts is scarce.

How do you become a sustainability manager – what training is required?

To become a sustainability manager, you usually need a degree in a field such as sustainability management, environmental sciences or business administration with a focus on CSR. However, lateral entry is also very possible. Many ESG managers also come from the communications industry or another specialist department. With further training in sustainability management, they can often join a company’s sustainability team directly.

What further training is important for sustainability managers?

With the new regulations and developments in the ESG area, it is particularly important for sustainability managers to continue educating themselves. Otherwise, topics such as CSRD, EU taxonomy or LkSG will quickly become too much for you. It is well worth your time to attend webinars and complete in-depth further training in the specific subject areas.

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CSRD-Bericht 10 wertvolle Tipps zur erfolgreichen Datensammlung
04.11.2024

CSRD: 10 valuable tips for successful data collection

CSRD presents companies with new challenges – and this starts with data collection. Processes and responsibilities are often not yet established, and the data must also comply with regulatory requirements. In this article, you will find 10 valuable tips for efficient data collection.

CSRD reporting with its ESRS standards is complex. You have probably already heard this or are perhaps experiencing it yourself. And this complexity is particularly evident when it comes to collecting data for the sustainability report.

A number of questions quickly arise: What data do we need? How detailed does it need to be? Who supplies the data? Who ensures that it is correct? And so on. The European Financial Reporting Advisory Group (EFRAG) is the perfect address to answer all questions relating to data collection. The organization has developed the ESRS, which specify the form and content of a CSRD report. And in its guidelines, it has repeatedly emphasized the importance of comprehensive and structured data collection.

Collecting all the essential information requires well thought-out planning, clear processes and close cooperation between the various departments in your company. The following 10 tips will help you to establish efficient data collection and optimize the preparation of a CSRD-compliant sustainability report.

Stress-free CSRD compliance

Our practical software package supports you every step of the way – right through to the finished CSRD report.

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1. start early: set up processes and avoid bottlenecks

The first tip is very obvious, yet it is often forgotten: Start as early as possible!

It is important to set up efficient processes before mandatory CSRD reporting begins. Well-defined and proven processes lead to faster data collection and reduce the risk of errors. Regularly reviewing and adapting these processes ensures that they remain in place even as requirements increase. Those who invest in clean processes at an early stage can therefore meet their regulatory obligations much more efficiently and quickly in the long term.

You must also be aware of this: Data collection is a real time waster. People often underestimate how long it takes to retrieve the essential information. You must not forget: For many departments in your company, your request comes on top of their actual tasks. You should also allow some time for responses from business partners and suppliers.

Various sources and departments are involved, especially when it comes to complex data sets such as the carbon footprint. While consumption data is usually available quickly, it takes much longer to carry out a commuter survey or to collect cross-location information. The information on the ESRS S1 standard (company’s own workforce) also usually takes longer, as a lot of quantitative data is requested here.

Another tip here: Calculate the deadline “from the back”! First determine when the sustainability report should be published – in the case of the CSRD, together with the management report. Then go through the individual steps, such as text creation, data collection and analysis of double materiality, right up to the beginning. Allow a little buffer for each task and then you will know when you should start at the latest.

Practical guide: Fit for the first CSRD report

Our practical guide with checklist makes it easier for you to get started and prepare for reporting in accordance with CSRD and the ESRS.

To the practical guide

2. double materiality analysis: the foundation for your CSRD report

A central component of CSRD reporting is the dual materiality analysis. This enables you to find out what impact your business activities have on the environment and society and what opportunities and risks exist for your company due to external aspects. These impacts, opportunities and risks (IROs) define which topics are material for your company. The double materiality analysis therefore forms the basis for your data collection, your CSRD sustainability report and your ESG management. You should therefore pay particular attention to this. Errors can lead to missing or inaccurate data. An analysis with substance, on the other hand, will guide you purposefully through the reporting process. Our AI-supported software solution offers valuable support, including time savings in the double materiality analysis.

3. gap analysis: identifying and closing data gaps

Has your company already produced a sustainability report? Is it based on a standard such as GRI or DNK? Then you already have a good template here that you can compare with the CSRD requirements. Carry out a gap analysis and find out what data you have reported in previous years, whether it corresponds to the ESRS formulas and what data is still missing. This will help you determine which processes are already in place and which data collection processes still need to be established or adapted. However, you can also carry out a gap analysis without a previous report. In this case, you first check which data you already have and then determine where there is still room for improvement.

4. identify data sources and define responsibilities

When collecting data, it is not only important what information is required according to CSRD, but also who or wor which department can provide it. You should therefore processes and communication channels up and define responsibilities. In this way, you create clarity, avoid delays and set yourself up for success. hethat data collection will continue continues to run efficiently and smoothly in the future.

5. promote teamwork and a shared awareness

CSRD reporting is a team effort. As you have seen from the previous points, many departments are involved – so teamwork is a must! When preparing reports, you are in close coordination with HR, IT, Finance, Purchasing, Risk Management and other departments. Encourage good and efficient collaboration. In the VERSO ESG Hub, for example, you can define responsibilities for each topic. Every year, when data collection starts again, each person responsible can enter their data directly into the tool. Regular training courses and workshops also raise awareness of sustainability. Involve other departments and inform everyone involved about the latest requirements.

6. set focus and define priorities

Focus on material topics. The double materiality analysis shows you the way here. Please note: The report should concentrate on your efforts in the area of your material topics and fulfill the regulatory requirements. To make the start of reporting a little easier, you should initially refrain from voluntary data points. You should also take advantage of transition periods that have been introduced to ease the burden on companies. You do not have to report on all material topics right from the start. Instead, there are topics for which you are given a settling-in period. Make use of the phase-in regulations that cover many standards. They allow you to skip the disclosures in the first few years or exempt smaller companies from disclosure requirements.

7 Learning from mistakes: The first report doesn’t have to be perfect

The first report does not have to be perfect – you have to understand and accept that. The first step is to establish efficient data collection as part of the CSRD and to set up or improve processes. Do not try to write by hook or by crook about concepts and measures that you have not yet introduced. Instead, set yourself a target for when you want to publish the relevant data – and communicate this openly in your report.

8. ensure granularity of the data

Ensure the right granularity of your data to guarantee the necessary transparency and traceability. Data should be collected in as much detail as possible to enable precise analysis and informed decision-making. Instead of general information on greenhouse gas emissions or energy consumption, it is necessary to collect data down to the level of individual business units, production processes or locations. Overly aggregated information can lead to important details being overlooked. In order to define your goals, you should take sufficient time and, if necessary, hold workshops. The focus should be on what is realistic and sensible for your company in the long term. Choose your goals and measures consciously and avoid adjusting them too frequently. This ensures sustainable and consistent reporting.

The ESRS standards at a glance

The European Sustainability Reporting Standards (ESRS) are intended to make sustainability reports more meaningful and comparable. All information can be found in the whitepaper.

Download whitepaper

9. quality assurance: check data for reliability

High data quality is the key to a CSRD-compliant sustainability report. It is therefore important that you set up internal control systems that work in a similar way to financial reporting. These controls ensure that the ESG data is accurate, complete and reliable. Data quality plays a key role, particularly with regard to the external assurance required under the CSRD. To ensure high data quality, you should prepare well and read the information in the standards carefully. There you will find the Application Requirements (AR) with detailed instructions. They specify how certain information must be disclosed or measured.

10. use technology: Digital tools optimize data collection

Manual data collection is error-prone and time-consuming. Excel tables quickly become confusing – especially with CSRD with over 1000 data points. You spend a lot of time scrolling back and forth between the individual data points. This is something that costs nerves and that you should save yourself. Software-supported reporting is simpler, more effective and more data-based. And we are not just writing this from our own experience, EFRAG also points this out. Digital tools, especially with AI support, help you to standardize processes and ensure that all essential data is recorded and processed correctly.

 

Effective data collection: how VERSO supports you

VERSO simplifies and accelerates your entire reporting process – from dual materiality analysis to data collection and reporting. You identify the material topics with the help of our AI-supported software solution. In the VERSO ESG Hub, you collect all material data and create a CSRD-compliant report directly in the tool.

Please feel free to contact us

* This information is summarized editorial content and should not be construed as legal advice. VERSO accepts no liability.

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So finden Sie die richtigen Projekte zur CO2-Kompensation – ohne Greenwashing
16.10.2024

CO₂-Kompensation – how to make it work without greenwashing

What to do with unavoidable greenhouse gas emissions? In this article, you will learn how to tackle carbon offsetting – with effective projects and without greenwashing.

Your carbon footprint and climate strategy have been drawn up and you are already reducing the first greenhouse gas emissions. But it is slowly becoming clear: Despite all your efforts, you will be left with certain residual emissions! What to do with the unavoidable emissions? If you are also faced with this question, this article is for you. Because of course, CO₂ compensation is the obvious solution. But…

Careful – Carbon offsetting is a double-edged sword

Carbon offsetting has long been a contentious issue. Quite rightly so, as the situation on the carbon market is actually not so rosy: the voluntary carbon market is currently not regulated by either state supervision or a binding legal framework. Instead of legally binding criteria for the validation of carbon offsetting, there are only a number of private standards and registries with different quality criteria. This makes the market structure opaque and leads to major differences in quality within the climate protection projects on which the so-called CO₂ credits are based. One example: Deutsche Umwelthilfe (DUH) has already successfully filed several lawsuits against offsetting through forest projects and reforestation. The reasons: The estimated forest area could not offset the amount of CO₂ emitted at all or the project did not run long enough to keep up with the lifespan of CO₂ in the atmosphere. This leaves you with two problems:

  1. You cannot rely solely on the information provided by standards and registers for quality assurance
  2. At the same time, your company is expected to report truthfully, as greenwashing is penalised.

Actually, you should now take another look at the certified projects yourself. As you can imagine: It will be time-consuming. With the following factors, we will show you how to efficiently select reputable carbon offsetting projects.

Guide to the decarbonisation strategy

A holistic decarbonisation strategy or climate strategy is more than helpful when implementing climate targets, transition plans and carbon footprints. With this guide, you can get started right away!

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6 factors for the selection of serious projects for CO₂ compensation

1. Impact

The projects should have measurable positive effects on the environment that, where possible, go beyond the mere reduction of CO₂ emissions. This includes the protection of biodiversity, but also the improvement of air and water quality as well as the restoration and preservation of ecosystems (co-benefits). A strong environmental impact means that the selected project makes a holistic contribution to environmental protection.

2. Methodology and verification

The projects should be based on recognised scientific methods and standards. They should also be regularly reviewed by independent third parties to ensure the reliability of the emission reductions claimed.

3. Durability and monitoring

It is important that projects are monitored throughout their entire duration to ensure that emissions are actually reduced in the long term. Regular monitoring and reporting help to recognise risks at an early stage and take countermeasures. This ensures the long-term impact of the project.

4. Additionality

Projects are considered additional if they would not have been realised without the expected income from the proceeds of emission allowances. This requires a more detailed analysis and assessment of the initial scenario (project baseline).

5. Double counting

The project of your choice must guarantee that the emission reductions are not sold more than once or claimed by different parties. This protects the integrity of the carbon market.

6. Embedding in the climate strategy

CO₂ offsetting should really only be an option if you have already exhausted all potential for reducing emissions as part of your climate strategy. A serious project should be part of a comprehensive climate strategy and should never be considered in isolation. This ensures that the measures make a meaningful contribution to your overall climate goals and are not just used for ‘greenwashing’.

What you should take away from this article

If you want to offset emissions, you should therefore not choose the first offset project that comes along. Use our tips to select a project with a real impact! And remember: climate neutrality can only be achieved with close coordination between your carbon footprint, decarbonisation strategy, greenwashing awareness and reputable climate and environmental protection projects to offset your unavoidable residual emissions.

Looking for support with your CO₂ management?

As you can see, choosing the right projects for your CO₂ offsetting is not that easy. And who knows, maybe you can still reduce greenhouse gas emissions in one place or another? We would be happy to look at this with you. We will guide you through your decarbonization strategy with climate consulting and CO₂ software.

Please feel free to contact us.

* This information is summarized editorial content and should not be construed as legal advice. VERSO accepts no liability.

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