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Nick Inge 31 May 2024

CSRD Reporting: Your Top 5 Questions Answered by EFRAG

The European Financial Reporting Advisory Group (EFRAG) recently released 44 detailed explanations on the upcoming Corporate Sustainability Reporting Directive (CSRD). With so much new information, many companies have questions. Here, we address the top 5 most anticipated questions regarding CSRD reporting:

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1. Consolidated Reporting Scope

Question: Does the consolidated CSRD report need to include all subsidiaries, even if some are located outside the EU or not financially consolidated?

Answer: Yes. The baseline for the CSRD report aligns with your financial reporting scope. This means all subsidiaries consolidated financially, regardless of EU location, must be included in the consolidated CSRD report.

2. Historical Data Requirements

Question: Do companies need to publish data from previous years?

Answer: Yes, but with some nuance. All quantitative and monetary data requires historical reporting. However, qualitative data from previous years is only mandatory if it improves understanding of the current year's report.

3. Double Materiality: Weighing Stakeholder Input

Question: When analyzing double materiality (how sustainability impacts the company and vice versa), how much weight should be given to stakeholder opinions compared to objective evidence?

Answer: Objective evidence and scientific data should be the primary foundation for your double materiality analysis. However, if such data is lacking, the opinions of affected stakeholders become an important source of information.

The weight given to stakeholder input should be measured by the degree to which they are impacted by the issue in question.

4. CSRD Report Structure and Data Presentation

Question: How does the CSRD report need to be structured, and how should data be presented?

Answer: There's flexibility in presenting the CSRD report. The core requirement is a four-part structure:

General Information
Thematic information required by ESRS 2 (the European Sustainability Reporting Standards) can be presented within the general information section or integrated into the relevant Environment, Social, or Governance sections.

5. Publishing Metrics vs. Setting Commitments

Question: Can we postpone publishing metrics, similar to how we can set future targets for Policies, Actions, and Targets (PATs)?

Answer: No. Unlike PATs, where you can commit to publishing them later, material metrics must be published in the CSRD report. If collecting data to determine these metrics is not possible, estimations are required.

Bonus: Integrating Quantitative Data into Qualitative Points

Question: Can quantitative data be included when processing qualitative data points?

Answer: Yes! You can integrate quantitative data into qualitative datapoints. Additionally, including supplementary quantitative data is allowed if it enhances understanding of the company's impacts, risks, and opportunities.

By addressing these common questions, we hope to provide a clearer picture of CSRD reporting requirements. Stay tuned for further insights as EFRAG releases more information!

Click here to find the full report from EFRAG