The Ultimate CSRD

& ESRS Handbook

Navigating the new Corporate Sustainability
Reporting Directive
Table of
Contents Introduction 03
Key terminology 05
The big questions 08
CSRD scope and expectations 13
How CSRD and ESRS can drive success 16
The first steps on your CSRD journey 19
The main challenges of sustainability reporting 21
The Denxpert solution 24

Introduction
Denxpert is a consultancy and software company specializing in
sustainability, ESG and EHS management. It has over 15 years of
experience in the field and is trusted by teams at over 500 of the
world’s leading organizations.
Our expert team helps companies comply with EU regulations and
implement first-class sustainability reporting infrastructure. One of
our major tasks right now is working with companies to prepare
them for the introduction of the Corporate Sustainability Reporting
Directive (CSRD).
A new horizon
The Corporate Sustainability Reporting Directive came into force across
the European Union on 5 January 2023. For larger companies, the new
rules must be applied for the first time for the 2024 financial year and
reports published in 2025. CSRD was created as part of the 2020 Green
Deal in order to:
Review and replace the Non-Financial Reporting Directive (NFRD)
Provide legal infrastructure to support the promotion of good
practice in the field of ESG
Specify sustainability reporting requirements for companies that
operate in the EU
CSRD is far more wide-reaching than the NFRD. While the NFRD applied to
around 11,000 companies, the CSRD will apply to approximately 50,000.
The CSRD covers all large companies and listed companies (except listed
micro-enterprises) operating in the EU. It also serves as a useful guide for
sustainable business practices and reporting for any company operating
in the European Union, regardless of size.
A helping hand
This ebook is designed to provide an overview of both the
Corporate Sustainability Reporting Directive and the European
Sustainability Reporting Standards (ESRS), which outlines the rules
and requirements for companies in sustainability reporting.
The European Commission adopted the final version of the ESRS
on 31 July 2023.

In addition, you can also learn why sustainability reporting is

necessary, how it can benefit your company, and the best way to
manage the challenges it entails. The ebook is intended to assist all
those impacted by the directive, whether they are executives,
middle managers, sustainability officers, IT or finance staff, or
members of the ESG team.
Key terminology
Before we dive headfirst into the ins and outs of sustainable reporting
and how it can change your company for the better, let’s take a look at
the main terms used.
Corporate Sustainability Reporting Directive (CSRD) European Financial Reporting Advisory Group (EFRAG)

A new EU directive that modernizes and strengthens the rules A private association that operates with the encouragement of the
concerning reporting requirements related to social and European Commission. As part of its mission, EFRAG is responsible for
environmental business factors. providing technical advice to the European Commission in the form
of fully prepared draft EU Sustainability Reporting Standards.
Corporate
Sustainability
CSRD Green Deal
Reporting
Directive A package of policy initiatives that aim to set the EU on the path to a
green transition, with the ultimate goal of reaching climate neutrality
by 2050. It supports the transformation of the EU into a fair and
European Sustainability Reporting Standards (ESRS) prosperous society with a modern and competitive economy.

ESRS sets out the rules and requirements for companies in the EU to
European Single Access Point (ESAP)
report on sustainability-related impacts, opportunities and risks
under the upcoming CSRD.
The ESAP offers a single access point for public financial and
sustainability-related information about EU companies and EU
Environment, social and governance (ESG) investment products.

A framework designed to be embedded into an organization's

strategy. ESG should consider the needs of all organizational
stakeholders and how to generate value for them.
ISSB

The ISSB (International Sustainability Standards Board) standards

serve as a basis for global sustainability-related disclosure. They
have been developed based on the widely used IFRS Accounting
Standards and the Global Reporting Initiative (GRI).

Double materiality

A term used in sustainability reporting. Under the double materiality

concept, a sustainability matter can be material from an impact
point of view, as it describes what is the company’s impact on people
and environment, and/or from sustainability-related financial risk
and opportunity perspective.

Greenwashing

A form of advertising or marketing spin in which misleading

information is deceptively used to persuade the public that an
organization's products, aims and policies are environmentally
friendly.
The big questions
What is the primary motivation
behind CSRD and ESRS?
The main reason the European Union wants to introduce the CSRD
and ESRS is to guide companies towards implementing more
sustainable business practices. Historically, companies have often
placed value purely on profit or other financial-based concerns.
This narrow approach not only brings potential risks to society and
the environment in general, it can also encourage the companies
themselves to indulge in unsustainable short-term thinking.

Sustainability reporting is based on the understanding that

all businesses must learn to operate sustainability to remain
competitive in the long term. Indeed, a sustainable approach is fast
becoming a basic expectation of consumers, suppliers, investors,
policymakers and society.

Currently, several sustainability reporting frameworks are available,

but there are significant differences between them. These
discrepancies not only encourage some companies to indulge in
‘greenwashing’, where they mislead people about their activities,
but also make it difficult for investors and other stakeholders to
accurately assess the real sustainability performance of companies.
The CSRD, and its underlying framework, the ESRS, should improve
the quality of reporting and make it easier to obtain objective
information regarding the sustainability of companies.
 How does the CSRD compare to the NFRD?
Though they are related and the CSRD is the successor of the NFRD, there are also
some crucial differences: see the infographic below for a full comparison.

Non-Financial Reporting Corporate Sustainability Non-Financial Reporting Corporate Sustainability

Directive (NFRD) Reporting Directive (CSRD) Directive (NFRD) Reporting Directive (CSRD)

No mandatory requirements, According to the European

Sustainability, environmental and Addressing social, environmental
mainly in PDF format Sustainability Reporting Standard
social impact assessment and governance challanges
(ESRS)
Objective Format

No requirements for external Reports must be externally verified

Around 11,600 companies Around 49,000 companies and their credibility and accuracy
verification and validation
operating in the EU operating in the EU ensured
Stakeholders Auditing

Large companies and public All companies with more than 250 Light regulation and sanctions Strick regulation and sanctions
organizations with more than employees and/or €40 million net against offenders
500 employees turnover and/or €20 million
balance sheet total Sanctions
Scope of
application
Until CSRD takes effect From 2024 onwards

Validity
Why do CSRD and ESRS matter?
Indeed, the most obvious reason we should care about CSRD and
ESRS is that companies must comply with the directive to operate in
the EU. Yet ESG matters to more than just the regulators:
companies able to instigate an effective ESG strategy are more
attractive to consumers, investors, suppliers and top talent.
Numerous studies have also shown that companies that follow
sustainable business practices enjoy more long-term success. In
addition, because the EU directives are designed to set the
standard internationally, any company that complies with the EU
regulations is likely to be perfectly prepared for meeting
sustainability reporting compliance throughout the globe.
What happens if you don’t comply?
Suppose a business is guilty of non-compliance with the CSRD.
In that case, it can expect administrative sanctions and three
possible penalties: a public denunciation, an order to change its
conduct, or financial punishment. Each EU member state is
responsible for setting the penalty and defining the limits of the
sanctions within their jurisdiction.
Perhaps even more importantly, a negative reputation in the field
of ESG can negatively affect sales and consumer goodwill, put off
investors, and make it increasingly difficult to find willing partners to
do business with.
Why is double materiality so What is going to happen with the
important? CSRD and when?
Double materiality is the idea that companies need to consider not The European Union has already adopted the CSRD and companies
only the impacts of their action on their own operations, but also will soon implement it. Below are the key milestones in this process:
how these factors affect the company’s value in terms of
long-term preservation and growth. In addition, it also considers 1 2021 The European Commision adopts the CSRD
the interests and expectations of stakeholders, including investors,
employees, customers and suppliers. Actually, it’s a methodology
2 2022 Member States transpose the CSRD into their national
for a company to identify which sustainability issues are important
legislation
for its own operations to work on and report on.
3 2023 Companies adapt to CSRD requirements - Companies
For example, burning an excess of fossil fuels in the operation of a
must be prepared for the new reporting requirements
factory may bring short-term economic gains. Still, these must be
offset against the potential damage caused in a range of other 4 2024 The European Commision adopts the CSRD
areas, such as company reputation, waste management, and
long-term harm to the environment.
5 2025 Member States transpose the CSRD into their national
legislation

6 2028 Large companies outside the EU will also have to

comply with reporting obligations
CSRD scope
and
expectations
 Want to know if CSRD applies to you?
Yes Does the company have listed securities on a regulated market in the No
European Union (excluding micro-undertakings)?

Yes
Is the company already subject to the NFRD regulation?
No
Yes
Subject to CSRD Is the company headquartered in the European Union? The company
may not be
No subject to CSRD
If you have a ‘Yes’ Does the company meet the EU's definition of a large undertaking,
to any of the where at least 2 of the following 3 criteria apply to the company?
questions, you Company has more than 250 employees
must start
Yes Company turnover exceeds €40 million No
preparing for
compliant Balance sheet exceeds a total of €20 million
sustainability
reporting!
Does the company have annual turnover in the EU exceeding €150
Yes
(Please note: million each of the past two years and an EU branch with net revenue
No
listed SMEs enjoy exceeding €40 million?
a grace period
until 1 January
2026, and an Does the company have annual turnover in the EU exceeding €150
opt-out clause Yes million each of the past two years and have an EU subsidiary that
until 2028.)
meets the EU's definition of a large undertaking, as outlined in the
No
criteria for companies headquartered in the EU?
Assessment:
What do you need to know?
CSRD and its underlying standard, the ESRS, outline the key
expectations for sustainable business practices in the
European Union in fields of environment, social and
governance. Companies will be expected to be able to answer
questions like these:

What are their CO2 emissions levels?

Do they order from sustainable suppliers?
What kind of equal-opportunity hiring schemes do they
have in place?
Have they polluted the local environment?
Are they successfully reducing their energy consumption?
What is their water usage in metric tons?
Are they compliant with environmental standards?

The ESRS calls for a mixture of quantitative and qualitative

data. Companies are expected to collect the data in a
standardized, consistent manner and submit it on an annual
basis, together with their annual financial report.
How CSRD and ESRS
can drive success
It would be easy to see CSRD and
sustainability reporting as just another
headache – more bureaucratic red tape
restricting how companies do business.
This, however, would be a significant
mistake. It makes far more sense to see it as
a great opportunity.

Because we all know deep down that

sustainable business is the best way
forward. But we are also aware that every
company and every division is under
pressure to deliver immediate profits and
results. The introduction of CSRD is the
perfect chance to take a step back, examine
the broader picture, and look to steer your
organization toward a more sustainable
future. Here are some of the key benefits:
Attracting investment
based on reliable
ESG reporting
The current hodge-podge of various
rating systems creates confusion and
contradictions, leaving investors unable to
properly measure how resilient companies
are to long-term ESG risks. This knowledge
gap means investors are unable to
channel financial resources to the most
sustainable companies. By providing
sustainability reporting in line with CSRD
and adjusting business activities to comply
with the highest level of the ESRS, you can
demonstrate the long-term viability of your
company to investors and other
stakeholders.
Simplified ESG
reporting
CSRD brings clarity on what information
you need to report about sustainability.
It will also reduce the number of demands
businesses receive for sustainability
information and the information they
publish on the EU-wide digital access
platform, European Single Access Point
(ESAP).
Taking a lead position
on the path to
sustainability
CSRD offers knowledge and structure to
improve your business on ESG
requirements. It will accelerate how
companies understand and answer
challenges related to sustainability. It
provides a robust framework for creating
and implementing a formidable ESG
strategy.
The first steps on
your CSRD journey
At first, the world of sustainability reporting may seem opaque and overwhelming.
The good news, however, is that there is a guided pathway to success. By carefully
selecting the right software and with some additional help, you can implement a
semi-automated system with its own checks and balances that will help ensure a
smooth transition. Once installed, the system should be used reflexively, with the data
and information produced to encourage a cycle of continuous improvement in all
areas of sustainability.
Publish your sustainability Use CSRD as an
statement to the ESAP ESG framework
4. 3.

Structure to Manage
Your CSRD Journey
Test & improve! Collect your data

5. 2.
1. 6.

Initial steps Overall ESG and

business benefists
The main challenges of
sustainability reporting
 Common Headaches of the ESG teams
In today's corporate landscape, ESG compliance is vital due to increase
investor and consumer pressure and legal requirements.
What are the main challenges when implementing a new ESG strategy?

Business challenges Regulatory challenges Technical challenges

Changing company culture,
being transparent, working
responsibly with partners,
paying attention to public
opinion, and valuing diversity
for overall business success.
Keeping up with constantly
changing directives like CSRD,
CSDDD, and SFDR, requiring
vigilance, clear procedures, and
technology to ensure
compliance.
Selecting the right software and
framework, monitoring
performance, managing data
effectively, and mitigating risks
through proper auditing.
 Of course, no one can promise that implementing a first-class sustainability reporting set-up is a
breeze and can be done overnight. Indeed, several major challenges must be overcome to ensure
complete compliance, full buy-in and seamless reporting. Here are some of the most important:

Shifting the culture Measuring and tracking performance

A genuine commitment to sustainable thinking and
reporting necessitates a distinct culture change, as the
company looks to place greater value on factors not
directly related to profit-making. Clear communication and
strong advocates are needed to explain the importance of
Measuring and tracking ESG performance is essential to
meet ESG reporting requirements and helps the company
monitor its progress. Here, the right software and
transparent procedures for team members to follow are
vital to ensure a consistent data supply.

1 ESG to the long-term viability of the organization.

3

Data management Mitigating risk

Once collected, the data must be appropriately managed,
with standard policies in place for effectively tracking,
improving and communicating ESG performance.
Companies require sophisticated software that supports
ESG-related data collection, integration, analysis and
Risk mitigation is also a major possible source of headaches
– after all, incorrect or misleading statements about a
company’s ESG performance can increase the risk of
litigation and damage to its reputation. To combat this, it is
also essential to have an effective auditing structure in

2 reporting.
4 place.
The Denxpert Denxpert specializes in innovative and customized ESG and EHS software solutions
used by more than 500 of the world’s leading organizations. Manage all of your

solution
operations related to CSRD compliance in one place:

Intuitive ESG management software with a unique, ready-made CSRD template

Effortless compliance, data collection, and reporting

Step-by-step guidance from our expert team

Tailor-made
A bespoke solution requires the consideration of your corporate goals, products, and
value chains. Our experienced consultants can help you turn your corporate vision
into a practical roadmap to sustainability.

Ready to help
Prioritizing ESG inside your organization is one of the most critical decisions to ensure
long-term business growth. Knowing where to start can be overwhelming, but with
the help of our CSRD specialists, you will feel confident at every stage of the journey.
The next step
Denxpert revolutionizes the way corporations collect,
process and present ESG-related data. We are highly
experienced in helping companies meet EU
sustainability reporting requirements. We also have
specially designed CSRD templates so you can
effortlessly ensure adherence to the new directive.

If you are interested in ESG-aligned business growth

through better data, easier reporting and expert help,
we’d be delighted to hear from you.

Learn More