This is how the ESRS report (almost) writes itself
Munich, May 6, 2024 - The Corporate Sustainability Reporting Directive (CSRD) has been in force since January 2023 and will be rolled out at national level by July 2024. In Germany, the Federal Ministry of Justice published a corresponding draft back in March 2022. The new EU directive requires companies to publish ESG reports in accordance with the European Sustainability Reporting Standards (ESRS) together with their financial reports. The first ESRS-compliant report for the 2024 financial year must be published in 2025. Under time pressure, affected companies must therefore adopt a new reporting format that requires detailed and specific information on a particularly wide variety of ESG topics from stakeholders across the entire value chain.
The good news: in future, CSRD managers will be able to manage all ESRS workflows conveniently in one intuitive application at - from stakeholder communication and dual materiality analysis to audit-compliant documentation. IntegrityNext, provider of the world's leading cloud solution for managing sustainability in the supply chain, bundles all these functions in its new ESRS reporting solution.
The crux of the double materiality analysis
The core and stumbling block of ESRS reporting is the double materiality analysis. This involves assessing the material topics for each stakeholder within a company's value chain in terms of their impact on the environment and/or society and their financial consequences (financial materiality).
There are a total of 157 potential topics to choose from, plus various sub-topics and even sub-sub-topics. The information or documents that need to be submitted are clearly specified for each topic. In total, there are over 1,000 data points to manage. To make matters worse, the materiality of many topics depends heavily on the industry and region of the respective stakeholder. In view of this complexity and depth of detail, the double materiality analysis is almost impossible to manage manually. This is why the experts at IntegrityNext have created a clear digital framework for this highly complex process. In accordance with d en ESRS , companies can document their impacts, risks and opportunities for each topic in a structured manner and provide evidence by uploading suitable documents.
Click by click to compliance
In the first step, users of the ESRS platform create their stakeholders on the basis of 13 different stakeholder types. These include, for example, investors, suppliers, creditors and many more. Based on the user's information on the location and industry of each stakeholder, IntegrityNext's extensive database draws on risk analyses to pre-fill the "Impact" and "Financial Materiality" fields for each topic: a great guide for companies new to this topic. Of course, users can customize these suggestions and also view detailed help texts on how IntegrityNext arrives at a particular assessment.
The topics identified as material are visualized in a so-called "materiality matrix" with "impact" as the X-axis and "financial materiality" as the Y-axis. This allows users to see at a glance which ESG issues require particular attention. Thanks to the integrated link with SDGs (Sustainable Development Goals), both views of the supply chain are combined in one platform.
The next view makes your work much easier: All key topics, including the required data points, are listed here in a structured manner. With the help of this overview, users can work through the individual topics one after the other like a Kanban board - including status updates. Finally, the finished ESRS report can be exported in an audit-compliant file format, including all documents and statements, and can also be integrated into the mandatory CSRD report. Data from the previous year can also be easily imported into the next report and adjusted where necessary.
"For many, this is a new topic and a new process. Without prior knowledge and without the right tools, a department in a company can sit on an ESRS report for a whole year. The resentment about the bureaucratic effort is therefore understandable. Creating transparency about sustainability is important, but it should not paralyze companies and discourage them from acting sustainably," explains Nick Heine, Co-Founder and CCO (Chief Customer Officer) of IntegrityNext. "We want to take as much of the burden off companies as possible and empower them in the midst of complexity: By automating the reporting processes via our platform and making them intuitive, companies have more time for value-adding activities."
About IntegrityNext
As a global leader in supply chain sustainability software, IntegrityNext stands at the forefront of corporate sustainability and compliance. Since 2016, businesses have trusted IntegrityNext to simplify ESG compliance, reduce risks, and address critical challenges like due diligence, decarbonization, and sustainability reporting. With over 500 customers and 2 million suppliers across 190 countries, IntegrityNext is transforming supply chains into engines of transparency and sustainable growth.
