CSR Sustainability Report: N³ Comments on the ESRS

Up to Date: EFRAG presented the revised draft of the European Sustainability Reporting Standards (ESRS) at the end of November 2022. It's now up to the EU Commission to decide whether these improved, yet still overcomplicated, rules for CSR reporting will be enacted in their current form. After N³'s detailed comments on ESRS E5 "Resource use and circular economy" in the first draft of April 2022 were largely considered, we've also commented on the new ESRS in extracts. Our statement can be downloaded at the end of this blog post.

Mandatory Sustainability Reporting: What You Need to Know

Previously, the publication of a sustainability report was at the company’s discretion. Now, so-called CSR (Corporate Social Responsibility) reporting has become mandatory. According to the recently adopted CSR directive, companies will need to report starting from 2026 if they exceed two out of the following three criteria at the balance sheet date:

1. An average of more than 250 employees during the fiscal year
2. A balance sheet total of 20 million euros
3. Net sales revenue of 40 million euros

This is expected to affect up to 15,000 companies in Germany alone.

Taxonomy Regulation and CSR Directive

The EU has created a classification standard with the Taxonomy Regulation to guide companies towards the “Green Deal.” The European taxonomy defines criteria to consider an economic activity as ecologically sustainable. It includes objectives in six areas of action, two of which are the circular economy and climate protection. A central question arises when sustainability must be considered as part of the annual accounts due to the upcoming CSR directive: how can economic and ecological data be integrated? We welcome this development, as we have been dealing with sustainability management and reports for 15 years. Companies that seriously and consciously deal with their position on sustainable development are changing themselves and our industrial society in a positive sense. However, we fear that most companies will struggle with this reporting, either wasting time and resources or resorting to generalities that won’t satisfy auditors.

Inform Yourself: Webinars, Lectures, and Publications on Sustainability Reporting

Solid reporting requires a lived sustainability strategy within the company! We discussed this with waste management companies on July 13 and November 17, 2022, during the CSR Directive and Taxonomy Webinar by the Akademie Dr. Obladen. Another edition of this webinar with updated information will take place on April 20, 2023. The invitation can be downloaded. We look forward to welcoming you there.

With the adoption of the CSR directive, work on its implementation in Germany begins. This will shape the discussion this year. Prof. Dr. Henning Friege will, among other things, address the question of implementing the directive in his lecture at the 18th Business Management Conference, which takes place on July 6 and 7, 2023, in Berlin by the Akademie Dr. Obladen in cooperation with the Abfallwirtschaft und Stadtreinigung VKS (Waste Management and City Cleaning VKS) branch.

Further Publications on Sustainability Management and Reporting by N³:

“EU Taxonomy and CSR Directive: Sustainability in the Annual Report” (H. Friege, H.P. Obladen, R. Dollase), VKS News 269, 23-25 (2022) – We will be happy to send you on request.

“Sustainability in the Annual Report!” (H. Friege, R. Dollase), UmweltMagazin 11-12/2022, 52-55 – We will be happy to send you on request.

“Decision bases for sustainable action – an approach for the area of chemical products” (Henning Friege) can be found in the book “Nachhaltige Unternehmensführung in der Digitalisierung” (2018)

“Waste and Circular Economy – Priorities for Sustainable Resource Management” (Henning Friege and Christina Dornack) can be found in the book “Nachhaltiges Management.”

“Innovative approaches for sustainable corporate management” (2019)

Download the N³ statement on ESRS E5 “Resource use and circular economy”

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N³ Nachhaltigkeitsberatung
Dr. Friege & Partner Wirtschafts- und Naturwissenschaftler