Sustainability reporting (ESG/CSRD): what you need to know
What is a sustainability report?
A sustainability report is a structured report in which companies disclose their impact on the environment, social issues and corporate governance (ESG). It contains information on topics such as CO₂ emissions, working conditions and compliance, and serves to ensure transparency for stakeholders.
Who is required to produce a sustainability report?
At present, it is primarily large, capital-market-oriented companies that are required to produce a sustainability report (under the existing Non-Financial Reporting Directive, NFRD). Under the new EU CSRD, this obligation will be gradually extended: from the 2024 financial year (report to be published in 2025), it will apply to large companies that meet certain size criteria. In the coming years, further companies will also be included.
What are ESG and CSRD?
ESG stands for Environmental, Social and Governance and describes the three key areas of sustainability. The CSRD (Corporate Sustainability Reporting Directive) is an EU directive that requires companies to report on sustainability in a standardised manner.
Software solution for sustainability reporting
A sustainability report is not a document that is simply drawn up and submitted once. Sustainability reports generally need to be updated regularly. The Opti.Tax software platform, which is based on taxonomy, is therefore ideally suited as a suitable software solution.
However, we are holding off on releasing sustainability reporting software. The reason: there is too much uncertainty at a regulatory level. As a medium-sized company, we need to allocate our resources where they are most needed. The situation is clear when it comes to issues such as transfer pricing (including CbCR and Pillar 2) or procedural documentation. As soon as we have clarity on CSRD and ESRS as well, we will provide you with the appropriate tool.
Standards for sustainability reporting
Dr Steve Waitschat: this is the standard recommended by the expert
German companies are feeling uncertain. Which standard applies, and who is required to report? Dr Steve Waitschat, a consultant and expert in sustainability reporting at the law firm Clostermann & Jasper, answered the key questions on our programme „hsp live at 11“.
Good to know
Produce a sustainability report
What are the common sustainability reporting standards, and how do they differ?
There are various standards for sustainability reporting, each with a different scope and objective:
- ESRS (European Sustainability Reporting Standards): a binding standard under the CSRD for companies subject to reporting requirements in the EU
- DNK (German Sustainability Code): a voluntary, practice-oriented standard, particularly suitable for small and medium-sized enterprises
- VSME (Voluntary Sustainability Reporting Standard for SMEs): a new voluntary EU standard specifically for small and medium-sized enterprises, which is based on the requirements of the CSRD
The main difference lies in the degree of obligation and the level of detail: whilst the ESRS are mandatory and very comprehensive, the DNK and VSME offer a low-threshold entry point.
What is the VSME?
The VSME is a voluntary EU sustainability standard for small and medium-sized enterprises (SMEs). It was developed to enable businesses to get started with sustainability reporting in a straightforward manner, whilst ensuring compatibility with the mandatory ESRS standards.
Can I convert my voluntary report into a mandatory report at a later date?
Yes, a sustainability report produced on a voluntary basis can, in principle, serve as the basis for a report that will later become mandatory. However, it is important to note that the requirements of the CSRD and ESRS are significantly more comprehensive and standardised. Those who start early by adopting a suitable standard (e.g. VSME or DNK) and work in a structured manner will significantly reduce the effort required for the transition later on and avoid duplication of work.
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About hsp – Software innovation made in Germany
Since 1991, hsp Handels-Software-Partner GmbH has been developing professional software solutions for tax consultancy and audit firms, as well as for businesses.
Our taxonomy software Opti.Tax has established itself amongst discerning professionals in the DACH region as the reliable, high-performance and long-term solution for electronic invoicing. The digital tools for legally required, GoBD-compliant documentation are particularly popular.
Practical relevance, up-to-date content and genuine service
Our software modules are developed in close collaboration with experienced partner firms such as Energiesozietät GmbH for internal control systems (IKS), ADKL Abels Decker Kuhfuß & Partner mbB for transfer pricing, and Schröder & Partner for the digital pension file. In this way, we ensure that the features in Opti.Tax are tailored to the real-world challenges of day-to-day professional practice.
Regular updates ensure that changes to legislation and new requirements are incorporated into the software in a timely manner. In addition, we support you with a comprehensive range of service and support offerings, e-learning courses, access to the hsp Community, our weekly live broadcast „hsp live at 11“ and much more.
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