CSRD — Corporate Sustainability Reporting Directive

The Corporate Sustainability Reporting Directive (CSRD) (EU 2022/2464) requires large EU companies and listed SMEs to publish structured sustainability reports following the European Sustainability Reporting Standards (ESRS). The first wave applied to large public-interest entities for financial year 2024 (reporting 2025), expanding to large non-listed entities for FY 2025 (reporting 2026) and to listed SMEs from FY 2026. For ERP-bearing organisations, CSRD turns sustainability reporting from a marketing exercise into an audited, structured financial-grade discipline.

ESRS topics in scope

CSRD reporting follows the ESRS (European Sustainability Reporting Standards) which cover environmental, social and governance (ESG) topics through twelve topical standards. Environmental: climate change (ESRS E1 — emissions Scope 1, 2 and 3); pollution (E2); water (E3); biodiversity (E4); circular economy and resource use (E5). Social: own workforce (S1); workers in the value chain (S2); affected communities (S3); consumers and end-users (S4). Governance: business conduct (G1). Each topic requires quantitative disclosures and narrative context, plus a materiality assessment justifying which topics are reported and which are excluded.

ERP as the data source

Many CSRD disclosures pull from data already inside the ERP. Energy and emissions: energy purchases (electricity, gas, district heating) booked through accounts payable, fleet consumption from fuel cards, business travel from expense management. Materials and waste: purchasing volumes per material category, waste-disposal vendor invoices. Workforce metrics: HR module data on headcount, turnover, training hours, gender split, pay equity. Supply chain: supplier master data, spend per supplier, supplier risk assessments. The ERP rarely holds all CSRD data — some comes from operational systems, spreadsheets and external sources — but it is the largest single data source.

CSRD reporting tools

Dedicated CSRD or ESG reporting platforms have proliferated since 2023. Enterprise: SAP Sustainability Control Tower, Microsoft Sustainability Manager, Workiva, Watershed, Persefoni, Sphera. Mid-market: VERSO, Tanso, Plan A, Cozero, Greenly — many German-built tools targeting the mid-market in Germany, Switzerland and Austria. Embedded in ERP: SAP S/4HANA includes sustainability modules; Oracle Cloud ERP includes Cloud ESG Reporting; Microsoft Dynamics 365 integrates with Microsoft Sustainability Manager. Choice depends on entity size: large groups benefit from enterprise platforms with consolidation, mid-market companies often pick a German specialist for the DACH-specific reporting templates.

Audit and assurance

A defining feature of CSRD is mandatory third-party assurance on the sustainability report. Initial assurance is limited (less rigorous than financial audit), with the EU planning to move to reasonable assurance over time. Auditors check that disclosures align with ESRS, data quality is sufficient, and controls over data collection are reliable. This drives ERP-side requirements: audit-trail on sustainability data, documented data lineage from source transaction to reported figure, segregation-of-duties on data entry and review, and internal controls over manual adjustments. Companies that try to assemble CSRD data in spreadsheets at year-end face material assurance findings; those that integrate the data flow through the ERP and dedicated ESG tool pass audit with much less friction.

Frequently Asked Questions

Is CSRD really being enforced?

Yes, with caveats. The EU is reviewing scope and effective dates under the omnibus simplification package (announced 2025) to ease the burden on SMEs and reduce reporting volume. Material scope remains for large entities; some thresholds may shift. Companies in scope should not wait for clarifications — the data infrastructure work is itself the biggest line item, and starting late causes audit pain.

Do mid-market companies in scope need a dedicated ESG tool?

For a 250-employee mid-market entity, an Excel-based first-year approach is often pragmatic, paired with a dedicated tool from year two onwards once the data flow is understood. Investing 20,000-80,000 EUR per year in a tool like VERSO or Tanso pays back through reduced compliance effort, lower audit fees and the option to flow ESG metrics into ESG-linked financing.

How does CSRD interact with the EU Taxonomy?

The EU Taxonomy classifies economic activities as environmentally sustainable; CSRD requires reporting the share of revenue, capex and opex aligned with the Taxonomy. So CSRD is the reporting framework, Taxonomy is the classification system. Companies must report their Taxonomy KPIs as part of CSRD disclosures.