Solution for advanced ESG Reporting for EU Standards
Thomson Reuters’ and SAP’s integrated ESG reporting solution to streamline compliance
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In response the growing demand for accountability and transparency in environmental, social and governance (ESG), the European Commission established a new regulatory frame through the Corporate Sustainability report Directive (CSRD). This directive requires companies to report their ESG data annually, starting with financial years that begin on or after January 1, 2024. Thomson Reuters and SAP teamed up to develop a robust reporting system. By combining the power of ONESOURCE Statutory Reporting with SAP’s Sustainability Control Tower, this partnership equips corporate sustainability officers with the tools they need to efficiently gather, manage, and file their ESG data, ensuring compliance with the European Sustainability Reporting Standards (ESRS) and driving transparency in corporate reporting.
Highlights:
Discover how Thomson Reuters and SAP’s integration solution simplifies compliance with the ESRS
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Simplifying ESG reporting compliance through technology and partnerships
Technology plays a crucial role in enabling companies to comply with the new ESRS requirements. Thomson Reuters and SAP developed a comprehensive solution to help corporations adhere to the standards. It is designed to assist corporations in maintaining compliance with regulatory directives and helps reduce risk by optimizing the process of ESG data collection, management, and reporting.
Companies will be required to use a digital XBRL taxonomy to tag (markup) their disclosures in ESRS reporting, ensuring an electronic reporting format. Our built-in tagging eliminates the need for outsourced iXBRL tagging and streamlines the ESRS report process. Additionally, this integration offers seamless access to integrated ESG data, enhancing productivity, and providing a comprehensive and efficient solution for meeting CSRD requirements.
Our latest ESG reporting solution is tailored specifically for those operating within the European Union or the UK. This integration helps to address some of the key challenges faced by those responsible for ESG reporting at large multinational companies. The history of ESRS standards will help us better understand the complexities of a solution that is designed to meet ESRS’s requirements. This helps us understand whom these standards will impact, what these new requirements will entail, and acknowledges the crucial role of technology in compliance.
The development of the European Sustainability Reporting Standards (ESRS)
The European Union (EU) has a long history of environmental awareness and sustainability initiatives that predate the specific development of the ESRS. The journey began in the 1970s, with the launch of the Environmental Action Programme in 1993. This period laid the foundation for fundamental environmental regulations. See the ESRS’ progressive timeline below:
1973
: The launch of the first Environmental Action Programme laid the groundwork for fundamental environmental regulations and institutions.
2014
- : Adoption of the Non-Financial Reporting Directive (NFRD) required large public-interest companies to disclose information on social and environmental impacts.2018
- : Introduction of the Action Plan on Financing Sustainable Growth aimed to redirect capital towards sustainable investments and manage financial risks related to climate change and other environmental issues.2019
- : The presentation of the European Green Deal set an ambitious goal for Europe to become the first climate-neutral continent by 2050.2020
- : The proposal of the Corporate Sustainability Reporting Directive (CSRD) aimed to enhance and standardize sustainability reporting across the EU.2021
- : The formal adoption of the CSRD proposal marked the introduction of the European Sustainability Reporting Standards (ESRS).2022
- : The final CSRD was published in the Official Journal of the European Union on December 16, 2022.2024
- : The European Union’s ESRS took effect for financial years starting on or after January 1, 2024.The development and finalization of the ESRS by the European Financial Reporting Advisory Group (EFRAG) involved extensive stakeholder engagement to ensure robustness and practicality. These standards are designed to redefine corporate accountability across the EU, by establishing a clear framework for reporting the environmental and societal impacts of business activities.
- This initiative addresses the demand for uniformity in sustainability reporting, ensuring that stakeholders–including investors, customers, and regulators–have access to reliable and comparable data for informed decision-making.Double materiality and increased granularity
A groundbreaking feature of the ESRS is the concept of double materiality, which requires companies to report not only on how their operations affect the environment and society, but also on how these external factors impact their financial performance. This dual perspective provides a holistic view of sustainability, highlighting the intrinsic link between business health, the health of our planet, and its people.
Companies must provide detailed disclosures on governance, strategy, impact management, risk and opportunity management, and sustainability metrics and targets. This increased granularity presents a significant challenge, requiring robust systems and processes for data collection, management, and disclosure.
Which companies must comply with ESRS reporting?
The scope is broad and includes all large listed EU companies including large subsidiaries from non-EU parent companies. Specifically, non-EU companies generating more than EUR 150 million in net turnover within the EU will also fall under these regulations.
As of January 1, 2024, under the CSRD, large companies with more than 500 employees, including EU public interest entities and non-EU firms with listed securities on EU markets, are now required to comply with ESRS reporting requirements.
