Please use Chrome for a better browsing experience as Internet Explorer is not supported
Download Chrome
The evolving landscape of Environmental, Social, and Governance (ESG) reporting is ushering in a new era of transparency and accountability for businesses across the European Union. With the introduction of the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS), organisations are now facing the imminent challenge of adapting to digital reporting requirements.
This blog will explore the nuances between CSRD and ESRS, the implications of the digital reporting mandate set for 2026, and the strategic steps your organisation can take now to prepare. Furthermore, I will introduce how ARKK, with its extensive experience and expertise in iXBRL and digital reporting, stands ready to assist you in navigating these changes and enhancing your ESG reporting processes.
CSRD was introduced as a successor to the Non-Financial Reporting Directive (NFRD) and is an EU legislation that mandates all large and listed companies to publish regular reports on their Environmental, Social, and Governance (ESG) activities. Essentially, CSRD outlines the reporting requirements for these corporates within the EU. On the other hand, ESRS provides guidance on how and what these corporations should report to meet CSRD's requirements, offering a framework of the necessary information and metrics.
Starting from 2025, companies already under the NFRD will be required to report in accordance with the CSRD, marking a significant move towards a sustainability-focused economy. However, this transition presents numerous challenges, particularly with the introduction of a digital reporting requirement in 2026. With the digital dimension becoming a critical aspect of ESG reporting, companies should start preparing their ESG reports for digital publication in 2025.
The digital reporting requirement necessitates that reports be in the Inline XBRL (iXBRL) format, making them readable both by machines and humans. This innovation will not only make the reports more accessible but also facilitate easier analysis by stakeholders. Given that iXBRL has been in use for financial reporting since 2021, many are familiar with it, though it may be new for sustainability teams. The current moment offers an ideal opportunity to integrate the digital aspect into ESG reporting preparations.
Reflecting on the XBRL Europe conference in 2023, a central message for ESG reporting was the importance of being taxonomy-centric. With the European Financial Reporting Advisory Group (EFRAG) releasing a draft of the digital taxonomy for consultation, which is expected to close in April and finalise later this year, corporations have the chance to align their sustainability reports with the upcoming digital taxonomy, thereby enhancing the machine-readability of their reports in line with ESRS expectations.
At ARKK, with our 15-year expertise in iXBRL, we are dedicated to guiding issuers through best practices and preparing for the forthcoming digital ESG reporting requirements. Our team is actively working with partners to educate and support corporations in navigating these changes.
As we edge closer to these new reporting standards, it's crucial for companies to stay ahead in their preparation efforts. If you're seeking guidance or need assistance with your digital ESG reporting, the team at ARKK is here to help. Contact us today to learn how we can support you in seamlessly transitioning to the digital ESG reporting landscape.
