CSRD: a cornerstone of the European system for directing investment towards sustainability

As part of the CSRD, companies must publish :

  • Environmental, Social and Governance (ESG) indicators
  • Percentage of sales, CAPEX, OPEX from activities in line with taxonomy


Information for civil society, customers, financial market participants (FMPs) and financial advisors (FAs).

Under the Sustainable Finance Disclosure Regulation (SFDR), companies must publish :

  • Products with ESG characteristics that partially pursue sustainable investment.
  • Products with a sustainable investment objective and pursuing an activity aligned with the EU taxonomy.



The European Taxonomy is a system for classifying economic activities as ecologically sustainable.

CSRD gives extra-financial data the same rigor and readability as financial data

Extended scope

50,000 companies in Europe



Strengthening and standardizing reporting obligations

1196 datapoints

Unique location

Dedicated section of the company annual report

Digital format

Single European electronic format XBRL

Mandatory audit

Statutory Auditors

“For companies, the arrival of CSRD is a major upheaval, comparable to the IFRS revolution in financial reporting in the 2000s”.

12 standards for all sectors applicable January 1st, 2024

Information selected according to the principle of double materiality

3 levels of information to be provided

  • All sectors (12 ESRS standards)
  • Sector-specific (coming soon)
  • Entity-specific (to be defined by entity)

4 reporting areas

  • Governance
  • Strategy
  • Impact, risk and opportunity management (IROs)
  • Metrics and targets

Large volume

  • 1196 data points

The 12 standards in detail

ESRS 1: General requirements

This standard does not provide disclosure requirements, but presents the conceptual framework, how to prepare the information (scope of publication, categories of standards, presentation of dual materiality analysis) and defines the structure of ESRS.

ESRS 2: General information

This standard comprises 12 disclosure requirements (DR): general, governance (GOV), strategic (SBM) and related to Impacts, Risks and Opportunities (IRO).

The 5 environmental standards set out the requirements to be met with regard to climate change, pollution, water and marine resources, biodiversity and ecosystems, and resource use and the circular economy.

ESRS E1: Climate change

Explain the company’s process for moving to a sustainable, low-carbon economy. Climate change mitigation, climate change adaptation, energy.

ESRS E2: Pollution

The company must disclose its actions to avoid and reduce pollution, including any phase-out of materials or components having a significant negative impact, but also to restore, regenerate and transform ecosystems where pollution has occurred.

ESRS E3: Aquatic and marine resources

The company indicates whether and how its policies deal with water management, both in its supply and in its use in the design of products and services, and what its commitment is to reducing the material consumption of water in at-risk areas as part of its own activities and throughout the upstream and downstream value chain.

ESRS E4: Biodiversity and ecosystems

If the company has a plan, it must disclose its contribution to biodiversity impact factors and mitigation measures, key dependencies and assets and resources, offsets, implementation,

If the company has not adopted a plan, it must explain its ambition in terms of biodiversity and ecosystems, and must indicate if and when it will adopt a transition plan.

ESRS E5: Resource use and circular economy

The company must indicate the objectives it has adopted with regard to resource use and the circular economy: abandoning or minimizing the extraction of non-renewable virgin resources, contributing to the regenerative production of renewable resources, regenerating the ecosystems in which they are used, waste management, etc.

The 4 social standards set out the requirements for the company’s own workforce, workers in the value chain, affected communities, consumers and end-users.

ESRS S1: Company workforce

This standard applies to the company’s own workforce, both employees and non-employees, and concerns working conditions, equal treatment and opportunities for all, and other work-related rights.

ESRS S2: Workers in the value chain

This standard applies to all workers not included in the “own workforce” scope of ESRS S1 and concerns the same 3 main areas.

ESRS S3: Affected communities

The company must describe how it consults with local communities in order to respect their freedoms or obtain their informed consent when their lands or resources are affected by the company’s activity.

ESRS S4: Consumers and end-users

The company must describe how it takes into account and guarantees respect for the rights of consumers and end-users.

ESRS G1: Business conduct

A governance standard outlines the company’s culture, its management of supplier relations, its policy to avoid corruption, its commitment to political influence, including lobbying, whistleblower protection and payment practices.

Double materiality

The CSRD aims to enhance the transparency and comparability of ESG reporting by companies. The aim is to place financial and sustainability information on the same level of importance.

With the double materiality analysis, the CSRD adds to financial materiality a so-called “impact” materiality, which aims to assess how companies’ activities contribute to the degradation or improvement of the environment, and affect the well-being of populations, but also the ecological health of natural entities.

Companies must demonstrate that their commitments, strategies and indicators effectively take into account the environmental, social and governance risks generated by their activities. They must also specify the roadmap and action plans designed to limit these risks.

In concrete terms, information is said to be material when it exceeds a significant threshold, an amount beyond which economic decisions, particularly those of investors, are likely to be influenced. Double materiality analysis is therefore a crucial step in CSRD.

A key process of CSRD

Define material topics

Involve all stakeholders

IRO criteria Impact Risks Opportunities

The entire process must be auditable and traceable

Criteria set by the ESRS :

  • Integration of internal and external stakeholders
  • Balance between Financial Materiality and Impact Materiality
  • Short-, medium- and long-term vision
  • Consistency with company risk analyses


Impact materiality


Financial materiality


Impact of the company on the environment and society

Positive and negative impacts

Impact of the environment and society on the company’s business model

Risks and opportunities

Life cycle analysis: CSRD integrates the entire value chain

LCA is a global view of a product or service. It takes into account the entire value chain, upstream and downstream.

Life Cycle Assessment (LCA) is an evaluation method designed to quantify the environmental impacts of a product or service, for eco-design purposes or to choose the best performing product or service from among several.

All potential impacts on the environment and resource consumption are studied, from the extraction of raw materials to waste treatment (“from cradle to grave”).

This is a global, multi-stage, multi-criteria approach, standardized (ISO 14040-44) and recommended by the European Union.

The roadmap to CRSD compliance

The CSRD is a complex directive for companies to implement: the number of indicators is substantial, CSR data is scattered and not very homogeneous between group subsidiaries, carbon equivalence tables are constantly evolving, and there are many frames of reference. It is often difficult to measure the real impact of CSR policies, and with the CSRD audit requirement, it is essential to keep track of all information.

Preliminary work
Step 1: Project scoping - 3 months

Dual Materiality
Scope of reporting
Gap analysis

Step 2: data collection structure - 6 months

Identify data resources (ERP, dedicated tools, etc.)
Data recovery from Bilan Carbone, BEDES, etc.

Step 3: Preparing the 1st exercise - 3 months

Policies and objectives
Defining action plans
Change management

Start of 1st fiscal year

Karbonpath, a data-centric, software-based approach to the CSRD challenge

Karbonpath secures the compliance of your extra-financial reporting, in line with the CSRD.

Karbonpath makes it possible to move from strategy to action, engaging the whole organization in transformation.