The implementation of the EU directive CSRD (Corporate Sustainability Reporting Directive) introduces new extensive and complex requirements for sustainability reporting related to environmental, social, and governance (ESG) matters.

It should be noted that the EU is currently reviewing a legislative proposal that would raise the thresholds so that only companies with more than 1,000 employees and either a turnover of EUR 50 million or a balance sheet total of EUR 25 million would be subject to the requirements. The proposal also includes a two-year postponement of the reporting obligation. The legislative proposal is expected to be finalized and implemented into Danish law by the end of 2025. If your company is currently subject to the requirements and you are unsure how to proceed, BDO is ready to support you with guidance tailored to your ESG ambition level.

All companies in accounting class C-large and all listed companies (excluding listed micro-enterprises) will, going forward, be required to report on sustainability in a separate, coherent section of the management report within the annual report, based on 12 standards adopted by the European Commission. These standards are called the European Sustainability Reporting Standards (ESRS) and specify how companies must report on sustainability and what information the sustainability reporting must contain.

This may sound straightforward – but it is not, and the new requirements differ significantly from current practice.

Among other things, companies must conduct a Double Materiality Assessment (DMA), which aims to determine which sustainability risks, opportunities, and impacts are material across the entire value chain and therefore must be reported under CSRD. Another major task is to identify the relevant data points for reporting – including existing documentation, data sources, and any gaps in the data foundation that must be addressed. Finally, the implementation phase follows, in which data is prepared for inclusion in the annual report, digitally tagged, and concluded with the issuance of a limited assurance statement by the auditor.

CSRD encourages company leaders to more actively integrate sustainability into their strategic decision-making. With the right approach and use of information, knowledge, and resources, reporting can create value beyond mere compliance – it can offer a new strategic foundation for the business, help secure long-term earning potential, and have a far-reaching positive impact on both companies and society.

Support for CSRD Reporting

We are ready to assist companies throughout the entire CSRD preparation process or with selected parts of it. Regardless of how much guidance and support you need, we will work with you to ensure that you achieve a robust CSRD report that meets audit requirements while also establishing a strong strategic foundation that integrates sustainability into your organization and operations, thereby contributing to real change.

We are ready to support you throughout your entire CSRD preparation process, reporting, and assurance.

BDO is currently experiencing high demand for support in the following areas:

Impacts, risks, and opportunities (IROs) are central elements of CSRD, as they describe how the company is affected by and interacts with its surroundings. Stakeholders and the value chain are also key concepts in CSRD, and to understand a company’s business model in relation to sustainability, an initial stakeholder analysis and value chain mapping are important tools for identifying material impacts, risks, and opportunities.

The materiality assessment is the foundation for the entire sustainability reporting process under CSRD and aims to identify material sustainability topics that are subject to disclosure (e.g., pollution, biodiversity, and affected communities). The assessment must include an evaluation of materiality along two dimensions: the company’s impacts on sustainability matters (impact materiality) and the effects of sustainability matters on the company (financial materiality). An ESG topic is considered material if it meets the criteria for one or both of these dimensions. When a company determines that an ESG topic is material, information must be disclosed in accordance with the requirements of the relevant topic-specific ESRS standard (including policies, action plans, targets, and data points).

Once the material sustainability topics that the company must report on have been identified, the next natural step is to compare current data with future reporting requirements. This is often done through a GAP analysis, which systematically assesses the company’s maturity by reviewing available ESG data and comparing it with the mandatory and material disclosure requirements in CSRD/ESRS. The result is an overview of the actions necessary to address any deficiencies in the data foundation – both regarding general and topic-specific disclosure obligations. The analysis must be conducted down to the level of individual data points and should cover both qualitative information, such as policies and narrative disclosures, and quantitative data, which must subsequently be formalized through appropriate accounting practices.

Ready for Assurance

If you have the competencies and resources to carry out the CSRD preparation process internally, it may still be advantageous to obtain quality assurance and an external assessment of your process, initiatives, and outcomes. We offer to review measurements, processes, etc., in connection with the issuance of an assurance statement on your sustainability report.

We can provide quality assurance and advisory support throughout the process and, if needed, participate actively by contributing specialist expertise to ensure that the auditor can approve the CSRD report.

In a CSRD context, the auditor must obtain a solid understanding of the client, including the client’s:

Business model and main activities
Objectives and strategic focus areas related to sustainability information, including any incentives or pressures that may result in management bias or fraud
Overall value chain, including key activities and actors
Process and outcome of the Double Materiality Assessment, which forms the basis of the sustainability report
Accuracy and completeness of ESG data used, including data from significant suppliers and partners within the client’s value chain

To ease the burden that companies face, we have developed a range of templates and tools that can facilitate the work with CSRD and ensure an efficient and streamlined process for creating an overview and establishing a plan to become ready for reporting in accordance with CSRD requirements.

The EU Taxonomy Regulation (for non-financial companies)

The EU Taxonomy Regulation was published in 2020 and has been implemented in stages across the EU. The regulation defines criteria for environmentally sustainable economic activities and sets reporting rules for companies. With the CSRD directive, it has become mandatory for sustainability reporting to also include the disclosures required under Article 8 of the Taxonomy Regulation. This means that companies must identify their different economic activities and calculate the share of revenue, operating expenses, and capital expenditures that align with the taxonomy’s criteria, and report these KPIs in a specified tabular format. We can help your company meet the requirements of both the Taxonomy and CSRD regulations. Our assistance may include identifying company-relevant activities, assessing alignment with environmental technical screening criteria and social minimum safeguards, developing business procedures and work instructions, and calculating the financial KPIs. We are also happy to support the organization of the process, documentation, and IT system development.

Due diligence in supply chains

A mapping of a Danish company’s value chain will, in many cases, reveal that the greatest negative impact on people and the environment lies outside the company’s own controlled entities — namely with suppliers and subcontractors. What preventive measures has your company established to address this risk?

Sustainability assurance statement

It is a legal requirement that the auditor issues a limited assurance statement on the sustainability reporting. We have certified sustainability auditors who are authorized to perform this assurance.