Questions and answers

How do I know if my company has to comply with this reporting?

Companies that must report from 2024 are companies that meet at least two of the following criteria for two consecutive financial years: (1) balance sheet total > €25 million, (2) net turnover > €50 million and (3) ≥ 250 employees.

Companies that must report from 2026 are listed SMEs that meet at least two of the following three criteria: (1) Fewer than 250 employees, (2) annual turnover of maximum 50 million euros, (3) a balance sheet total of maximum 25 million euros.

As a subsidiary, can you refer to the CSRD report of the parent company?

If the head office is located within the EU and submits a mandatory CSRD report, you may refer to it as a subsidiary in another EU country. The condition is that the activities of the subsidiary are the same at the head office.

What does double materiality mean?

The CSRD introduces the concept of double materialityThe dual materiality analysis (DMA) assesses both a company's impact on sustainability (impact materiality) and the influence of sustainability issues on the company itself (financial materiality).

• Financial materiality: How sustainability impacts corporate financial performance.

• Impact materiality: How business activities impact people and the environment.

This means that companies need to take a broad view of their value chain, from raw material extraction to end product and even the life cycle of the product with the consumer.

Useful link:  This document may also help with DMA (Double Materiality Analysis)

What does data point analysis involve?

The double materiality analysis (often performed by or together with external consultants) determines which activities are material in your specific sector. A data point analysis is performed for the activities that are material, to provide insight into where the data of the material activities comes from.

Useful link: This is the link to all data points that are in the reporting standards (ESRS). Companies only report on the data points that are relevant (material) to them: EFRAG (sharefile.com).

Where do these data points (1,231 in total) come from?

The data points are the specific outcomes of the double materiality analysis. A data point analysis is performed from the themes that are material, to find out where the data comes from to make the material themes clear. The reporting standards (ESRS) then indicate how the company reports on this.

What does the GAP analysis entail?

A CSRD gap analysis compares a company's current sustainability practices with the CSRD requirements, identifies gaps in policy, data, processes and capabilities, and forms the basis for a targeted improvement plan. The Gap Analysis is an analysis of the gap between existing policies and measures and the desired policy within the CSRD regulation.

Are there templates to arrive at the double materiality analysis?

Because each sector or sub-sector deals with different materiality, there is no standard template for performing a DMA. There are initiatives to develop sector-specific standards. EFRAG (formerly an abbreviation of European Financial Reporting Advisory Group) is a collaboration between various national and European stakeholders in reporting and is developing sector-specific standards:

Useful link: Sector-specific ESRS | EFRAG

Is there a difference between carbon and GHG?

Green House Gases (GHG) are broader than just Carbon. GHG includes a broader group of gases that contribute to the greenhouse effect. In addition to CO2, this also includes other gases such as methane (CH4), nitrous oxide (N2O), and fluorinated gases.

Useful link: Explanation of GHG calculation

What exactly is Scope 1 and 2?.

Scope 1 includes all direct greenhouse gas emissions from sources owned or controlled by the reporting company itself. Scope 2 covers indirect emissions caused by the generation of purchased energy that the company consumes. Examples of this are electricity, steam, heating and cooling.

The correct information can be found here: https://www.milieubarometer.nl/nl/standaarden/csrd/

How can I increase customer value with CSRD?

The CSRD project can be used to draw up a future strategy. The project provides a lot of insight into sustainability, and in this way a vision can be formed and a future plan in the field of sustainability can be drawn up.

It also provides a strong moral stance, which can strengthen the position in the market and convince customers and employees to work with the company.

How do I avoid a very heavy reporting burden and where are we, as small SMEs, going to put the costs of these reports?

The starting point is the question of which reports are mandatory, depending on the size of the organization. The “trickle down effect” to smaller SME entrepreneurs (the question can be put to them…) is also a concern for MKB-Nederland that they bring to attention and try to find a solution for.