Up to now, most attention has been paid to which companies will be in scope, the double materiality assessment requirement and the numerous new mandatory data points. However, there are other practical CSRD challenges that are receiving less attention.
For example, it’s important to note that the CSRD is just a foundation that individual countries must then later clarify. Notable per-jurisdiction changes include variations in the types of entities covered by the regulations, and adjustments in asset size, turnover and balance sheet criteria that determine regulatory scope.
Critical to consider too, is the fact that CSRD requires disclosures to be in the iXBRL format, which is the same format as the ESEF version of a UK annual report. Moreover, ESRS disclosures (both text on the page and XBRL tagging) are required to be assured. For UK companies, this represents a change from current practices, as auditing of ESEF tagging is not required for financial statements. The tagging requirement has, however, been delayed by at least one year, due to technical challenges.
We believe that the shift to an iXBRL format for both sustainability and financial reporting will ultimately prompt many reporters to opt for a ‘digital-first’ approach, rather than prioritising the PDF. This shift will enable the simultaneous production of iXBRL format reports – readable by both people and machines – and PDF files from a single source, streamlining the process significantly.
