Many companies have been issuing reporting about their sustainability work for many years, but we have recently seen a rapid increase in environmental, social and governance (ESG) reporting requirements, with the introduction of increasingly stringent reporting regulations.
The background
The process behind sustainability reporting was initially established decades ago – many companies will remember the Global Reporting Initiative (GRI) being introduced back in 1997. Twenty years later, the Non-Financial Reporting Directive (NFRD) came into effect. As its title suggests, the directive required large EU companies to disclose non-financial information within their annual reports. This information included environmental, social and employee-related topics, as well as information about anti-bribery and anti-corruption initiatives, and work to protect human rights and increase diversity.
The EU Taxonomy entered into force in July 2020 and remains a cornerstone of the EU’s sustainable finance framework. The Taxonomy requires companies to report which of their economic activities are eligible (i.e. have the potential to be sustainable) and aligned (meeting specific criteria defined by the Taxonomy Regulation). Companies must report how their economic activities align with the EU Taxonomy’s six environmental objectives, including climate change mitigation and adaptation.
In 2021, the EU decided that the NFRD needed to be revised and expanded. A new version was proposed, with the scope of sustainability reporting extending beyond companies’ own operations to include their upstream and downstream value chains. This went on to become the Corporate Sustainability Reporting Directive (CSRD), which came into effect in January 2023 . The European Financial Reporting Advisory Group (EFRAG) was asked to develop a set of European Sustainability Reporting Standards (ESRS) within the framework of the CSRD and these were adopted later in the year.
What are the European Sustainability Reporting Standards?
So, what are the ESRS and who is required to report under them? The new standards are there to ensure that companies’ ESG (environmental, social and governance) disclosures are standardised, 
transparent and comparable. There are 12 Standards (two cross-cutting and ten topic-specific) within the ESG area, and they are applicable to companies that fall within the scope of the CSRD.
At present, those organisations that fall within the scope of CSRD are large companies that meet two of the following criteria: more than 250 employees, net revenue exceeding EUR 50 million and total assets exceeding EUR 25 million. Listed SMEs will be required to start reporting for the 2025 financial year in 2026.
What about other standards and reporting frameworks like the EU Taxonomy – do they clash with the ESRS? No – the ESRS are aligned with the main global standards such as the Global Reporting Initiative (GRI). Taxonomy reporting must be included as part of an organisation’s sustainability report for all companies that fall within the scope of the CSRD. In fact, the ESRS and EU Taxonomy together enhance the transparency of sustainability reporting, helping investors and stakeholders assess a company’s environmental and social impact.
What can we do to help?
Navigating the intricacies of new EU sustainability reporting requirements can feel like a complex task, especially considering the associated translation demands. However, with Fluid Translation, you can be confident that your organisation is in expert hands. We remain at the forefront of all developments in sustainability reporting standards, ensuring our team possesses the most up-to-date knowledge and our linguists have access to extensive and relevant reference materials. Our commitment to unwavering accuracy and linguistic excellence means that your translated sustainability report will not only be technically precise but will also resonate authentically with your international stakeholders, reading as if it were originally crafted in their language. Furthermore, as a crucial step in our rigorous quality assurance process, your translated sustainability documentation will be reviewed by an expert in sustainability terminology, guaranteeing clarity, consistency and the correct use of key terms.
Trust Fluid Translation to be your quality partner in communicating your sustainability efforts effectively on a global scale.
Written by guest author and sustainability expert J Pain.